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Its all down to referral marketing, a way of encouraging people to try out a companies products and services by giving them a free gift. Referral sites, the sites that give you your free gift are essentially advertising websites that drive traffic to their affiliates, the sites whose offers you complete.

Step-By-Step

  1. You complete an offer for one of the referral site's affiliates. If you are in the UK I'd recomend the LOVEFiLM free trial offer or if you do not have a credit card one of the ringtone offers. US sites carry similar offers such as Blockbuster DVD rental offer. All the offers are from well known, respected companies.
  2. The affiliate pays the referral site (the site that actually gives you your free gift) a fee for referring you.
  3. You then refer others to do the same, the affiliate pays that fee for each of those people.
  4. The referral site can then afford to buy your free Xbox 360, Playstation 3, Nintendo Wii, Apple iPod Touch or Apple iPhone as well as make themselves a profit.

Ultimatly it's a win-win situation for all parties...

  • You get your free Xbox 360, Playstation 3, Nintendo Wii, Apple iPod Touch or Apple iPhone without having to spend tens or hundreds of pounds.
  • The referral site gets enough from the fees collected to give them a profit.
  • The affiliate gets a potential customer who may decide to keep the service after having tried it.

For Example

For example, say you decide to sign up for a 2GB iPod Shuffle (cost £45) and you complete the LOVEFiLM free trial offer. Then you persuade 3 friends to do the same

  • You (and your friends)

    Receive
    A few DVDs and an iPod Shuffle
    Spent
    Nothing

  • Referral Site

    Receive
    £20-£30 fee from LOVEFiLM for each person
    Spent
    £45 on your iPod leaving £35-£45 profit

  • LOVEFiLM

    Receive
    4 potential customers who may like their service enough to keep it
    Spent
    £80-£90 instead of hundreds on a TV or newspaper campaign