Don’t Click Banner Ads
by Brent @ 12:17 pm on 02.03.10
I am sure, like me, you think of yourself as “smarter than average”. You would never fall for a phishing scam or give your bank account number to Nigerian royalty. But the fact is, everyone has their weakness, and someone has found a way to exploit you. Perhaps you’ve been called and told you’ve won a prize and that got you excited. Or maybe you were told about a club discount you could receive, but only by paying huge membership fees. Maybe you’ve fallen for a few of these things. You might still be smarter than average, but even above average people have below average moments.
Mine came in the form of a banner ad. I was told I could buy a Macbook for under $100. I clicked it only because I wanted to know what the scam was this time. The scam was an auction site. I should have clicked ‘back’ right away, but I kept reading. I saw usernames of people who seemed real (and probably are real) winning auctions for big-ticket items like laptops and flat-screen TVs for only a tenth of the retail price.
And that was my weak spot. The idea that this site buys so much stock that they can sell for low prices somehow made sense to the little person inside me who wanted a 50” LCD TV for $150 bucks. The longer I was on the site, the more I felt like I had stumbled upon a gold mine. How did I not know about this place before?
That’s the moment the warning bells should go off. If someone makes you an offer that you can’t wait to tell your friends about, then you are being scammed. As the adage goes, if it seems too good to be true, it is.
I got myself a username and thought it was time to start winning some TV’s and laptops. This was going to be the best Christmas ever. I tried to register a bid, when I was hit by the catch: you had to pay to bid.
Pay to bid? Seemed a little strange. But, hey, each bid was only like 10 cents, so what’s the harm? I’ll pay for a few bids, snipe one of these auctions right before it ends, and I will bringing home some luxury items. So I payed for some bids and began. “Yeah, $60 worth of bids… that’s like 6,000 bids, that’s going to last me a lifetime on this site”.
I started bidding on a Macbook. The bidding started at $0.02. I threw my bid down. Now it was at $0.04 with 20 hours to go. 20 hour until I win my $100 laptop with free shipping!
But why wait 20 hours? Why not go snipe an auction that’s almost ending? There was a TV auction ending in 30 seconds. I entered the room. 3. 2. 1. BID! Yes, I am the high bidder. I WON! Oh wait, the auction has 30 more seconds, how did that happen? Did I read that time wrong? Nope… now the auction has 2 minutes, now 5, now 20. What is going on?
Well, every time you bid, it adds 10 seconds to the auction. In order to win, you need to be the high bidder and stay the high bidder for 10 seconds. But with each auction being watched by 100 other suckers, um, I mean, people of above average intelligence, the auction was never going to end. Once the clock hits 3 seconds, the whole room would bid, pushing the price up another $2 and adding another 10 to 30 minutes to the auction time.
This is going to take forever, I thought, I need to go to bed. The owners of the site had foreseen this problem and created a solution for me. I could buy blocks of bids. I could setup a “bid butler” to bid for me while I dreamed of my new TV. Well, do the math, how long do you think those 6,000 bids I bought lasted? Not very long. Oh, and guess what I won? That’s right, nothing. $60 down the drain.
I started thinking about how much this site was selling these laptops for, in reality. Let’s say the auction ended finally at $200, which for a Macbook would be an amazing deal. 100 people bidding at $0.10 a bid, each time moving the price up only $0.02.
$200 / $0.02 = 10,000 (number of bids)
10,000 bids * $0.10 = $1000 on bidding alone
$1,000 + $200 = $1,200
So, these guys sold that laptop for $200. And out of those 10,000 bids, what are the chances yours will be the winner? Very slim.
Also, $200 as a winning price is a very conservative price. Some were as high as $600, still an outstanding deal. But a $600 final price means the site made $3,600 on that laptop. Sure, a few went for $90, and those are the ones mentioned on the banner ads to get you there. The only way to guarantee a win is to pay 3 times the retail price.
Wow, do I feel stupid. Not only am I down $60, but I was beaten by 6th grade math. Don’t click banner ads.
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