Gratis Internet is a Washington, D.C.-based referral marketing company that rewards customers with products of high-demand such as the iPod and PlayStation 3. In 2004 it became a member of the Inc. 500; while in 2005 Gratis broke into the top twenty at eighteen. Its name comes from the Latin word Gratis, meaning free of charge.
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Gratis Internet was established in 2001. Since July 2004, it has launched a number of websites offering free merchandise, most notably iPods, to users who register and complete membership requirements.[1][2] These sites received large amounts of media attention.[3] Although the word "free" is used prominently, would-be members seeking to complete an offer to qualify for the free merchandise are often given a number of options, some of which involve signing up and paying for a service or subscription. Gratis has launched its websites in the United States, United Kingdom, Canada, Germany and more recently Australia. In August 2005, Gratis Internet's multiple websites including the original FreeCondoms.com and FreeIpods.com were branded under the FreePay name.
Gratis's revenue in 2004 was US $20,479,325.00 according to Inc.com.[4] Inc.com also reports that Gratis Internet has only 12 employees.
In March 2006, Gratis Internet announced new terms of service imposing time limits.[5]
Based on Better Business Bureau files, this company has an unsatisfactory record with the Bureau due to unanswered complaint(s).[6] In 36 months prior to November 2008 Better Business Bureau has processed 848 complaints about Gratis Internet.[6]
See: Viral Marketing
In order to receive the advertised "free gift" at each of Gratis' websites, a visitor is required to register and complete one affiliate offer. Affiliates include AOL, Blockbuster, RealNetworks, casino and credit card offers, and others. The affiliate offers typically consist of trial memberships, service subscriptions, credit card applications and the like; some require credit cards during registration, and a few involve payment of some kind, causing critics to claim the "free" label a misnomer.
The visitor is then required to refer a set number of people, which varies by the product (the number required is usually the MSRP of the gift divided by US $50). A valid referral is one which has both completed registration via a referral link and signed up for an affiliate offer. Each referral must be a unique user or the account will be "put on hold" during the approval process. Because sponsors must acknowledge the completion of their offer, they are willing to invest more for each referral than they might for other, more traditional forms of advertising.
The advertisers pay Gratis for the referral, between $25 and $90, though the company has not released information as to specific numbers.[7] For example: assuming the MSRP of an iPod is $250, five affiliate signups (the number needed for one user to redeem a free iPod) nets Gratis between $150 and $540. Per the program's terms, Gratis does not need to deliver an iPod to any member with four or fewer referrals.
Since Gratis Internet was created similar companies have been created offering similar incentives for completed offers. Gratis Internet and its initial service, FreeCondoms.com are credited with creating the incentive marketing industry.[8]