Introduction

This post was written especially for those who are involved in Banners Broker – either you have personally made an investment, or you know somebody who has. NB: Please don’t simply dismiss me as a “negative blogger”. I’m not selling or promoting anything here and I’m not looking to build traffic for myself by using the Banners Broker name. My sole motivation in writing this is to inform, and possibly (hopefully) help some of those who may have been adversely affected by Banners Broker.

Almost a month ago, I wrote a post about Banners Broker, which got quite a bit of attention. If you’ve not read it, I basically analysed Banners Broker and concluded that it is a fraudulent ponzi scheme. Since then, I’ve been keenly following developments, mainly on the realscam forum, the official Banners Broker facebook page, and the Banners Broker website itself.

Bite-sized synopsis

I have a suspicion that my previous posts might have been a bit too heavy-going for some of my intended audience. That’s not meant as a slight; I just mean that not everyone has the time or inclination to spend a long time trying to take in a lot of (at times complex) information.

This time, I’m going to give a very short, straight to the point, bullet-point rundown of the gist of this post. Then you can read more, if you feel like it. Here goes:

1. Banners Broker is a fraudulent ponzi scheme.
2. It’s collapsing, and there are many signs of this:
3. You can’t use your prepaid Mastercard anymore.
4. If you try to withdraw with Payza or Solid Trust Pay, you probably won’t be able to due to delays and “technical faults”.
5. A lot of the time you can’t even access the Banners Broker website.
6. Your panels aren’t moving, or are moving so slowly you won’t even make any money from them.
7. You can no longer earn money the way you originally wanted to. You need to write blogs now.
8. You cannot contact anyone within Banners Broker to ask why it’s all so bad.
9. The only response Banners Broker have to all of this is that you need to “keep the faith”, plus vague assurances about longevity and compliance.

Okay, now if you would like to know more, read on.

My Predictions – One Month On

In my original post, I made a number of predictions. I’m no Nostradamus, and my predictions were hardly original; in fact you could say they were fairly obvious given the premise that Banners Broker is a ponzi scheme nearing its final stages. However, I’d like to take a look here at what I wrote almost a month ago, and what has happened since. Here’s what I wrote back then:

Based on what I have found, and the developments that I see happening within Banners Broker, I predict that the scheme is approaching collapse. I think that affiliates will find it very difficult, if not impossible to reclaim their investments. I foresee increasingly desperate attempts by Banners Broker management to stall payments, recruit more aggressively, discourage withdrawals, and it will become increasingly difficult to actually contact anyone at Banners Broker – support calls already cost $5 per question – something which I find absurd.

The excuses given as to why the service is getting worse and worse, and why it is becoming more and more difficult to make and claim earnings, will get even more outlandish and complex. Finally, it will become impossible to contact anyone at Banners Broker, the panels will freeze, and those behind the scheme will disappear.

Reading this, I hope you can identify it with some of your experiences with Banners Broker over the past few weeks. To elaborate, I will go over a number of recent developments which I believe clearly demonstrate that Banners Broker is currently undergoing a massive, slow-motion meltdown.

Anatomy of the Meltdown

Mastercard pulls out, you can’t get your money out

One of the methods of withdrawing earnings from Banners Broker has been via a prepaid Mastercard. Although Banners Broker have never had any endorsement from Mastercard (they obtained the cards from an independent supplier, Vector Card Services), the card seems to have imparted an air of legitimacy to the scheme. I’ve heard this line personally from an affiliate, and it’s understandable why the card would give an extra sense of security. It was also promoted as a faster way to get cash out than the alternatives.

On March 13th, Banners Broker made the following announcement via their website member dashboard:

Dear Banners Broker Prepaid MasterCard Cardholders:

As of today March 13th, 2013, the Banner Brokers Prepaid Card program has ceased to operate.  Vector Card Services Limited is contacting cardholders regarding the winding down of the card program.
As of the date of issuance of this email, there will be no further authorization of loads to cardholder accounts and cardholders will have a limited time period to withdraw all funds from the card. As a cardholder you have until Friday March 22nd, 2013 to withdraw all funds from the card.
At the end of this period all remaining funds on the card will be returned to you the cardholder upon completion of the appropriate paperwork and receipt of a copy of your passport.
Our strong recommendation is to withdraw all funds from the card.  This is the simplest option to draw down all remaining funds from your Prepaid Card. More information will be communicated to you.  A second notice will be sent to you with a link to a full FAQ to address your questions. Please contact your Banners Broker representative for more information.

Vector Card Services Limited

Why did this happen? Here’s what Banners Broker CEO Chris Smith said in a webinar shortly after the announcement:

Unfortunate news that Mastercard has ceased to want to operate with us with our Prepaid Card option. As you know we have been promoting this specifically, as we truly believed this was the best option. Unfortunately Mastercard has the option in their contract to cancel the contract anytime. The email I received said that because of bad publicity surrounding Banner Brokers, they would not want to be associated with BB any longer.

And this is what Vector Card Services’ CEO, Ted Nham had to say in the same webinar:

Facts are, there has been a growing number of online campaigns originating from bloggers, independent and disgruntled BB’er and just plain bloggers, and unfortunatley this has caused quite a stir. … Unfortunately, this online “noise” and bad publicity has come to the attnetion of Mastercard, and even though there is no logic or reason, Mastercard has decided to close the program.

The question is, why is there such a large and vocal group of “independent and disgruntled BB’er and just plain bloggers”. If Banners Broker really is just a great company trying to help out the little guy, why such opposition? This cannot simply be brushed aside by dubbing all critics “negative people”.

Anyway, the situation right now is that affiliates are left with two other methods of withdrawing cash: Payza and Solid Trust Pay. Both notoriously backlogged, with affiliates being made to wait months before they can actually get their hands on their withdrawal. In the words of Chris Smith (from the same webinar):

“I will be honest, we were moving away from these processors and moving toward the card platform because of delays in these ways.”

With no alternative forthcoming, it looks like delays are now officially standard operating procedure. Ultimately, I believe that Banners Broker hope that most affiliates will get sick of waiting, and write off the investment as bad debt.

Bannersbroker.com is crashing and burning

First of all, a little bit of background: Any website resides on a computer somewhere, known as a server. This server is usually owned or maintained by a hosting company. Their job is to make sure that the website is always available to visitors. The amount of time that the website is available is known as “uptime”. Of course, it’s hard to guarantee that a server will be available 100% of the time, but typically a reputable web host will guarantee at least 99% uptime, and usually more like 99.99%. What this means is that the website should only experience, at the very most, about 1 1/2 hours of “downtime” per week (and if my host was that bad, I’d change).

If you are a Banners Broker affiliate, you’ll no doubt have noticed that the website has been down for large, huge, massive chunks of time. I’ve seen various explanations for this, ranging from planned maintenance to cyber attacks. I won’t get into the technical arguments about this, because you’ll probably find it dull. Suffice it to say, whatever the cause of the downtime, the explanations do not make sense.

I run a moderately large e-commerce website. We invest a significant amount of money in ensuring that our website is available to customers at all times. If something goes wrong at the hosting company’s end, I can call and speak with an engineer who will personally sort out the problem, usually within about 15 minutes.

Banners Broker is an entirely Internet-based operation, with apparently upwards of 300,000 members. It is inconceivable to me that they would use a host that would allow such massive amounts of downtime.

I think there are a few possibilities here:

1. Banners Broker are having trouble finding a reputable host who want to be associated with them, and keep having to migrate the site, resulting in the large amounts of downtime.
2. The engineers who write the Banners Broker site are rushing to implement new systems of stalling panels and payments (e.g. how do we implement this whole blogging thing?).
3. The whole thing is a ruse, simply designed to prolong the scam, and keep affiliates waiting. All the while your monthly subscriptions for traffic packs and the like are probably being processed without a hitch. Funny, that.

Your panels aren’t moving

Let’s for a moment suppose that a “panel” does indeed represent some kind of real commodity (note: it doesn’t). The movement of your panels represents earnings for you. From what I gather, they’ve either stopped moving, or are moving so slowly that they will make barely enough to keep pace with your monthly subscription fees. To be clear: this is the very essence of what you are interested in with Banners Broker. If the panels don’t move, what are we all here for, exactly?

Here is an explanation posted on the official Facebook page:

As our hard working IT team diligently works to make our website better in v2.9 and building toward v3.0 it requires that certain features of the site be placed on hold. The ability to visualize panel movement is one of those features. There is no need to be alarmed however. The software is still actively recording panel traffic, and once the work on the site is at a level where the panel movement can be switched back on, you’ll see your panels as they’re supposed to be. This is an unfortunate circumstance, but a necessary one in order to ensure the stability of the site.

First of all, this is too vague. I write internet-based software systems for a living, so I have an idea of what makes sense and what doesn’t. This doesn’t. If the panel movement is happening behind the scenes, then displaying the figure from the database on a web page is a trivial thing to do. Seriously, this explanation does not cut it.

Imagine this same explanation applied to another financial system: You check your bank account, and your wage doesn’t show up. Don’t worry – the money’s been put in there, but our internet banking system has a problem visualising the movement of money. Are you really comfortable with that?

Again, keep the faith guys – we’ve got it all under control.

Banners Broker is no longer a passive income source – welcome to the world of blogging!

I would bet that the vast majority of affiliates were especially attracted to Banners Broker due to the promise of earning money without having to refer people, or do any other form of work. That’s all changed of late, apparently in the name of compliance; since Banners Broker wants to be thought of as a business rather than an investment opportunity. Whatever the logic behind it, gone is the prospect of logging in a few times a week, clicking around a bit, and watching your eWallet fatten.

As far as I can tell, there seems to be two ways to qualify your panels now. Either get more people into Banners Broker (remember my prediction of encouraging more recruitment?), or write blogs.

Here is a bit from a webinar on the 6th of March:

INCENTIVE TRAFFIC – no referring needed. but it is not passive. Write blogs. Example – write 36 blogs, you would earn enough to qualify a blue panel. This is not alot of writing. Is it worth spending one hour or a few hours a day to earn traffic? Yes.

What does this mean for you? Here’s an excerpt from a breakdown I found on the realscam forum (my emphasis added)

Imagine that currently you have 3 green, 3 blue and few other smaller panels that need to be qualified.
2 blue and 2 green can be qualified using Traffic Pack. after that, you cannot use traffic pack until you qualify 1 panel using other type of traffic, so actually from this point, no matter how many traffic pack you have accumulated.
So, we need to qualify 1 blue and 1 green panel, which need in total of 180000 traffic
180000 / 1500 = 120 blog article submission. That is 4 blog submission of at least 250 words every day.
No big deal we all can do this.
Now lets say your account is much bigger, so lets add 3 red and 3 black panel. Again 1 red and 1 black have to be qualified using traffic other than traffic pack:
1 red + 1 black = 1620000 traffic required / 1500 per blog = 1080 blog entry which is 36 blog / day [view the original post here]

Ask yourself this: do I want to write potentially dozens of blogs every day? Do I have the time to do that? Do I even know how to write a blog?

Having recently gotten into the world of blogging myself with this site, I can tell you that it does take quite a bit of time. But then again, I’m doing it out of love, rather than for money.

Above all, take a look at how much cash you have managed to get out of Banners Broker so far (I mean actual money, not the number displayed in your eWallet). Okay, are you prepared to spend hours a day to achieve a similar level of return from now on?

We won’t even get into trying to figure out exactly how writing a blog translates into ad impressions and thus qualifies your panels (my brain is still recovering from my last gruelling analysis of Banners Broker business logic). At this stage, such analyses are purely moot.

 Conclusion – what can I do?

In my original post on Banners Broker, I took a rather cautious and conservative tone. I just wanted to present the facts as I saw them. After witnessing what has occurred since then, I have become emboldened in my attitude towards Banners Broker. I cannot but give the following sincere and heartfelt admonitions:

1. If you still have money in Banners Broker, try to get it all out, now. I fear this will be impossible, but it’s worth trying. For any money paid in within the past 120 days, look into the possibility of claiming a chargeback.
2. If you are paying money into it, then stop now.
3. Recommend to everyone you know who is also involved that they get out now. Share this article, and share my original article which explains why all this is happening.
4. If you live in the UK, report your experience of Banners Broker to http://www.actionfraud.police.uk/
5. If you have made profit (real cash, not eWallet) from Banners Broker, consider the fate of a similar internet-based ponzi scheme, Zeek Rewards, that was closed down by the US Securities and Exchange Commission in 2012. Those who profited from the scheme are now being pursued to claw back the earnings and distribute them to those who lost out. You can read about the case here: http://www.zeekrewardsreceivership.com/

I think this is the last I will write about Banners Broker. The meltdown will continue, probably for at least another few weeks or even months. All that remains is to watch it melt, and try to help as many people out of the radioactive debris as possible.

Michael

 

 

 

Introduction

After writing my first post on Banners Broker, and being surprised by its popularity, I have decided to post a follow up, to address a criticism I have encountered when speaking to those who are in favour of Banners Broker. Specifically, I have been told that the example of earnings from the Green panel was taken from an outdated, unofficial document, and therefore I should not base my criticism on the figures extrapolated from that source. I have also been directed to this article written by Terry Stern, International PR Director of Stellar Point. I had come across this document a few weeks earlier, when it was forwarded to me from a friend who received it from a Banners Broker affiliate looking to get him involved. So it seems like there’s at least some agreement that this is ‘official’ information, and therefore a good target for further analysis. If you have not read this before, I recommend you do so, as I will cite parts of it throughout this piece.

Okay, so what is Banners Broker, really?

In my first post I drew comparisons between Banners Broker and Google because not only is Google a very well-known example of a successful advertising broker, it is also used by proponents of Banners Broker to demonstrate how much money there is to be made in this industry. I have seen many, many explanations by affiliates which state that Banners Broker is “like Google”. As I pointed out in my original post, Google’s business model is basically very simple:

Website owner (or publisher): “Lots of people visit my site. I’d like to earn some money by having advertisers place ads on my site.”

Advertiser: “I have a product or service I want to promote. I’d like to place ads for it on websites that get a lot of visitors. I’ll pay for it, of course.”

Google: “Hi, guys. We’ll hook you up. For our trouble, we’ll pay the publisher a little less than we charge the advertiser. Kerching!”

So, given the explanations of Banners Broker that I had heard before, I took a look at how Banners Broker might fit into this model. I found that it didn’t work. I won’t explain it again – read the first post.

But it turns out that I was wrong! In the document that will be at the centre of this article, Terry Stern explains the actual workings of Banners Broker. Let’s now go on a journey, down, down the rabbit hole.

Banners Broker International, is an online broker of web ad space and traffic impressions. We are NOT an advertising company, nor do we actively solicit advertising from companies. We offer an access point to companies looking to advertise online through their website, but, don’t get involved in the actual process other than to provide access to the brokers we deal with.

Okay, lets start with this statement. Immediately, there is a problem. Read again the second sentence. Now look at this picture: It’s the first slide from the “Main Presentation” which is available to affiliates through their dashboard on bannersbroker.com (yes, I’ve got an account, and I watched all the powerpoints). Do you see a discrepancy?

All right, I’ll give them the benefit of the doubt and assume that the slide is old and someone forgot to update it to bring it into line with the new model. Mr. Stern also states, “nor do we actively solicit advertising from companies.” This, however, is not consistent with the fact that the homepage of bannersbroker.com offers, as one of the three main services, the Advertiser package, and elsewhere states: “After purchasing a preset number of impressions, we place your ads on various publishers’ websites and monitor them daily to ensure their success.” And finally, go here and listen to what the annoying man has to say.

Again, let’s give Mr. Stern the benefit of the doubt, since he is at pains to explain how, “You’re also going to have to start all over and use different eyes if you’re going to want to understand who BBI is and how it works.” Alright, let’s insert our different eyes and dive a little deeper.

The ad space BBI purchases, is done through the broker’s we deal with who own reseller programs, however, BBI isn’t restricted to the specific terms those agreements state, due to a unique system created by Chris Smith.

So, he seems be saying that Banners Broker is actually a broker that brokers between advertisers and other brokers. Following? Am I understanding this right? Please clarify, Mr. Stern.

So the broker is tier one in this instance, and reseller (BBI for example) is a tier two, and any affiliates would be tier three. So the tier one broker sells space to the advertiser at market price, passes remnant inventory to the tier two resellers at a discount and pays them a discounted rate on servicing that inventory, who discount it even further and pay the tier three affiliate who purchases the ad space through packages. This is where BBI makes the bulk of their revenues, and how it can afford to pay an affiliate up-to twice the initial inventory purchase value back as commission and still earn a profit themselves.

I’m afraid my only response to this paragraph was “WTF?!” I read it and re-read it. My head felt like it was full of cotton wool. I needed to know a bit more about this whole thing. I found a couple of really great articles covering the basics of online advertising, the first of which clearly explains the value chain, and defines the product of this industry, and the second that explains exactly how ad networks come into it, and how they make their money. If you, like me, feel mentally exhausted by reading the paragraph above, I highly recommend you read those two articles.

So, after studying up on the basic concepts, feeling confident that I have them straight, I will attempt to tackle Mr. Stern’s explanation.

The product in this whole supply chain is “inventory”, i.e. space on a website that can be used to display ads. This is what the advertiser wants to buy. This is what the publisher has to sell. The ad network, or broker, assists the advertiser to find the best places to place the ads, i.e. the most valuable inventory. The ad network makes profit by buying inventory cheap, and selling it at a higher price to the advertiser. Simple:

Okay, pretty straightforward. We can clearly see why this model works, and how money is made by the publisher and the ad network. It is understood that the advertiser hopes to increase his profits through successful advertising, although he does not make profit directly from the above transaction.

Now, let’s look at the Banners Broker way of doing things – the unique system created by Chris Smith, described by Mr. Stern above. I’ve tried my best to put this into diagram form, but I fear I’ve fallen short of representing all the elements involved. Anyway, here’s my best shot:

Is it that my “different eyes” just aren’t different enough? I’m really intrigued as to what value Banners Broker could offer which would justify its strange insertion (and that of its affiliates) into an otherwise simple and workable model. Above all, why is the ad network paying the tier-two reseller at all? Isn’t that, y’know, the wrong way around?

Let’s just get things clear here: It is the publisher who has the product to sell here (ad inventory). It is the advertiser who pays money for that inventory. Any amount of middle-men (ad networks, brokers, resellers – whatever you want to call them) simply mark up the original cost of the inventory in order to make a profit. With that in mind, please reinsert your different eyes:

The broker pays their in-house publisher network a certain amount for the number of ads shown, we’re all familiar with this model. When it comes to resellers however, that rate changes. The broker pays their tier two resellers a set amount for the amount of traffic they serve. [my emphasis added]

Wait, I get paid for sending traffic to the publisher website?

… and isn’t that a bit backwards too? Let’s for a moment assume that all the above makes sense so far. I know, I know – just try. The other interesting issue raised in the above-quoted paragraph is the idea that the amount of traffic to the publisher website translates to profits for the affiliate (and presumably Banners Broker too). This is where the concept of “traffic packs” comes in. A traffic pack is described in the Training Traffic powerpoint (available through the affiliate dashboard) as “an amount of virtual traffic that you can buy. Monthly traffic packs include 50,000 traffic hits which you can apply to any website you want or you may use it to qualify a panel in lieu of a referral sale.” Here’s a bit more from Mr. Stern:

Tier two resellers are allowed to sell traffic to their tier 3 resellers or affiliates in any denomination they choose, at whatever pricing they choose, so obviously, in order to make a profit, the tier two reseller is going to mark up the cost of that traffic before selling it. BBI does this in the form of “traffic boosters” or “traffic packs” as you’ve seen them called. BBI pays for what it uses with the broker, but, charges the tier three affiliate up-front.

From this explanation, it seems to work this this:

1. The publisher, with their popular website, generates a bunch of traffic (people viewing the site).
2. This traffic (people) views ad inventory on the publisher’s website.
3. Banners Broker pay the ad network for the fact that the ad inventory has been viewed by the traffic.
4. Advertisers pay someone (not quite sure who) for having their ads viewed in the ad inventory by the traffic. Somehow Banners Broker make some profit at this point.
5. Affiliates then also make a profit because Banners Broker have made a profit. With some of that profit they can buy a traffic pack to send more traffic to the publisher website.
6. Go to step 2.

In other words, “Pay for traffic, which generates revenue for you so that you can buy even more traffic.” Is this a financial version of a perpetual motion machine?

Okay, okay. What’s my money really being used for?

There is one point in Mr. Stern’s article where he gets a little bit closer to (what I consider to be) the truth. Read carefully what he says here:

You can make the incorrect argument that BBI generates the bulk of its revenue through affiliate sign-ups, however, with BBI having to constantly purchase both space and traffic, until they receive their commissions from the broker for the ad revenue generated, they require capital to purchase the space/traffic. The fees collected by BBI for the packages of space and traffic from its affiliates goes toward augmenting the available capital to purchase space and traffic from the brokers. No company in existence uses 100% its own capital to purchase products, it leverages its profits and sales revenue towards the continuous replenishing of inventory.

In essence, your money is used as additional capital for Banners Broker to do its special thing. You put in your money, Banners Broker use their unique system to turn that money into big profits, and you get a cut of that profit. Doesn’t that then make affiliates into investors? It sure sounds like an investment to me.

Well, more recently, Banners Broker have been at pains to demonstrate how it is emphatically not an investment or passive income source; rather it is a business which requires some good, honest work on the part of the affiliate. The snag is that this work element seems to consist of getting more affiliate sign-ups. Oops. Which is it?

Conclusion

For those of you who made it this far, well done. Your synapses should now be  fairly supple from the feats of gymnastics that you have just put them through. I’ll concede that this post could be seen as somewhat redundant, in the same way that it is pointless to try to disprove the existence of the teapot orbiting the sun. As I mentioned in opening this post, I wanted to particularly focus on the article by Terry Stern, just because it has been used to demonstrate the validity of Banners Broker as a real business, and I find it fascinating how jargon and logical complexity is used to defeat sound thinking.

Or maybe it’s just me, because judging from the comments by affiliates when this same explanation by Terry Stern was posted to a Facebook group, they all seem to get it.

Oh well.

There’s a lot more to know about Banners Broker, but given the rapid daily developments, the reader is better served by resources such as the realscam.com thread on Banners Broker or the Banners Broker Ponzi Scam facebook page.

In closing, I leave you with my final diagram:

- Michael

Funny story: I wanted to do a write-up on my thoughts on Banners Broker, so that I could share it with interested people I know. I was going to just write an email or maybe a Word document and send it out to a few people. In the end I decided to put it online, as it’s easier to just send a link, plus all the links within the article itself will work nicely from within a browser. I set up WordPress, wrote the thing, and went to bed.

The next day I woke up to find a few emails asking me to moderate comments and pingbacks from my blog. What? How did anyone find it? I eventually figured out that it was Finch who must’ve discovered the article via a pingback to his blog, and he posted it on a Facebook group page. Soon enough, I discovered that it was being shared and discussed on Facebook and the realscam.com forum. It was a little surprising, but I was glad to get good feedback, and to find that some strangers out there appreciated what I had written. Today I set up Google Analytics and checked out the real-time stats. It turns out I am getting a fair bit of traffic, pretty constantly.

It’s been a pleasant surprise, and I am thinking of writing a follow-up piece, in response to feedback I’ve had from those I have spoken to about my findings regarding Banners Broker. Specifically, the claim that my analysis is a bit off, because I’ve misinterpreted or have been misinformed about the true business model of Banners Broker. Well, I’ve got the facts now from Terry Stern in this response he gives to critics (I was referred to this as a refutation of my analysis). I’ll take a bit of time to pull that apart, if my mind proves supple enough for the mental gymnastics required to comprehend it!

Until then,

Michael

 

Introduction

As a website designer and developer, I have many years of experience in the field of internet commerce and marketing. I became interested in the claims made by Banners Broker, and read as much of their literature and documentation as I could find, in an attempt to understand the revenue model they claim to use. This included signing up as an advertiser and attempting to run an ad campaign using the Banners Broker system. After a full evaluation of all the evidence, I have conluded – and I am certain in this conclusion – that any revenue generated by Banners Broker for its affiliates does not come from advertising.

I have written this post to share my findings and conclusions with interested people who may have come into contact with Banners Broker, or who may even be involved themselves. I urge you to take the time to read this, despite it being quite lengthy, and to take the time to understand the points I make here.

How does Banners Broker generate money?

I know that many BB affiliates are fairly new to the subject of the internet, and especially to the workings of internet advertising, so I will attempt to keep this as simple as I can, while dealing with the facts that should be understood by anyone involved in this business.

First of all, let’s look at how Banners Broker explains its business model:

What does banners broker do?
We connect advertisers with effective ad space and publishers with the most relevant ads to market on their websites. With an extensive online network consisting of hundreds of thousands of publishers and advertisers from around the world, we help our clients increase sales and earn additional advertising revenue. [source: bannersbroker.com FAQ section]

So, this explanation is pretty straightforward, and it sounds like Banners Broker operates on the same basic model of any online advertising broker, for example Google, with its “AdWords” and “AdSense” products. I decided to take a look for myself at what sets Banners Broker apart from all the other existing and successful online ad brokers, to see how it generates so much revenue that it can pay out to all its affiliates.

My experience of advertising with Banners Broker

To test this out, I signed up on bannersbroker.com as an advertiser (since I work for an online retail company, and we could always do with increasing sales). Almost immediately, alarm bells were raised: why do they require a photo ID? Why does my dashboard include such an incredibly complex array of options, using unknown terminology such as “panels” and “traffic packs”? All I wanted to do was place some ads for my website – a very simple concept. You would think that Banners Broker would make this as easy as possible, seeing as it is supposed to be the source of their revenue.

As a comparison, I was able to sign up to Google’s AdWords in about 30 seconds, and their dashboard was suitably straighforward, reflecting the simple concept of “Here is my ad, please show it on some websites and charge me a little bit of money each time someone clicks on it”.

I continued on and created my ad campaign, and at this stage I became fairly convinced that this was just not a serious advertising platform. The reason is the woeful lack of options when setting up the campaign and viewing reports on my campaign. As a comparison, Google’s AdWords allows me to finely-tune exactly where, when, on which devices my ads should appear, and offers all manner of analytics for me to track the effectiveness of my campaign. In contrast to this, Banners Broker offers so little in the way of customization and reporting that I can safely say it would be virtually useless to any company that is serious about using online advertising.

The next question is, where do these adverts end up? Again I will refer to Google as it is a very visible example of how to do things right. Most times that you search Google, you will see a section to the right of the search results page listing adverts that companies have paid AdWords to display. Google also display ads on websites which take part in their AdSense program, displaying boxes on the page with an “Ads by google” label on them.

So which sites do Banners Broker display their ads on? As you may know, there are two options offered: the Choice Network and the Blind Network. I first chose to run my campaign through the Choice Network. The Choice Network is described by Banners Broker as:

“our Choice Network, which is a partnership between two brokers, has now grown to over 60 websites and is well on its way to becoming a major contender in their respective industries.” [source: http://support.bannersbroker.com/index.php?/News/NewsItem/View/8/to-our-loyal-customers-and-affiliates]

So, what kind of industry-leading, high-traffic websites make up the Choice Network? The answer is a collection of virtually empty, content-free, essentially “fake” websites, which only seem to serve adverts for Banners Broker itself, rather than actual paying clients. A few examples: http://150cash.com/, http://www.wethreegreens.com/, http://www.thatisnotasport.com/, http://www.exteriorspread.com/, – a few generic articles, no comments, stale content that’s not been updated for months… you get the idea.

OK, so the other option is the Blind Network. Due to the nature of a blind ad network, we can’t know exactly where our ads will appear, so it’s difficult to verify whether or not my ads actually get shown anywhere. However, due to the aforementioned lack of standard ad campaign options, combined with the fact that Banners Broker steadfastly refuses to name any of its ad network partners, I am fairly certain that they don’t actually appear anywhere.

My conclusion of the Banners Broker advertising platform, after a fair appraisal and given my previous knowledge and experience of how actual online advertising works, is that this is not a real product. It is a fairly well-disguised approximation of the real thing.

What about being a publisher?

Okay, so what about the other half of Banners Broker’s business – paying publishers to display their client’s ads? Ignoring for a moment that I have just demonstrated that there probably aren’t any real advertising clients, let’s take a look at how this works.

As I run an online retail website, we don’t advertise for other companies on our website. Therefore it wasn’t appropriate for me to try out the publisher side of the business. However, I found a detailed account written by the owner of very high-traffic Canadian website. You can read about his experience of using Banners Broker as a publisher here: http://philsmy.com/2012/10/bannersbroker-verdict-scam/, and I recommend that you do in order to appreciate my conclusion below.

In short, he found similar results to what I discovered as an advertiser: the publisher platform is likewise not a real product.

Conclusion regarding the advertising platform

It appears to me that the claim that Banners Broker generates its revenue from selling on-line advertising space cannot possibly be true, based on a good look at their advertising platform. Why would any company choose to pay for a virtually useless product, when there are many companies offering the same, but in a form that would actually work?

So, if there isn’t a significant amount of money coming from real advertisers, the obvious question to ask is, where does the money come from? Affiliates sign up on the promise of good returns, so we should try to figure out what those return might be, and how they could be realised.

A look at the numbers

Here is a quote taken from the Banners Broker setup manual, on page 9 of an instructional manual entitled “How to manage your Banners Broker account” (http://freemoney2wealth.info/blog/wp-content/uploads/2012/10/Managing-Your-BB-Business.pdf)

Let’s take a Green panel as an example. It costs $270 to purchase. When it reaches its traffic cap (approx. 8 weeks) it will have made $540. This amount goes straight into your E-wallet and immediately BB will repurchase back a Green panel ready to be activated once again with traffic to make you a further $270 in approx 8 weeks (see above disclaimer).

Following this example, that means a green panel will, after 16 weeks, have made a profit of 100%, with a further 100% being made every 8 weeks thereafter, which would be a total of 550% profit for the year!

According to Forbes magazine, the 10 most profitable industries are:

So the most profitable industry in the world has a 16.09% profit margin. Note that online advertising does not appear on the list. It also needs to be borne in mind that the profits generated by those industries are the result of specialised skill and training – lawyers, doctors, accountants – and lots of hard work. Banners Broker is promoted as a business that lets you earn without any special knowledge, skill or training, and with very little – if any – work.

As another point of comparison, what is an expected return on investment in other established fields such as gold, stocks, bonds, or real estate? A fairly simple introduction for beginners can be found here: http://beginnersinvest.about.com/od/beginnerscorner/a/What-Is-Considered-A-Good-Rate-Of-Return-On-Your-Investments.htm. The article concludes, “As you can see, if you expect to earn 15% or 20% compounded on your blue chip stock investments over decades, you are delusional. It isn’t going to happen.”

So, 15-20% is a delusional expectation, yet per our calculation, Banners Broker offers up to 550%? Even if the calculated figure of 550% returns based on Banners Broker’s own estimates is considered a best-case scenario, it is still clear that something is not right here. Again: where is the money coming from?

The final thing to consider is this: how can Banners Broker possibly hope to compete in a free market, when it must pay a large proportion of any profits to its affiliates? The fees that Banners Broker would have to charge advertisers (assuming for a moment that there are actual advertisers involved somewhere) would price them out of the market. A list of the top online advertising companies available here (http://en.wikipedia.org/wiki/Online_advertising#Ad_server_market_structure) shows that there are already well-established, major companies that Banners Broker would have to compete with. When we consider the terrible platform that I described earlier, plus the need to pay large amounts of their revenue to affiliates, it should be clear that Banners Broker could not possibly be competetive.

So, where does the money come from?

Now we get to the million-dollar question. I hope I have demonstrated clearly enough that there are profound, fundamental flaws in the business model that Banners Broker promotes to affiliates. To make the amounts of money that Banners Broker claims can be made, that money must come from somewhere. Somewhere other than online advertisement.

If there aren’t significant amounts of money coming from clients, then any money made must come from within the system itself. This is not a new model for making money. It has existed since the early 20th century, and it’s known as a “ponzi scheme”. Here is a definition of a ponzi scheme taken from the Financial Services Authority website:

‘Ponzi’ schemes are named after their creator Charles Ponzi who, in the 1920s, guaranteed a 50% return to investors in the US. However, much of the subsequent money he received was used to pay ‘dividends’ to earlier investors. The scheme collapsed when he was unable to attract more money to pay investors who entered the scheme later. [source: http://www.fsa.gov.uk/consumerinformation/scamsandswindles/investment_scams/ponzi_pyramid]

In effect, any returns that are made by Banners Brokers affiliates come from the money put into the system by other affiliates. The major flaw of a ponzi scheme is that it is unsustainable. In order for anyone to make any money at all, the scheme must continuously, exponentially grow. This growth eventually slows and at that point, the scheme collapses, leaving the vast majority of affiliates out of pocket.

There is a very good description of the typical characteristics of a ponzi scheme in this Wikipedia article: http://en.wikipedia.org/wiki/Ponzi_scheme. I will use this description and compare it with what I have learned about Banners Broker.

Typically extraordinary returns are promised on the investment,^[5] and vague verbal constructions such as “hedge futures trading,” “high-yield investment programs“, “offshore investment” might be used. The promoter sells shares to investors by taking advantage of a lack of investor knowledge or competence, or using claims of a proprietary investment strategy which must be kept secret to ensure a competitive edge.

As we saw earlier, extraordinary returns are promised, or at least promoted. Banners Broker takes advantage lack of investor knowledge in the online advertising industry. Their website claims that, “Unlike other online marketing techniques, our unique Ad-Pub Combo Package allows entrepreneurs to advertise their businesses while earning ad revenue simultaneously.” The actual explanations I have found of the way the “Ad-Pub Combo” works are all but impossible to understand, and do not stand up to logic.

Initially the promoter will pay out high returns to attract more investors, and to lure current investors into putting in additional money. Other investors begin to participate, leading to a cascade effect. The “return” to the initial investors is paid out of the investments of new entrants, and not out of profits.

Affiliates are often drawn onto the scheme by reports from friends or associates that people they know have made a lot of money from Banners Broker. Indeed, it is reasonable to assume that there are some people who have made a lot of money from this scheme – especially those at the very top. However, as mentioned earlier, a ponzi scheme relies on a constant stream of new investors. The method used to ensure this is by referrals. Originally it was promoted that you could make money with Banners Broker without having to refer anybody. As you may be aware, changes announced at the Bolton World Tour event mean that there is increased focus on making referrals. Their explanation is: “The very strong message in all the changes is to eliminate passive earnings as this is a business not an investment.” (taken from a message posted to the Banners Broker Network Facebook page) My take on this is that they are increasingly worried about the cash flow from new affiliates drying up, leading to a collapse of the scheme.

Often the high returns encourage investors to leave their money in the scheme, with the result that the promoter does not have to pay out very much to investors; he simply has to send them statements showing how much they have earned. This maintains the deception that the scheme is a fund with high returns.

Promoters also try to minimize withdrawals by offering new plans to investors, often where money is frozen for a longer period of time, in exchange for higher returns. The promoter sees new cash flows as investors are told they cannot transfer money from the first plan to the second. If a few investors do wish to withdraw their money in accordance with the terms allowed, their requests are usually promptly processed, which gives the illusion to all other investors that the fund is solvent.

There are two mechanisms by which Banners Broker achieves the above.

First is the concept of “panels”, and their rules concerning how much of your investment must be kept in active panels at any given time. With the 2.9 update, further restrictions have been introduced to keep even more money inside the system. Panels keep your initial investment locked up inside the scheme. I have read reports that the time it takes to qualify a panel has increased markedly in recent weeks. This is an attempt to freeze invested cash for longer.

Secondly, there is the eWallet. Many Banners Broker affiliates who claim to have made  profits base this claim on the figure shown in their eWallet. There is a big difference between the figure shown in your eWallet, and having actual money in your bank account. Ask any affiliate who thinks they have made a profit how much money they have actually withdrawn. I would guess that most of them haven’t actually withdrawn the money, or have only withdrawn small amounts to test the system.

On top of this, with Banners Broker, withdrawals are generally not processed promptly. There are countless accounts I have come accross of affiliates facing weeks or even months of delays when attempting a withdrawal. As a ponzi scheme nears collapse, it become more and more difficult to make any withdrawals, and I believe the current delays experienced by affiliates are a sign that Banners Broker is nearing the end of its lifespan.

Overall conclusion

In this post, I have specifically chosen to focus solely on the claims made by Banners Broker in regard to its business model. I believe the facts speak for themselves, without even looking into the numerous other red-flags that I found when researching the company and it’s methods. I know that the management of Banners Broker have attempted to defend themselves against various allegations made on blogs and internet forums, arguing that they are the targets of a campaign to sabotage a legitimate business. I believe such a campaign to be unnessecary, since the company themselves have, through their extraordinary claims, provided all the evidence one needs to figure out the truth.

I believe that Banners Broker is a fraudulent ponzi scheme which preys on those who can least afford to lose their money, and that the vast majority of affiliates stand to lose some or all of the money they put into it. Any money that is made, comes at the expense of those who have been introduced later. Most affiliates have signed up in good faith, and are unwitting victims of a very sophisticated scam. A minority of early-adopters, and the people behind the scheme, know exactly what they are doing, and unfortunately stand to make a lot of money at the expense of everyone else.

Predictions

Based on what I have found, and the developments that I see happening within Banners Broker, I predict that the scheme is approaching collapse. I think that affiliates will find it very difficult, if not impossible to reclaim their investments. I foresee increasingly desperate attempts by Banners Broker management to stall payments, recruit more aggressively, discourage withdrawals, and it will become increasingly difficult to actually contact anyone at Banners Broker – support calls already cost $5 per question – something which I find absurd.

The excuses given as to why the service is getting worse and worse, and why it is becoming more and more difficult to make and claim earnings, will get even more outlandish and complex. Finally, it will become impossible to contact anyone at Banners Broker, the panels will freeze, and those behind the scheme will disappear.

If you are still convinced about Banners Broker, as a final word, I would recommend you read this Q & A session with Terry Stern, and see how the International Public Relations Director of Stellar Point deals with some of the same issues as I have raised in this post. There are also two other posts on the same blog, here and here, which go into detail about more warning signs that I did not even get into here.

http://finchsells.com/2013/01/29/banners-broker-qa-with-terry-stern/

Michael

UPDATE 8/03/13: I’ve written a follow-up to this article, which you may be interested to read.