Now this won't be a perfect example and we will have to make a few assumptions to make it a bit simpler but it should give you an idea as to why there are so many companies that want to give away free iPods.

For this example, let's assume that we go to a company claiming to be giving away a $150 iPod nano if we ourselves sign-up for two promotional offers and get five friends to do the same. Also, that there are one hundred people interested in this offer, they each sign-up for their two offers and that everybody is as good as everyone else at getting other people to sign-up under them. Finally, that the promotion companies pay the iPod giveaway company $15 per completed offer, for a total $30 ($15 each offer) X (Two offers completed per person interested in a free iPod).

Let's look at the numbers, person #1 signs-up for the offer so there are now 99 people left who are interested in the offer. Person #1 then gets five more people to sign-up under him so there are 94 (99-5) people left interested in the offer and person #1 gets the first iPod. Persons #2-6 have now completed the offers and have each signed-up five friends, so there are now 69 (94-5(5)) people left interested in the offer and iPods #2-6 have been sent out. These 25 people now try to sign-up five friends each, but find they can't because they need a total of 125 (5(25)) interested people, but there are now only 69 people left who are interested.

Assuming the remaining 69 people sign-up, the company giving away the iPods will be very happy along with persons #1-6, who each got their iPod at a discount. However, persons #7-100 got nothing and instead they had to pay money out of their own pockets to participate. So, overall the company received $3,000 ($30(1,000)) from completed offers but only gave away $900 (6($150)) worth of iPod nanos. This results in a nice profit of $2,100. No bad for giving away a free iPod and this does not even include the extra revenue that the company will earn from selling your e-mail and other personal information.

Although, this is just a simple example and real world offers will vary in their requirements, numbers, gift amounts, etc. they are clearly a bad deal unless you are the company itself or one of the people at the top of the pyramid. Now, I know some people will read this and still think that they can get in at the top or somehow get enough people to sign-up under them. I say good luck, but if you are determined to sign-up for these offers here is some advice.

Tip 1 – Sign-up early for a new offer, as we saw the only way to get your free iPod or other gift is to be one of the few people at the top of the pyramid.

Tip 2 – Do not use your real e-mail address, since you will get tons and tons of spam and other e-mail advertisements.

Tip 3 – Give out as little personal information as possible, because the company will most likely sell this information to other marketers.

I hope this clears up any questions you had about whether or not you should sign-up for one of these offers. If you haven't done so, I would recommend not doing it. If you have, I am sorry but you are most likely going to see many, many marketing offers in your future. Either way good luck and remember you don't get something for nothing.