How Do Unique Bid Auctions Really Work, aka Zeek Rewards, DubLi Network, or BidiFy Part 2

A few days ago we started looking at the Unique Bid Auction industry to better understand why network marketers from around the world are flocking to companies like DubLi Network, Zeek Rewards and BidiFy. Today I want to look at what the critics have to say about the Unique Bid Auction, and a little about gamification, one of the psychologies which could be attracting millions of folks to bid in the auctions.(Click here to read part one)

What is Gamification?

Gamification is known to be used interchangeably when talking about the three following terms: game design techniques, game thinking and game mechanics to enhance non-game contexts. In most situations gamification will apply to non-game applications (such as unique bid auctions) and processes (Facebook applications), in order to encourage people to adopt them, or to influence how they are used. (On a positive note, Evolv Health used gamification in their new Facebook application attracting 32,000 stories in the first 30 days, with 2.5 million impressions being shared worldwide, leading to their surge in new customers and distributors.)

Gamification can be described as, making technology more engaging (easier to understand and use). Guiding or encouraging users to engage in desired manner. Helping the user or programmer to solve situations while not being a distraction, And lastly and maybe the most interesting where it pertains to unique bid auctions, taking advantage of human psychological predisposition to engage in competitive (maybe addictive) online activities. Second Life, may be one of the first online communities to have utilized gamification, even though I do not think the term was around back at the launch.)

Here are some great research on gamification:

All the World’s a Game, and Brands Want to Play Along – Source – Ad Age Digital

“Basically game mechanics are a way to get consumers addicted to things,” said Tim Chang, principal at Norwest Venture Partners, which has backed many social mobile game companies. “They keep people engaged to keep doing things, as opposed to what goes viral quick: You click, you watch and then never see it again.”

One of the best examples is, of course, mobile social game Foursquare, which awards badges as users “check in” via their phones at physical places. Accumulating badges — and achieving statuses such as the “mayor” — are motivations to get people to check in.

7-Eleven and Zynga connect for a campaign with FarmVille and Mafia Wars.

Mr. Chang plots this trend on what he calls the “game-ification of life,” where competition and points are increasingly a part of offline activities, such as shopping with services like Gilt Groupe and Groupon and health and wellness with NikePlus.

Recently H&M ran the first-ever brand integration on MyTown, a mobile game like Monopoly set in the real world, created by developer Booyah. During the campaign, H&M was the most searched location within the game, 700,000 users checked in to its retail stores, and 8 million saw its virtual goods. The game, which has 2.3 million users since launch in December, has since worked with brands such as Travel Channel, Olay and Microsoft Windows. (Read the full article click here)

Beyond Facebook: How social games terrify traditional game makers but will lead us to gaming everywhere – Source – Game Beat

Jesse Schell, a game design professor at Carnegie Mellon University, generated a lot of chuckles this morning with his observations about that in his talk “Beyond Facebook” at the Dice Summit in Las Vegas.

Facebook games and others that use the “free to play” business model, where you can play a game for free and make money by selling virtual goods, hook their users via clever psychological tricks that convince you to buy things, either with real cash or by fulfilling some kind of special offer. These little incentives add up, creating a silly compulsion loop, forcing people to search for achievement points in everything they do. They keep playing because they get little rewards all of the time. Schell said that this trick will tie into other trends. (Read the full article click here)

Gamification Facts & Figures – Source – Enterprise Gamification

Phunny Phacts

Average age of gamers in years: 37 (has also been playing for average of 12 years)
77% of American households own videogames
The average age of the most frequent game purchaser : 41 years
55% of gamers play games on their phones or mobile devices
% of youth playing computer & video games: 97
% of female gamers: 42 (In fact, women over the age of 18 represent a significantly greater portion of the game-playing population (37 percent) than boys age 17 or younger (13 percent).)
% of gamers older than Fifty (2011): 29 (an increase from 9% in 1999; This figure is sure to rise in coming years with nursing homes and senior centers across the nation now incorporating video games into their activities.)
Percent of gamers who play games with other gamers in person: 65
91% of the time parents are present at the time games are purchased or rented.
68% of parents believe that game play provides mental stimulation or education, 57% believe games encourage their family to spend to time together, and 54% believe that game play helps their children connect with their friends.
Avg. of hours/week played in WoW: 20
Gamers have collectively spent 5.93 million years playing World of Warcraft
# of articles in WoWWiki: ˜250,000
Rank of WoWWiki compared to all Wikis: 2nd
Rank of Wikipedia: 1st
Most popular games played by US soldiers in Iraq when off-duty: Halo, Call of Duty
46.6% of surveyed German employees playing games during working hours: daily, 10.0%; several times a week, 15.5%; once a week, 7.0%; once per month, 3.6%; less than once per month, 10.6%
61% of surveyed CEOs and CFOs are playing games during their working hours
Highest proportion of active gamers by country in percentage of the population (National Gamers Survey 2011):
Germany: 66%
Mexico: 57%
Russia: 53%
UK: 52%
Brazil: 47%
USA: 42%
Largest number of gamers are in China
Average number of game platforms that a gamer plays on: 3.8
Time spent gaming per day in the US: 215,000,000 hours

Examples of companies and industries using gamification:

Communicate Hope, which aided the development of Microsoft’s Office Communicator (now known as Lync). For this game, the goal was to get users to provide feedback on the product design and usability and to submit bugs. The game leaderboard was linked to five charities and Microsoft’s contributions to those charities was tied to the game results. Smith’s group got 16x more feedback from people playing the game than those not playing the game, and tens of thousands of dollars went to the charities.

Microsoft & Rochester Institute of Technology – Students who dropout early were less likely to have been woven into the social fabric of their school. Phelps proposed to create a productivity-style game around the “non-academic” aspects of college life and turn it into a “Hero’s Journey.”

(Read the full article click here)

Here is a great slideshow presentation on exactly how gamification works

Now think of how unique bid auctions work… Winner’s circle, competitively against others. Using free bids just to say you are the winner, these are all techniques we can find in other online businesses.

Now let’s look at what critiques have to say about the unique bid auctions:

Most online penny auctions just don’t make any sense – Source – MSNBC

But before you rush to sign up, you’d better understand how penny auctions work. The bidding starts at zero and goes up by only a penny each time. But you have to pay anywhere from 50 cents to a dollar to place a bid. And most penny auction sites make you buy a package of bids to get started.
“They’re very different from other auctions because you have to pay to play,” says Bob Schroeder with the Federal Trade Commission. “You could end up spending more than the value of the product you’re bidding on.” (Read the full article click here)

Profitable Until Deemed Illegal – Source – Coding Horror

I was fascinated to discover the auction hybrid site (previously known as It’s a strange combination of eBay, woot, and slot machine. Here’s how it works:

You purchase bids in pre-packaged blocks of at least 30. Each bid costs you 75 cents, with no volume discount.
Each bid raises the purchase price by 15 cents and increases the auction time by 15 seconds.
Once the auction ends, you pay the final price.
I just watched an 8GB Apple iPod Touch sell on swoopo for $187.65. The final price means a total of 1,251 bids were placed for this item, costing bidders a grand total of $938.25.

So that $229 item ultimately sold for $1,125.90.

But that one final bidder got a great deal, right? Maybe. Even when you win, you can lose. Remember that each bid costs you 75 cents, while only increasing the price of the item 15 cents. If you bid too many times on an item — or if you use the site’s “helpful” automated BidButler service, which bids on your behalf — you’ll end up paying the purchase price in bids alone. For this item, if you bid more than 305 times, you’ve paid the purchase price — and only raised the cost of the item by $45.75 total. (Read the full article click here)

The Big Money: The Pennies Add Up at – Source – Washington Post

At first glance, — which began in Germany as a phone and TV-based auction site called Telebid, migrated to the web as “Swoopo,” and launched its U.S. site last year — looks like an auction site patterned on eBay, with prices for most items starting at a penny and rising as members “bid” up the price. Like eBay, Swoopo has a full panoply of auction tools, such as comprehensive records of all completed auctions and an electronic bidding system (“Bid Butler”) that will put in last-second bids to keep you in the auction. Unlike eBay, however, on Swoopo you pay 60 cents each time you make a bid.

Sixty cents? Sure doesn’t sound like much when a $1,000-plus camera or computer is at stake. But consider the MacBook Pro that Swoopo sold recently for $35.86. Swoopo lists its suggested retail price at $1,799. But then look at what the bidding fee does. For each “bid,” the price of the computer goes up by a penny, and Swoopo collects 60 cents. To get up to $35.86, it takes a stunning 3,585 bids — and Swoopo gets its fee for each. That means that before selling this computer, Swoopo took in $2,151 in bidding fees. Yikes.

In essence, what your 60-cent bidding fee gets you at Swoopo is a ticket to a lottery, with a chance to get a high-end item at a ridiculously low price. With each bid, the auction is extended for a few seconds to keep it going as long as someone in the world is willing to take just one more shot. This can go on for a very, very long time. The winner of the MacBook Pro auction bid more than 750 times, accumulating $469.80 in fees.

Some of the ideas behind Swoopo have been explored in a theoretical way by game theorists. The reluctance of bidders to say goodbye to their “sunk cost” has been explored by economists such as Daniel Kahneman and Amos Tversky — and has been found to draw bidders deeper into the game. Swoopo plays off those insights to efficiently get people to make bad choices. It’s the evil stepchild of game theory and behavioral economics. (Read the full article click here)

An iPad for $2.82, or illegal gambling? Source – Red Tape Chronicles – MSNBC

Here’s a puzzler: How can a website sell a $10 Walmart gift card for 26 cents and still make money? Or sell an Apple iPod worth $100 for $3.30 and make an enormous profit?
Welcome to the wild world of penny auctions, where nothing is quite what it seems and everything costs money — even the bids themselves.
Penny auctions have taken the Internet by storm. Ads for electronics products promising seemingly impossible 95 percent discounts appear on hundreds of popular websites. There are dozens of penny auction sites, with more popping up daily. One site,, recently engaged in an aggressive national radio campaign, bringing even more attention to this “new kind of auction.”

Penny auctions are run by for-profit companies that believe they’ve hit on a new formula that is entertaining and offers a real chance at deeply discounted merchandise. Of course, paying a little money for a chance at a big prize sounds like gambling, but supporters of the concept say that additional elements they’ve added differentiate the format from what might otherwise be called an illegal lottery. Some observers aren’t so sure.

“We call this entertainment retail,” said Jeff Geurts, chief financial officer of Quibids. He says the site runs 15,000 auctions per day, and will soon ship its 2 millionth product to a winner. “We look at shipping products as a measure of our success.” (Read the full article click here)

Well there you have it a little more on the whole unique bid auction industry.

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28 thoughts on “How Do Unique Bid Auctions Really Work, aka Zeek Rewards, DubLi Network, or BidiFy Part 2”

  1. @Gerry Gulley,

    From those I have talked with, who have fallen in love with the business model, they are not leaving one for the other, they are riding two horses to see which one they like best.

    In the South we have a saying… "You can't ride two horses with one ass." When folks try to do two programs, it doesn't do anyone any good. It is this lack of loyalty which is why very few companies hit the legacy level.

    Personally, both companies have a long ways to go before they are out of the woods in several areas. I guess we'll all see how things turnout for everyone.

    Living An Epic Adventure,

    P.S. Another reason I believe folks are not leaving one for the other is because Zeek doubled their numbers in 45 days. This shows folks are not leaving just adding.

  2. It appears that quote, unquote the smart money is moving to Bidify from Zeek. Is the industry just made up of 'Hustlers'?

  3. Pingback: | Chad Nilsson
  4. @Trecia,

    Not sure if I can answer everything because you did not ask a specific question. I can tell you the following as I leave N.C. and head back home for the weekend.

    1. The tech team is working around the clock in two locations to speed up the system. As the company grows and the database grows, it slows down until the new commands are written and databases are tweaked.

    I had this same issue happen when I ran ProSTEP. Our tech team was always moving the database to faster servers, tweaking the commands to make it faster.

    2. I also know that very soon, maybe even as I write this comment, credit card processing will be back and will allow everyone to breath easier.

    3. I will be shooting a new video on Monday along with a new article. And if you have a specific question please pass it my way.

    Living An Epic Adventure,

  5. Hi Troy,

    Just wondering if you could shed some light on any info you found out at Zeek's Red Carpet last night.

    Their last communication was on 5/21 – 3 days ago. Affiliates are getting more worried, things are moving slower and negative comments abound.

    I have quite a few affiliates in this gig with me and I can't give them answers until I get some – making me look bad as a leader.

    It would seem that Zeek could douse the fire by communicating daily on their progress or even lack thereof. SO – if you have any insight it would be most helpful!


  6. Hi Troy, Do you know when your next article on zeek rewards will be written? Im getting tired of that so called site where the same 5 people write with a huge agenda against zeek and dont have the courage to identify themselves. Your name has been brought up several times and not always in a good light. Thanks for doing real investigative work. Its a breath of fresh air.

  7. At this time the interviews are not at the quality we can use on the net. I may have new videos from this months Red Carpet. I do know this month's Red Carpet was videoed by professionals and will be available soon.

  8. Troy will you be releasing the interview videos with Zeek 's top leaders that you filmed few weeks ago( first Red Carpet event i believe)?

  9. @Kurt,

    I think the trip will give you some new insight. The afternoon and evening is totally set up for the affiliates to meet and talk with Paul and his team in a small group setting. From my experience last month, they did not hold back from any questions.

    I will be flying in tomorrow and will also be meeting with the staff to ask some additional questions folks have asked here.

    Living An Epic Adventure,

  10. Hey Troy,

    I am considering going to the next Red Carpet event at ZR. Can you shed any light on your experience with the trip, etc.

    I'm following the lame excuses being given for payment and signup issues and I don't know whether to cry or laugh.

    Kurt Gross

  11. @K.Chang,

    Well, I am not sure where you get your numbers so I am not sure if there are from a 1099 or not. And, since I have no clue what a specific Zeek affiliate's tax rate might be I can't use any specific numbers. But with that said, let's look at what an IDS is all about.

    The FTC is very clear, an IDS must show be created based on the actual income earned by every independent business owner contracted during the latest IDS to determine the average, high and low number. Which is why it is called an Income Disclosure Statement. Which brings us to the 1099. The IRS is very clear, that all income earned by individuals in the USA or working in the USA be reported. It is not the IRS's concern about how much money is spent to earn that money, nor do that ask the companies to keep track of it.

    So, although you may not agree with the IDS, it is the real dollars earned.

    It is not however the real money "POCKETED" which may be more or less than you spend on expenses.

    Now as for your statement on what you report… Respectfully you are incorrect. You report 100% of what the 1099 states you earned as income. Then you expense out, everything you spent to launch, and run your business. This is done as a "Sole Proprietor", "S-Corp," C-Corp," Partnership, LLC, or Professional Association. Which will determine how you expense out the business. But all the income reporting is the same.

  12. Regarding the IDS,

    The IDS does not reflect the "real" numbers.

    According to the way Zeek is reporting the 1099s, if they pay you $1000 for 2011, you have to deduct like 700 as expenses as they were used to repurchase bids. You only POCKETED $300, which is what you report as income on tax return.

    Though that counts as $1000 paid out on the IDS.

    Which is why I consider that as misleading.

  13. @Juno,

    I will be at this month's Red Carpet event, and will continue researching and reporting. 🙂

  14. Hi troy, It's nice article to read!

    Do you have any plan to attend to this month red carpet event and write articles?

  15. @K. Chang,

    Most network marketing companies offer profit sharing plans. Although none are exactly what we might see in other industries, the companies do share in the profits generated by the field.

    These revenues include internal sales generated through the affiliates, personal retail sales, and wholesale sales. Even Ben's company shares with the field several different income sources a couple which are only from the field force.

    I will be talking with the team next week and will be asking about the Zeekler side of the business.

    On the IDS, that is actual incomes earned, and then averaged.

  16. K. Chang,

    Yes to much focus on recruiting for recruiting sake, will cause issues, if there is not a viable product or service offered to the public.

    And the regulators when they raise concerns, look at two specific revenue items to determine if the company is viable. First how much revenue is the company taking in from none commissionable sales. And second how much in commissions is being paid out from the sales of products and services marketed to the public (retail and wholesale). The second can be a little tricky depending on the regulator.

    Now when looking at your second question "What do the three competitors bring to the arena.

    Let's look at the two who have gained traction at the time of this writing Zeek and Dubli.

    They bring discounts off of retail pricing of products and services. At Dubli 90% of the gift cards bought through the Xpress auction offer some percentage off the retail price. At Zeek I have seen $100 gift cards won for less than $15 including the shipping. If the person bidding is also an affiliate, then if you add in the commissions they receive from buying bids and the product through their own stores, they can factor in an even larger discount off the retail price.

    DubLi is the world's leader in the network marketing community in online shopping and entertainment. Their shopping and entertainment mall is very large stuffed with name brand partners.

    Zeek is still building out their shopping mall experience, and is where DubLi was about two years ago, when they first launched in the USA.

    If you study the Millennial Generation you can see they buy more online than any other demographic group. I believe this is where the largest growth in the future when we talk about auctions and membership shopping.

    I am not totally sure I understand the "Zeek's official story" comment. But they do promote the following:

    "ZeekRewards is's private, invitation-only, affiliate advertising division where Associates can qualify to earn rewards on every Retail bid they sell and every VIP bid they buy and give away as samples!"

    The full network marketing business model can be found at:

    There is more to it, than just buying bids and giving them away.

    Now as for the affiliates essentially paying themselves because they buy bids and give some of them away. isn't that the same as buying some health product, or energy drink and giving them away? Giving away bids doesn't earn you any money. However, when any customer buys bids, and uses the auctions, or affiliates buy bids and use them in the auctions, then revenue is generated and the affiliates earn commissions and bonuses.

    The only red flag (possible pegal issues)have been addressed early on by their attorneys and compliance folks. Now the only issue I have found is the fact many of the affiliates are still hyping the network marketing business opportunity incorrectly and out of compliance with all current laws. Each time the company have found this happening they have issues warnings and/or terminated those affiliates.

    The Zeek Squad of compliance officers travel around nationally shutting down meetings and sanctioning rouge affiliates.

    Now to your term "resellers" the majority of network marketing companies moved away from using the "reseller" model years ago. There are still a few who use it, such as Watkins Products and even Youngevity to a certain degree, by allowing their products to be purchased at a wholesale price and then retailed inside of stores.

    However the majority of network marketing companies, Amway, Mary Kay, MonaVie, L.I.F.E., Limu, Yoli use independent promoters aka independent contractors to market the product, and the company does the rest. As a matter of fact, the law is clear, the company owns the complete database of customers and distributors (LOS = Line of Sponsorship). So all the affiliates, distributors, IBOs, whatever they are called are really only 1099ed statutory employees at best. They sign an agreement to market a specific product through their own name or a company they control. Inside of their agreement it is determined what they can and can't do, the fact they will be classified "for tax purposes only" independent contractors, and their responsibilities will be to sell products and build a sales team to do the same.

    If you read the Zeek Rewards agreement it is as standard as all the majority of all the others.

    I do not beleive QuiBids has any type of affiliate program at all. At least none I have seen. DubLi Network is the exclusive network marketing arm for DubLi does use Dr. Keith Laggos for consulting and Grimes & Resse as their MLM Attorneys.

    All companies who use a direct sales channel have their own vulnerabilities.

    Take Herbalife and USANA this last couple of weeks. Short Sellers on Wall Street decided to see if they could make money shorting the stock, and started publishing the business model, calling ALL direct selling companies ponzi's and pyramids. The stocks fell in the short team, then rallied back. This same thing happened in 2008 (that boy's now in prison) and the SEC took a look at the business models and deemed their network marketing arms viable.

    There are a few companies who generate wholesale sales outside of their network marketing arm which are not as vulnerable: Amway, MediaNet (DubLi's parent company) and Youngevity are three of many I personally know of which generate large percentages of their revenues through other marketing channels.

    It would not surprise if Rex Venture generates large profits outside of their network marketing arm.

    Not sure I addressed all your questions, if not just let me know.

    I will be publishing an article on the short selling shortly.

    Living An Epic Adventure,

  17. I think Mr. Sturtevant and I are on the same frequency band.

    ZeekRewards's business model essentially allows the members to pay themselves, as they are sharing the profits, but the profits are from the bids they themselves bought (the purpose is irrelevant). No "external" revenue, i.e. bid buying customers that are NOT affiliates, are needed. That would make it a Ponzi scheme, not a real business.

    I would LIKE to see ZR have plenty of real non-affliate customers buying plenty of bids to generate tons of profit for everyone to share, but only ZR would know the real ratio between "real" customers and the affiliates buying bids just to share in the profits.

    The expiring points and repurchase of bids also means the actual profit is usually below 30% of purported payout. If they paid you 1000 (on 1099), the money you actually pocketed and have to pay taxes on is $300 or so, if you can deduct all the expenses properly. Thus, the IDS is highly misleading.

  18. As long-time network marketing advocate you know what's legal: selling products or services. Too much recruiting for recruiting's sake (and not selling stuff0 and it's a Ponzi or pyramid scheme.

    How does penny auction leverage network marketing? What do the three competitors bring to the arena?

    Zeek's official story is all the affliates are promotional agents. They buy bids to be given away, and are in turn rewarded by ZeekRewards with VIP Profit Points, which entitles them to a portion of the profit, right?

    Considering that the bids are what generates the profits, aren't the affiliates essentially paying themselves, therefore make it look like a Ponzi scheme to an overzealous lawmaker?

    Do Zeekrewards have any OTHER legal vulnerabilities and such that increase risk to participants/affiliates that they are addressing? (i.e. compliance for what exactly?)

    Do Quibids and new Dubli consider affiliates to be resllers (i.e. more like traditional MLM) or do they maintain the story that affiliates are promo agents like Zeekler?

    Do they have their unique vulnerabilities, based on your long experience in network marketing?

  19. @Ben,

    I always find it an honor when you have time to stop by. For you folks who do not know Ben, he is the top income earner at LightYear Wireless and the driving force in the field for that company. Although, he may not admit it, his leadership has helped to drive that company forward the last few years.

    Ben, the only money paid through the compensation plan (not counting bonuses in the profit sharing) comes from the sale of bids. There are at least two forms of bids. Those bought by retail bidders and those bought by affiliates of Zeek Rewards, to help promote their business.

    There are also additional income which comes from the revenues driven by the affiliates when they bring new customers to the auctions.

    As for the (actual product) the bids being purchased are purchased by all bidders. They may use them in one auction or over several different auctions. Then there is also the additional online stores and malls such as those found at Zeekler and DubLi.

    Theses malls and stores would be similar to the online telecommunications store you have available through LightYear, or maybe a better comparison would be a website such as Market America or Team National.

    Dubli Network has now moves their unique bid auction to the back burner, and are leading with their stores, malls and entertainment platform. They like LightYear Wireless are owned by a public company which provides private label shopping malls to other companies, both inside and outside the network marketing community.

  20. While I haven't had a chance to really look into all of this Troy, from an experienced Networkers perspective I'd have to seriously question the compensation plan side of opportunities like Zeek Rewards.

    If the money being paid out is coming from the "excess" bids of the members participating then from my eyes you're getting very close to an illegal operation. There are no actual products or services being purchased by those losing out in the auction yet money from those participating is being used to fund the comp plan. Am I missing something????

  21. K. Chang,

    Great questions, and I can surely work on an article or two on the network marketing side of the business. I am not sure if Quibids has any form of affiliate program at all. DubLi Network does have a very solid network marketing side of them business. They have over 100K reps worldwide and promote the fact they have over 3 million customers. I am working on a stand alone article on them now which should be ready early next month.

    Now, as to the "legality of the flip side", I am not sure I fully understand, can you clarify just a little more for me?

  22. Don't mean to beat a dead horse, but all this is debating the AUCTION SIDE of the business.

    I have no problem with the auction side: Zeekler.

    I *do* have a ton of questions regarding ZeekRewards.

    Do Quibids, (new) Dubli, and such have a similar comp model that's basically grafted onto the auction business like ZeekRewards? Will you ever go into legality of that flip side of the coin?

  23. @Wayne,

    From you comment it seems you have not read or watched much of what I or others have written. The short answer is do some more due diligence. Maybe start with part 1 of this series.

    The longer answer… As we see in any industry, there are always people who run companies who will try and take a short cut. So it is with unique bid auctions. SOme companies are i for the long haul and others are in for a short term cash fix off the backs of bidders. The two leaders inside the network marketing community who are doing things right or are at least trying to get it right (depends on who you talk with), are DubLi Network and Zeek Rewards. BidiFy is starting to come on strong.

  24. Are penny auctions scams? Do they have auto-bidders (fake accounts) bidding against real bidders so the house doesn't lose?

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