We’ve outlined some facts below for additional clarification.

The Facts

1. When Facebook announced a more aggressive approach of enforcing their revised Advertising Guidelines, the team here at Gambit took immediate action to ensure our publisher partners on Facebook ran ads that complied with these guidelines. This included pulling thousands of international offers until we had had a chance to review each one individually. Gambit opened a direct channel of communication with Facebook and worked with Facebook employees to weed out all non-compliant offers.

2. While working through our ad inventory directly with Facebook, due to a technical bug, Gambit ended up showing a number of non-compliant offers to a segment of international traffic on the Facebook platform.  As soon as we noticed the bug, we took immediate action to fix it.  Unfortunately, while we were fixing the bug, Facebook sent our game development sister company, Kickflip, Inc., a cease and desist letter.  We understand that Facebook thought we were intentionally running the non-compliant ads which cannot be further from the truth.

3.    In any event, Kickflip, the company targeted by Facebook, does not own or operate Gambit.  Nor does Gambit have any relationship with Facebook, contractually or otherwise.  Gambit is an independent third-party payment and advertising platform for use by app developers, and Facebook cannot shutdown Gambit and its service any more than it can claim to shutdown Paypal or Google.  Moreover, it is our firm belief that Facebook cannot interfere with our publisher clients’ decision on which payments and advertising service provides them the best solution for their applications.

4. What social networking companies like Facebook can do is set guidelines on the types of advertising that can be run, and hold the publishers accountable.  Many of our clients already know that Gambit’s payments and advertising product provides the best solution to guarantee compliance with these guidelines.  While our competitors continue to run non-compliant ads, Gambit is delivering fully compliant advertisements to all of our publishers.  If we can’t deliver, we won’t be in business.

5. Gambit’s service remains completely uninterrupted for publishers and end users, and will remain both stable and compliant with whatever guidelines our publisher clients ask us to follow. Our publishers continue to run Gambit on their Facebook apps today.

6. Gambit continues to work diligently to ensure all ads we run through our clients’ applications on Facebook are compliant with the guidelines. Gambit continues to develop additional tools and educational materials to help our publishers make the best decisions about which monetization options they choose to run on their applications and games.

Q & A

Q: Why did you guys let non-compliant ads through?

A: When Facebook announced a new enforcement strategy for their Advertising Guidelines, Gambit took immediate action to sort and filter the ads we serve. However, ad inventory is vast and changing. Because of a technical error, we ended up serving some ads to non-U.S. traffic that were not in compliance with Facebook’s new guidelines. We did not do this intentionally, and we removed the ads as soon as we found out. We fixed the error, redoubled our efforts to filter out non-compliant ads, and are now serving only compliant ads.

Q: I’m a publisher in the Facebook platform and I use Gambit Payments. Am I at risk of being shut down?

A: No, absolutely not. Gambit Payments is running only compliant ads for developers running their applications on the Facebook platform, so the ads you publish in your app do not violate Facebook’s Advertising Guidelines and pose no risk.

Q: I’m using Gambit. Will my users still have access to payments and offers?

A: YES, your users still have access to payments and offers. Gambit Payments’ monetization services – including direct payments and compliant offers – are, and always have been, up and running without disruption.

Q: Are you guys still in business?

A: Thanks for asking. The answer is a resounding YES! We are definitely still in business and are challenging ourselves (and our competition) to be better than ever at product innovation. We still think the high-quality offers-based monetization of social applications is a fundamentally sound business model, but end user experience must be deeply integrated into the development process. We also think there are a lot more lot more innovation methods beyond traditional offers to monetize online communities on social networks and beyond, and we’re looking forward to rolling those out in the near future.

We hope this dispels some of the confusion and sensation surrounding Gambit’s business on Facebook, and we invite your questions at team@getgambit.com

Today, we want to go over 2 major things:

1: Facebook’s updates and revised commitment to their Advertising Guidelines.

Talk, speculation, and position statements are plentiful but not so helpful when Facebook’s compliance police crack down.

2: The fictions and real facts on offers, based on our experience and research as a top 3 payments and offers provider.

Note: for the purposes of this article, ‘higher risk offers’ will be defined as those that don’t fully comply with Facebook’s revised Advertising Guidelines.

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1: Facebook’s new Advertising Guidelines

If you’re a Gambit publisher, then you’ve seen our email about Facebook’s changes to their Advertising Guidelines, what actions Gambit has already taken, and what publishers can do to stay happy. If you’re not one of our publishers, then you may have heard elsewhere about Facebook’s new initiative to clean up ads on their platform.

Although this announcement may mean changes for the offers you’re using, we’re actually really excited about better ads, and we commend Facebook for taking the lead. If you’re a Gambit publisher on Facebook, be aware that we’ve manually checked and filtered all offers based Facebook’s newly published criteria, so your app will not be at risk for running non-compliant ads.

Here at Gambit, we’ve provided a wide variety of ads to suite our numerous diverse publishers, but we’ve also recognized that not all ads are created equal. That’s exactly why we made Gambit Ratings, our ratings system that tells you how healthy any given offer is for your business, since the very first day we launched Gambit.

We’ve previously recognized user issues with offers, and if you’re interested in checking out our recommendations for how to keep your users happy and your business healthy, see the full article here.

We’ve been in close communication with our contacts at Facebook, and you can count on us to pass any news right on to you. To make sure you get this, please make sure no-reply@getgambit.com is going to your inbox, not your spambox.

We see this as a positive development that will spark innovation in our industry – both in payments and offers, and in the development of the apps themselves. If you have any questions, we’re right here at team@getgambit.com

Now that we know what’s up with Facebook, let’s bust some myths about offers and ‘Scamville.’

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2: FACT or FICTION?

The offers that pay out best are the ones that scam users, while legitimate offers like Netflix are few and far between.

FICTION

FACT: The offers that pay out best are the ones that bring in quality leads that actually convert.

Netflix is a good example, and it’s not the only one. While some offers providers scramble for their share of Netflix-quality offers inventory, we’re spending our time building out something called Gambit Exclusives – high-quality offers that you won’t see on any other offers networks – so that Netflix and Blockbuster aren’t your users’ only options.

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FACT or FICTION?

Every offer ever published has always been compliant with Facebook’s Advertising Guidelines.

FICTION

FACT: Prior to Facebook’s recent guidelines update, all offers providers were occasionally serving higher risk ads like mobile offers or the now infamous Video Professor offer to meet demand.

Yes, that’s right. ALL offers providers, even Gambit, made limited quantity of these offers available as long as demand from publishers was present – which it was.

Making higher risk offers available does not mean that all publishers using Gambit or another payments company were by default serving these ads to end users. To the contrary, we at Gambit, like any offers provider worth its salt, have always strongly encouraged our publishers to get in to their offers panel and get granular with understanding – and filtering -  offers.

Gambit Ratings is our ratings system and range of filtering tools that enables publishers to monitor offer performance, screen and investigate user inquiries, and get rid of any offer that seems suspect, ’scammy’ or that’s just underperforming. These tools were in place when we right after we first launched Gambit, and they’re still going strong today.

Why even serve these risky offers?

If these offers are so shady and worthless in the long term, why do payments providers like Gambit even bother to make them available to developers?

The answer is simple – to supply to a demand from some of their developer clients. While some developers have publicly rejected risky offers – or offers altogether – others have chosen them as a way to grow revenues.

In the past, Gambit has encouraged developers to be aware of how offers affect their users’ experience, but has ultimately put this choice entirely in developers’ hands. Developers have access to an array of tools and data to review and eliminate offers individually or by category, but the reality is that not everyone does.

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FACT or FICTION?

Offers providers never receive user complaints about unclear or seemingly ’scammy’ offers.

FICTION

We published a post over a month and a half ago about what to do about user complaints on offers.

FACT: Every offers provider – Gambit included – has fielded their fair share of user complaints.

Even the highest rated offers can be confusing, which is why we have our own customer support staff dedicated to handling customer inquiries – and complaints – about the payment and offers experience. We all hire sizable teams to take on customer support  because we know it can be a point of major confusion for end users.

At Gambit, we work extra hard not to offload the responsibility of offers-related customer support onto publishers because we’re the ones with all the superfine transaction data, we’re the ones with the advertiser relationships, and we’re the ones who are best able to solve the problem.

A tip for publishers: your offers and payments provider should always offer full payments-related customer support as a best practice for precisely this reason. And remember, real support staff are always better than autoresponders.

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FACT or FICTION?

You’ll lose the revenue game without higher risk offers.

FICTION

After Facebook’s Advertising Guidelines announcement, we spent the weekend manually combing through every single offer in our inventory and running some calculations on what share of total revenue they represent.

We found that higher risk offers could impact up to 14% of developer revenue.

FACT: While 14% of your revenue is important, 4 potential long-term costs may add up to even more that that:

• Pissed-off users who never want to transact again
• Increased churn rates when users decide they’ve just had enough of the game altogether
• Increased customer service costs. How many tickets do the risky offers generate, and how much time and resources are being devoted to resolving those issues?
• Plummeting brand value in an industry that’s inherently social and reputation-based

Facebook is a social destination where reputation and trust play an even bigger role than in most other online media. It’s also a communication platform where people easily spread messages about their experiences with thousands – or even millions – of other users via their networks and community forums, magnifying the importance of reputation.

Including risky offers can bring on major liabilities that hurt both the short- and long-term value of the business, and end up costing a lot more money than they bring in.

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FACT or FICTION?

<defeated sigh> But lead-gen offers are the only alternative to direct payments, and the only way I can monetize a larger percentage of my users. </defeated sigh>

FICTION

Two weeks ago, we launched Gambit Tasks – a totally new way to monetize by giving them the chance to complete small 10-minute bundles of click-based, crowdsourcing tasks in order to earn virtual currency.

FACT: Gambit Tasks means no lead-gen, no delayed billing, no silent subscriptions. Your user tags some photos with keywords for better data sorting, and is rewarded for his or her time with virtual currency. We’re the ONLY offers and payments provider who has come out with product innovation that’s an alternative to offers, and we’ve got lots more coming down the pipeline.

It’s too early to spill all the beans, but if you want to know about more cool – totally different – stuff we’re working on, email us at team@getgambit.com

Don’t be defeated. Be excited. It’s a good time to be building a virtual economy.

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Just the FACTS

• Offers and ‘product bundling’ aren’t an inherently bad model, but some offers have not been clear to users about the true costs associated with participation. We’ve called these out as ‘higher risk offers.’
• We’ve manually combed examined, categorized and removed all offers that pose a Facebook compliance risk, and we’ve also made sure that our publishers understand what’s going on.
• Higher risk offers represent 14% of potential revenue decline across our publishers on Facebook.
• As an offers provider, Gambit has always had tools and ratings data available to help publishers screen offers.

Now that Facebook has announced specific and enforced consequences to for non-compliant advertising, it’s time for everyone – publishers, payments companies, and advertisers – to get informed and take action.

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CALL to ACTION for developers

This week’s debates and the data presented above bring us to 3 Calls to Action that we think all publishers and payments companies must heed:

1. Understand where your money is coming from. Who’s writing you those checks, and for what kinds of leads or actions? What’s the life-cycle of that revenue stream, and what does its growth or decay trajectory look like?

2. Measure the money you’re getting from offers against your long-term business objectives. This is obvious to say, but difficult to implement when competitors are using – and temporarily thriving on – revenue models that may damage the long-term objectives of your business. When Facebook cracks down, however, everyone will be accountable to the same rules.

3. Use tools to moderate or clean up when necessary. Widely available tools include offers ratings, ability to reject offers by category or by individual offers, and open communication with your payments provider about the offers in question.

If you’re a developer, this is your business, so you get to choose what risks you’re willing to take to achieve your objectives. That’s the fun of being a grown-up. Just don’t make those choices without the necessary information, and don’t make choices that will get your business into major trouble or shut down.

If you’re an ad network, then transparency both to your advertisers and to your offers platform and developer partners will be key in building a business that brings real value to both sides.

If you’re a payments provider, there’s major work to be done. It’s time to clean up offers or start looking to product innovations that provide a payments alternative while creating a payments experience that the user not only tolerates but enjoys.

While still a beta product, Gambit Tasks lets users complete small bundles of Mechanical-Turk-esque tasks in exchange for virtual currency. As the virtual goods industry surpasses its billion-dollar mark, more and more will be at stake.

Developers should expect (and ask for) the product developments and product integrity that will grow this industry into something every player can be proud of.

Say hello to Gambit Tasks:

Hello, Gambit Tasks.

WHAT IT IS

Look for Gambit Tasks in the Offers Panel, alongside the traditional promo offers you already know so well. Like offers, users can earn virtual currency for your game without direct payment, making this a superb way to engage younger users, or international users in emerging markets.

Instead of completing surveys or signing up for promotions, users can now complete a set of quick, easy, but non-automatable tasks. These are tasks that are hard for software to master, but extremely easy for humans – especially social game-playing, Internet-savvy humans who are incentivized by the prospect of earning your virtual currency.

Here’s how it works:

1. A company that’s a Crowdflower client has thousands of online images that need to be checked for copyright issues
2. The company submits this set of tasks to CrowdFlower
3. CrowdFlower places the tasks in the Gambit payments platform, where it’s accessible to millions of users
4. A social game user wants to buy virtual goods in a game using Gambit, sees the offer to earn currency by doing a bit of work, and starts checking pictures for copyright issues
5. Once the user is done, the user is paid in virtual currency that can be used to buy goods back in the game.

Tasks would include:

• Tagging images or video clips with keywords to make them more searchable in a database
• Classifying text or other content under specific categories
• Reviewing content for copyright violations or other classifications

For those developers out there with lots of younger or international users who have more time than money, this represents a HUGE opportunity to increase your revenue. Yes, be excited.

WHY WE DID THIS

In our world, we’re always thinking through new ways to turn cash into virtual cash and then virtual cash back into cash for developers. So, when we got word of what the team over at CrowdFlower was up to — bringing big customers with simple tasks in connection with a massive online workforce who are more than happy to do a few tasks for cash, we started putting it all together.

Social gaming is exploding in popularity, and every day more people are buying virtual currency with real money, that they make from doing real work. Why couldn’t they just do the work and get their virtual currency right away?

Gambit Payment’s online payment system makes the earning opportunities CrowdFlower brings to the online workforce available in virtual economies for the first time in the history of social games.

The coolest part, we think, is that this gives all of our developer partners an excellent way to widen the transaction funnel.

Remember when we said that a user who has completed just 1 offer is 3 times more likely to transact again (often in direct payment)? With Gambit Tasks, the entrance to this transaction funnel is even wider because of how easy, accessible, and low-risk Tasks are.

The second coolest part is that your users can continue their in-game experience while earning virtual currency by doing game-like Tasks that are actually real work for real companies.

Crowdflower recognized that a partnership with Gambit would give them access to millions of capable users who were already among the web’s most fluent in web-based actions, and we recognized that the partnership would mean tons more engagement and revenue opportunity for developers.

We also like to try out new stuff. A lot. New stuff = exciting = reason for living.

We already know that this year’s revenue projections for the social game industry are tracking to surpass 1 billion dollars for developers on Facebook and MySpace, and we think Tasks is going to be a major enhancement to an already booming sector.

We’re really proud to be able to offer you guys product innovations like this, or even just feature improvements that you’ve requested, and we want to let you know to look for lots more stuff like this to come.

If you’re into this idea, have new ones for us, or just have questions, leave us your comments below.

A reprint and updated post of our latest piece is on Venture Beat, check it out and fill free to chime in on the discussion.