In a move sure to irritate its members, AllAdvantage.com, a company that pays people to view ad banners, restructured its payment plan this week to reduce the amount of money most members can earn. And the company picked an odd time to alienate its membership: It's on the verge of going public.
AllAdvantage customers agree to submit information about their interests, allowing advertisers to target ads at them with greater precision. Members download free software, which places a one-inch-high horizontal "viewbar" on their screens. The company then records the sites visited by the member, and sends out a variety of ads to match that member's interests.
AllAdvantage pays members according to the time they spend surfing, as well as the surfing time accumulated by the new recruits members bring in.
The model seems to serve the company well. The company's revised S-1 statement, filed June 5, says that during March 2000, its viewbar delivered more than 7.7 billion advertising impressions. For the three months ending March 31, 2000, it paid members $32 million. The company counts a total of 6.5 million members, of which 2.5 million are considered "active."
AllAdvantage recently filed S-1 documents with the Securities and Exchange Commission. It hopes to raise between $125 million and $143 million with its IPO. Citing SEC "quiet period" rules, company executives declined to comment for this story. But in a letter to members, CEO Jim Jorgensen wrote that in June, "we will begin tailoring our payment rates and hours on a country-by-country basis, based on member participation and sponsor support worldwide."
The localized changes outline a complex system that increases the number of hours payable each month in some countries (such as the U.K. and France) but decreases the number in others (such as the U.S. and Norway). Likewise, some countries will see increases in the pay rate per hour, while others will see a sharp decline.
While the company is increasing its U.S. pay rate this week from 50 cents an hour to 53 cents, it is simultaneously reducing the number of hours for which it will pay members to surf, from 25 hours each month to 15. For U.S. members who have no recruits but spend the maximum allowable time surfing, the change would result in earnings of $7.95 a month. Previously, such members could earn $12.50 a month - a difference of nearly $55 per year.
However, members who get the big checks make the bulk of their loot off of recruits. It's classic multilevel marketing: The more people you convince to sign up, the more money you can make. Because individual surfers can make less under the new plan, those who recruited them - and received a cut of their pay - are, in turn, likely to make less than before.
Nor is payment restructuring the only chink in AllAdvantage's armor. Downloadable programs available for free on the Internet, like FakeSurf, automate mouse clicks to make it look like Internet surfing is taking place. Such programs are particularly popular among college students. AllAdvantage tries to be vigilant about updating its software to combat scammers, but it's a bit of an arms race. And while AllAdvantage was early to market, copycats like DesktopDollars and ClickDough are also competing for consumers' surf time.
Clifford Neuman, a faculty member at the University of Southern California (dossier), says he may not hang around. "I've observed little retention among those who have signed up, so I'm considering taking down the link on my page," he says. "With these price changes it'll be even less appealing because people won't see anything for months. With that much waiting time, most people will likely drop out before they get their first check."
