Zynga Credibility Evaporating - What's The Effect On Its Super Star VC Investors?
By Tom Foremski - November 8, 2009
Zynga, one of the largest virtual goods and gaming companies, promised it would stop running scam ads after Mike Arrington at Techcrunch called it out, amongst others, last Sunday. Then Zynga did it again.
On Saturday Mike Arrington noticed the ads were back, but he had to use someone else's computer because the ads weren't showing on his connection.
Deliberate blocking?
Mark Pincus, CEO of Zynga says no, it was "offer provider, doubleding, told us this was the result of their failure to remove an optimization queue which was still showing these ads to 10% of pageviews. i want to be clear that zynga had no control over the pages being shown and never filtered them from michael or anyone's view. "
You would think that this week of all weeks Mr Pincus would use a belt and braces to make sure no scam ads filtered through unnoticed.
It didn't take Mike Arrington long to find the ads so how come Zynga didn't see them?
Dean Takahashi at VentureBeat noted:
Zynga's credibility is fast evaporating. It's quickly accumulating an unpleasant reputation; especially since Techcrunch posted a video of CEO Mark Pincus admitting "I Did Every Horrible Thing In The Book Just To Get Revenues".
There are 230,000 Google references to Zynga plus "scam" out of 1.44m just for Zynga. That's 1 in 6 references .
How will this effect Zynga's A-list investors? There must be considerable concern about being in the public eye.
It's a top tier A-list take a look:
Bing Gordon
Kleiner Perkins Caufield & Byers
Fred Wilson
Union Square Ventures
Reid Hoffman
Chairman, LinkedIn
Peter Thiel
Managing Partner Clarium Capital
Bob Pittman and Andy Russell
The Pilot Group
Brad Feld
Foundry Group
Sandy Miller
Institutional Venture Partners
Rich Levandov
Avalon Ventures
Maybe we can hear from some of them this week.
For example, New York city's top VC, Fred Wilson has a very popular blog A VC - Musings of a VC in NYC.
But like the New York Times' recent failure to notice the scandal in the world of virtual goods, Mr Wilson's blog hasn't noticed it yet either.
It's a great story. You'd think the East Coast media would be all over this story of a Silicon Valley bubble fueled by scams...
- - -
Please see: NYTimes Article On Virtual Goods Misses Huge Controversy
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Comments (4)
i've noticed it, just not blogged about it.
i have commented on it at techcrunch and in the comments of my blog.
Posted: November 9, 2009 3:05 AM
Tom, while Zynga is responsible for not filtering the scammy offers, the culprit here is the scammers themselves, not Zynga. The Video Professor and others like it exist in the Net, and, I presume, they operate on many sites. Should the CEO of those sites resign as well? Is their credibility in question as well?
Mike Arrington seems to be fighting a private battle against Zynga (and other social gaming sites, using direct payments as the source of revenues). But why do you think we all should join him in that? Why don't you urge NYT and others to fight the ad scammers instead?
Posted: November 9, 2009 9:26 AM
Mark, I agree, I think we should all try to help fight the ad scammers because they are killing the Golden Goose, they are harming Internet commerce. But it also seems to be the case some companies have turned a blind eye, arguing that it's "only" a small percentage of ads (yet a large percentage of revenues). I'm not advocating singling out Zynga I'm advocating singling out all companies involved in the scam trail. Follow the money and this touches a lot of companies. If you follow the broader money trail beyond the mobile scams it affects even more companies and I will support any efforts to get rid of scams where ever they are.
Posted: November 9, 2009 3:52 PM
"The broader money trail" yes, definitely, plus the "broader context" of such "investigative" pieces like the one by M. Arrington, that happened just when EA is negotiating a deal with Playfish.
Now the deal is done; EA has just acquired Playfish -- let's see if the crusade against the alleged scam-artists will continue.
Incidentally, Video Professor has been out there selling its stuff for more than 20 years now. The Secret Crush scam isn't new either; it was once known as Facebook scam.
Posted: November 10, 2009 7:46 AM