Bidify relaunch with “traditional” MLM comp plan
Foreword: On the 28th of August Bidify made some additional changes to their compensation plan. In order to catalogue the changes, the original Bidify compensation plan shall be referred to as v1.0, the changes in this article reflect v2.0 and the new changes v3.0.
Following the SEC take down of Zeek Rewards for running a $600 million Ponzi scheme, Bidify immediately announced they were reducing the initial investment amount US-based members could make, from 25,000 Euros down to 5,000.
Largely seen as an irrelevant cosmetic change, which appears to be somewhat of a recurring theme over at Bidify, less than 24 hours later after this announcement the company announced they were shutting down Bidify altogether to remodel their compensation plan.
With Bidify being Zeek Rewards’ biggest competitor and roughly half way into their penny auction points 120 day run (after which a true test of their viability would have taken place), this was largely seen as confirmation that, as many suspected, a MLM penny auction pegged to a points based compensation plan was not sustainable without mostly paying newly invested affiliate money.
Zeek Rewards had been doing exactly this for nearly two years to the tune of 98% of the daily ROI paid out consisting of newly invested affiliate money.
In any case, shortly after taking Bidify offline to work on a new “more traditional” compensation plan for their affiliates, Bidify popped back online yesterday.
Read on for a review of the new Bidify compensation plan.
Whereas the old Bidify compensation plan focused on mostly affiliates purchasing bids and giving them away to increase their share in a profit pool that was undoubtedly mostly being funded by their fellow affiliates (as evidenced by the dramatic plunge in the daily ROI % paid out to Bidify affiliates immediately following the shutdown of Zeek Rewards), Bidify’s new compensation plan revolves around the sale of Bidsson penny auction bids to customers.
Qualifying for commissions
In order to qualify for commission payouts, Bidify affiliates must be generating a minimum of 25 Personal Volume (PV).
1 PV is equal to 1 Euro being spent and is defined within the Bidify compensation as including self purchase of bids by affiliates or their retail customers.
Residual Commissions
Residual commissions in Bidify are paid out using a unilevel commissions structure. A unilevel structure places an affiliate at the top with every recruited affiliate placed directly under them, forming that affiliate’s level 1.
Any new affiliates recruited by those level 1 affiliates count as level 2 and so on and so forth.
Using this unilevel structure, Bidify pay out commissions on the sale of bids down 8 levels. These commissions are paid out as a percentage of the Group Volume (GV) generated by the downline of an affiliate, separated into levels within their unilevel team.
Note that GV is defined within Bidify as bid sales by an affiliate’s downline (other affiliates) and the purchase of bids by retail customers belonging to their downline.
How many levels a Bidify affiliate is paid out on depends on what tier qualification they are currently at. There are five tier qualifications within Bidify and along with their requirements they are as follows:
- Tier 1 (be a “qualified” affiliate) – 10% on Level 1
- Tier 2 (qualified affiliate + 25 GV) – 10% on level 1 and 4% on levels 2 and 3
- Tier 3 (50 PV + 100 GV) – 10% on level 1 and 4% on levels 2 to 5
- Tier 4 (50 PV + 200 GV) – 10% on level 1 and 4% on levels 2 to 7
- Tier 5 (50 PV + 300 GV) – 10% on level 1 and 4% on levels 2 to 8
Frequent Sales Credit
Originally named the “Mandatory Account”, Bidify’s new Frequent Sales Credit is a bonus paid out at a rate of 25% of the cash commissions paid out to affiliates.
Bidify state that Frequent Sales Credit can be used to
- purchase Bidsson bid packages
- pay for won auctions
- pay Bidify monthly membership fees
- purchase cruise tickets
Cruises
In addition to the residual commissions above, Bidify also offer their affiliates the chance to go on two 7-day boat cruises a year.
Each month the company tallies up their top 5 affiliate performers and gives them tickets for a free cabin.
The company states that if the same affiliates top the list who already have tickets for a cabin, the bonus will roll down to the next affiliates in line (performance wise) for that month.
What happened to existing Bidify affiliate’s old points?
With the old compoundable “Ponzi points” not fitting into Bidify’s new sales based compensation plan, Bidify have found themselves in the position of trying to provide some value on the money previously invested in the scheme by affiliates.
Capping affiliate points as they were prior to the scrapping on the points-based compensation plan, Bidify have announced a weekly payment every Monday from a pool of “50% of the auction revenue” for the week prior.
How much of a share in this pool an affiliate earns each week is directly tied into how many bonus points they’d generated prior to Bidify scrapping the points-based compensation plan.
Mechanically this could still be seen as a payment mostly consisting of affiliate money (should there be more affiliate bid purchases than retail customer purchases in any given week), but being closed off to new members and with a lack of an option to re-invest earnings to increase point balances, I’m not too sure how this plays out legally.
From a practical sense as a new affiliate looking to join Bidify I might be weary of this compensation paid out to older affiliates draining the overall commissions pool.
Effectively every week company revenue disappears into a profit pool that is only made available to a select few group of affiliates. As a Bidify affiliate who joined after the compensation plan change, I wouldn’t be able help but observe that these are commissions paid out each week that I have no means to ever qualify for.
Joining Bidify
With the Ponzi points compensation plan gone and no need to encourage affiliates to invest in bids for a daily ROI, membership to Bidify is now just 25 Euros a month.
Along with the 25 PV affiliate qualification requirement, if an affiliate was to self-qualify for residual commissions they’d be looking at a minimum 50 Euros a month to participate.
Conclusion
Bidify’s new compensation plan is a massive departure from the Ponzi-esque points re-investment scheme they had running only days ago.
With it comes a strong refocus on the sale of bids and whereas before (putting the legalities of running a potential Ponzi scheme aside) they might have been able to get by on affiliates generating the vast majority of the volume paid out as a daily ROI to affiliates, now this is not the case.
Instead, the inherent value of the Bidsson bids themselves is being put to the test rather than the value of the points able to be generated by the purchase of them.
Being the second largest MLM penny auction under Zeek Rewards’ Zeekler auctions prior to their collapse, it goes without saying that anyone considering running a MLM penny auction (or already running one) is going to be watching Bidify and Bidsson to try to evaluate whether or not an MLM penny auction is viable without a Ponzi scheme attached to it to drive sales volume.
By and large the affiliates from various MLM penny auctions I’ve come into contact with have shown no inclination towards enthusiasm of penny auctions themselves so I really think those in Bidify are going to have to focus on attracting retail customers if they’re going to succeed in the business going forward.
One of the big problems I predict is going to be customer retention and from that the generation of a consistent (and reliable) income by affiliates. Penny auctions by nature entirely allow bidders to spend money and walk away with nothing (well, not quite nothing if you consider the experience of losing their money something in itself).
As such it’s entirely possible for someone to purchase Bidify’s one and only product line from the company’s affiliates (bids) and then have nothing to show for it.
How this will play out in the long-term of course remains to be seen but I’d strongly suggest any change in Bidify’s compensation over the next few weeks would be an indication that a MLM penny auction relying on the sale of bids to customers isn’t really viable.
Part of the problem here I suspect going forward will also be that those who initially joined Bidsson did so to participate in the passive nature of a Ponzi points re-investment scheme. With that gone they’ll no doubt pay the 25 Euro a month admin fee to see how much the weekly profit pool pays out, but if nobody pushing actual bid sales and thousands of points in the pool, this might dissolve quite quickly.
The first new revenue pool payment is due either this coming Monday or the next so it’ll be interesting to see what the dollar payout is per point generated under the previous compensation plan.
With August a month most MLM penny auction affiliates and company owners would most likely quickly wish to put behind them and forget about, we’ll be keeping an eye on how Bidify performs throughout September.
Any status reports from Bidify affiliates during this time are of course naturally welcome.
The new compensation plan was probably a smart strategic move to prevent being shut down, but the changes they’ve made won’t be popular.
It will be very difficult to expand a downline here, so the downlines will probably contract rather than expand.
I don’t think they have many real customers, the ONE thing that can generate profit. So they will probably use existing funds to pay out a fake weekly “profit share” to existing investors, until the money supply dries out.
MLM penny auctions isn’t a very good idea in itself. It becomes even worse when you’ll have to pay out money weekly to old investors, “pay for old sins”, money that could be used in better ways. Adding cruise tickets as an incentive makes it even worse, but they’re probably added to make the compensation plan look better.
Bidify will probably NOT be able to handle this for a very long time. This new compensation plan is probably only an attempt to keep it going for a while until the money dries out.
50 PV (Euro) per month per affiliate is the identifiable amount of money coming in. And that will have to cover commissions, payouts to old investors, cruise tickets and all other expenses.
Then we can add revenue from REAL customers, maybe €25 per month or so per affiliate. I’m trying to be realistic here.
So this clearly can’t be much fun for a new affiliate to join. This is a windup of a scam rather than a business designed to grow, and the windup will first of all protect the interests for the few on the top.
Yes. The true test for Bidify’s longevity will be predicated on the new comp plan. We’ll wait and see.
If Bidify can pull it off, they may be considered the pioneers and teach Zeek Rewards wana-be’s a lesson on how to successfully run a legit penny auction.
I can’t see very many people joining this as a business opportunity, like you quite rightly said, especially when they see old members getting paid part of the pot.
In fact the only way I can see it going is if they get rid of the MLM altogether, it will then be upto those left to build the customer base, there is a few successful penny auction sites, so the customers are there.
They seem to be very proactive in improving the site by possibly having a drop down menu for different currencies which I see as a must, plus the buy it now option along with the buy back option.
It’s a bit like pulling a rock up a hill, the more people pulling the easier it will get, hopefully when it gets to the top and starts going back down, then the momentum will build.
Here’s hoping, I’d just put 5k into just before it shut down. Either the best 5k I’ve ever spent or it could be the worst. At the moment it is favouring the worst, I’m sorry to say.
BS!! it’s only a matter of time before this ZEEKREWARDS Jr gets shut down by the FEDs or the Gov’t where they reside.
They are taking money from U.S. residents, if people are dumb enough to send these people money after the zeek debacle then they deserve to lose there money AGH!!!
Am I missing some basic understanding these penny auctions?
How many members are bidding on how many auctions per day?
Surely, for it to be worthwhile for the people running it, it needs lots of people buying bids and using them. But then the chance of winning would be ridiculously low and that would make it a waste of money for the people paying for the bids.
If that is so, then who is going to keep buying bids after repeatedly failing to win an auction?
The whole concept of these penny auctions just does not make any sense to me.
Thom
There already are many examples of running a successful penny auction… and none of them have an MLM plan or require you as the affiliate to PAY THEM in order to have the PRIVILEGE of marketing it.
I can sign up as an affiliate with the other penny auctions and earn commissions on real sales. I don’t have to pay them, I don’t have to recruit others (nor would I want to, a penny auction doesn’t need an MLM).
MLM’s are useful when you need to person-to-person interaction to sell things, like weight loss, cosmetics, etc. Sure the products are overhyped and overpriced, but it’s the personal relationships that sells products & signs up new distributors.
A penny auction needs none of what is said in the last paragraph (unless it is a Ponzi).
Absolutely, Jimmy. I was referring to Bidify as a penny auction company pulling off success as an mlm type business model. My fingers aren’t crossed on that happening.
I didn’t state my point clearly.
Thank you.
Okay So now that only old affilates get commission from the old plan how does new member earn commission off bidify.
This article isn’t very clear on the new model.
The new model kind of make it 100% passive for old members since there is no requirement of getting customers
But it could also mean negative ROI if there isn’t enough “profit” to go around…
@Hi bye
Directly by either purchasing bids themselves or getting retail customers to.
Residually by recruiting affiliates who purchase bids and earning off the purchases of any customers they generate.
Pretty much. It’s hard not to look at it as a 25 Euros a month passive ROI based on what they “put in” before the change.
@Thom
Without an attached MLM compensation plan this seems viable as a business (Quibids).
With an attached MLM compensation plan (or a Ponzi scheme) a penny auction has yet to succeed over any considerable length of time. Bidify are trying to make it work so keeping an eye on them will give us an indication of just how sustainable penny auctions and MLM really are.
That said, unfortunately due to legacy issues with the old Ponzi points compensation plan, even with the changes Bidify aren’t a 100% retail penny auction so it’s not quite a true retail based penny auction.
It will probably mean spending funds for fake ROI, until the funds have dried out.
The new compensation plan is designed to kill the business within few weeks or months. It will probably be killed by the affiliates themselves, demanding transparency and filing claims against it.
The only fresh money coming in from affiliates will be:
* €25 monthly membership fee
* €50 monthly PV Personal Volume
Some of it will be paid from Frequent Sales Credit, instead of being paid with money.
You can see from the Residual Commission that they don’t expect much money coming in from retail customers. GV qualifiers are 100, 200 and 300 GV, all very low. That means they don’t expect much commissions to be generated either.
”50% of the auction revenue”
To keep old investors with high point balances satisfied, they will probably have to fake revenue — paying money from the funds derived from the new investors who joined in the last 1 or 2 months.
Bidify will be killed by “conflict of interest” between old investors and new investors, all of them wanting to protect their own investments in one way or another. It won’t take more than 1-3 weeks before someone starts to feel cheated.
There is a major conflict of interest here, if money derived from new investors is used to pay the old ones. There will also be conflicts if they don’t pay that way.
Bidify is obviously insolvent, if we count money from the investors as liability. The correct action here should be to freeze all payouts and file for bankruptcy, and let qualified people do the job.
@M_Norway – there is another possibility.
Bidsson could run some very attractive penny auction promos to generate new bid purchases – whether from ‘affiliates’ or retail – but then use their own shill bidders so they don’t have to pay out the actual prizes.
The only path to success for Bidify is if Bidsson generates enough revenue to pay off the old Ponzi scheme to a point where they can kill off the business and hopefully keep the regulators away.
But the only way to get genuine penny auction revenue is to make it more attractive than the competition. The only way to do that is run loss leaders (which wouldn’t produce the revenue needed). So the only way to offer a very attractive penny auction and not be a loss leader is to cheat.
Wow bidify isn’t going anywhere. Their compensation plan isn’t attractive at all
They can’t be this dumb to actually implant this if they knew what they were getting themselves in. I think they are testing this out to become like Quibids and if it fails we may see a more attractive plan
Answering myself 🙂
Having slept on this, it occurred to me that bidding on penny auctions probably has the same appeal as gambling. And gambling sites seem to do very well.
Thom
If they manage to do that, they don’t have to kill the business either, since the auctions can support MORE than the payouts to affiliates in that situation.
But I tried to be realistic about it. Technically speaking, Bidify is probably insolvent already if we count the invested money as LIABILITY, money people want to get back. And I considered it to be unrealistic to expect the affiliates to be able to drive enough customers to the auctions, enough to support their own payouts
And the correct way to handle insolvency will probably be:
* Freeze all payouts, freeze all the funds
* File for bankruptcy (or some voluntarily solution)
* Let qualified people handle the situation
The ones who will lose money (if Bidify continues) are the investors who joined it late (haven’t compounded their points), people without a huge downline (won’t earn much in commissions), and people who haven’t withdrawn money ( >= their initial investment).
Bidify needs a different type of leader in this situation than what they have had till now, a leader less eager to pay his friends and the people he consider to be valuable to him. They need someone who can make this project perform an emergency landing, a controlled crash landing with fewer injuries.
THE OLD POINTS
The problem here is that the points are worthless, and they shouldn’t be used to calculate parts of the weekly payouts, where people with more points will get a higher payout than people with fewer points.
If they intend to use a point system, it has to be reduced to what people have put in as money. What they have earned in points will be meaningless to use.
In the system here, people will be compensated for all the MONEY they have put in, but not for any WORK (like recruiting). Recruiting a downline will be compensated through the other parts of the compensation plan.
Neither Frode Jørgensen nor Kevin Thompson have done a very qualified job here. The new compensation plan will create lots of trouble. They should first of all have tried to make it become FAIR, and that doesn’t mean “those who joined first and recruited most people deserves most”.
The system they have created here will end up in a situation where people will sue their upline, so it won’t protect the interests of the top earners, either.
Personally I think there is a huge amount of money to be made in the penny auctions, look at quibid, in the UK there is madbid, multimillion pound companies, how did they get to where they are now.
There is a gap in the market for someone to take this worldwide with a slightly different angle on things, especially the far east. May be better to look for investors rather than MLMr’s
Kind of off topic, but Bidify’s site looks a million times more professional than zeeks… Can any of you IT guys tell me what language/platform it was created with? CorePHP maybe? Thanks.
PHP definitely, with some sort of a modular architecture similar to Fusebox. I’m not familiar enough with the various PHP architectures so I can’t pinpoint it further.
It also makes decent use of CSS and integrated ZenDesk support.
Quibids’ profit margin is 5-10%
http://www.quibids.com/en/quibids101/blog/7-Does-QuiBids-make-excessive-profit-on-their-auctions
So if they make alot of money, they make it on VOLUME rather than PRICE, on the number of auctions per day and on the customers using “Buy now”.
Zeekler didn’t make much money, and I don’t think Bidsson does it either. Businesses needs first of all real customers, not thousands of affiliates.
@M_Norway, I agree with you, don’t think I’ve ever said anything to disagree, do you think qbids were nothing one day and the next they had thousands of customers with thousands of auctions per day. Of course they didn’t, it takes time to build it up.
It’s not going to happen overnight, the Bidify management team seem very proactive in trying to get this to the top. They could have quite easily just disappear.
There is another new compensation plan due out this week, there will be a few ups and downs before they get it right.
@ John
Qbids would be out of business if they started giving 50% of money to affiliates like Bidify or zeek rewards. Qbids survives because they spend that money in advertising to acquire retail customers instead.
The Penny Auction + MLM model is over. I challenge any of these firms to come in an open forum like this and discuss openly. Top earners who put in money or spent lot of time recruiting others will want to make you believe otherwise.
MLM Penny Auction model works on the assumption that people use their credibility and reputation to sponsor other people who will put down money to buy sample bids in what SEC calls illegal investment schemes.
If we take sample bids out of the equation, then the game is over as the affiliates are no longer required. Firms can spend that money to acquire new customers like qbids is doing. Affiliates are only need to put the money to buy sample bids.
In last 18 months since inception of zeek and bidify , how many people actually made money from getting retail bids customers who actually bought retail bids. None to 1%. SO now what has changed?
John do you think that these firms have now a magic lamp or what. I am also a Bidify affiliate and i am openly saying this game is over as I don’t want others to loose money.
If an affiliate has any ethics or conscience, he or she will not sponsor any person in any of these Penny Auction Businesses such as Bids that give, Bidify, Ultimate Power Profits or any new ones that are springing up. Learn from Zeek. All of them are bound to fail.
Just that you know that SEC is aware of all these Penny Auction MLM firms. We have checked with them. Why don’t you call SEC and check with them what they have to say about the MLM Penny auction firms whether it is Bidify, Bids that Give or Ultimate Power Profits.
I think Bidify will collapse when nobody wants to join to sell bids to actual customers. People aren’t going to want to join when it’s not an easy, passive investment scheme like Zeek was.
Having affiliates sell bids to customers for a profit and doing away with the points business is what I said Zeek needed to do (before they were shut down) to change it from a ponzi to a legitimate MLM business, but the whole MLM side is totally useless and unneeded because they could just sell bids right on the Bidsson site.
With penny auctions not being that popular anyway, I think Bidify is doomed.
What data suggests that the bidsson business will not be profitable? People are saying the MLM affiliate model will not be successful. Why can’t it be?
Isn’t the purpose of MLM for the parent company to ultimately reap the benefits of marketing being done by affiliates instead of themselves? IMO, I’d rather try a penny auction if someone approached me about it rather than a TV ad that tells you nothing except for “hey, come get some great deals on products”.
At least a direct marketer can answer all your upfront questions to let you know what you’re getting into.
Bidsson Alexa ranking is already above where a bunch of other penny auction sites are without affiliates. Granted, yes a lot of affiliates are using their FSC to bid, but my point is that bidsson is getting more traffic than other penny auctions who have been out there for a whole.
More traffic means more people participating, which means more people telling their friends about their experience.
I see no issue with a penny auction utilizing an MLM to help grow their customers. It may reduce the profit margin of bidsson, but that’s fine if you’re a company trying to build customer base rather than maximizing profit margin.
If I started my own penny auction, no way I can afford to pay for all the tv advertising. An MLM would seem less capital intensive from a startup perspective.
I think the problem is not that Bidsson / Bidify is profitable. The problem is whether it APPEARS to be profitable ENOUGH to continue to recruit sales affiliates, who in turn recruit CUSTOMERS.
Remember, recruiting customers cost $$$. it’s called “customer acquisition cost”. MLM pass that along to the affiliates with high margins of their products.
With the penny auction industry, bids physically cost nothing, so margin is great. How the affiliates “share” in that sale of bids then is the biggest question.
The biggest draw of the scam Zeek Rewards is PUT IN MONEY, DO LITTLE, EARN A LOT. People don’t care much about the first as long as they can verify 2nd and 3rd.
Bidify now confirmed that it had dumped 2nd and 3rd and replaced them with unknown.
That’s why it won’t NEARLY as successful as Zeek. A real company is never as successful as a fraudulent one.