As the virtual goods market continues to grow in the US – nearly doubling this year to just over $1 billion, according to our recently released Inside Virtual Goods research report – more attention is being paid to one of the more intriguing sectors of the virtual goods payment ecosystem: offers. Offers, a form of incentivized lead generation for performance marketers, are a popular alternative payment method for a variety of free-to-play online games, and currently play a role in the monetization of many social games through virtual currency microtransactions. How does it work? Basically, players are incentivized by developers to take advertiser offers with in-game virtual currency that they can then use to progress through the game.

One of the main issues that many people are still trying to wrap their head around is the sustainability of the offers space. Given concerns over quality of both the offers themselves and the leads they generate, are offers really going to be a meaningful method of social game monetization in the long term?

Quality has been and always will be an issue in any performance-based marketplace. Why? Because actors on both sides – advertisers and users – are trying to optimize for their own goals. And as you may expect, based on the history of the world, some people are always willing to be tricky to make an extra buck. That’s why the companies that operate performance marketing platforms have to keep both sides in check. If either side of the system – users or advertisers – act fraudulently, the system stops working. This is why Google has large efforts and teams devoted to managing both click fraud and landing page quality…

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