Let the Seller Beware Promotions Will be Hacked - Remember CueCat?

As an example, does anybody remember the CueCat? Created by the now-defunct Digital Convergence way back in 2000, the cat-shaped, mouse-sized scanner connected to Windows-based computers. It allowed users to view web pages related to whatever bar code they scanned in. These items were given away "free" at Radio Shack. To use the CueCat, you had to go to Digital Convergence's web site and register some personal information...and that's when things got interesting. The personal information was then connected to that particular CueCat's unique ID code, so the company could literally create a dossier of every person using the CueCat, including everything they ever scanned. While Digital Convergence claimed that they were not tracking anyone that closely, the cat (so to speak) was out of the bag -- and one or two security breaches that revealed the names, e-mail addresses, and zip codes of more than 100,000 CueCat users couldn't have helped matters.

Many CueCat users reacted in a most interesting fashion: they disabled the unique ID on their CueCats, and found that the devices could be used as an ordinary bar code scanner. The little plastic cat turned out to be just the thing to help catalogue large book collections, for instance. Of course, Digital Convergence was rather less than thrilled with the tampering, especially when users found a way to prevent the CueCat from transmitting information back to the company's web site. Digital Convergence ended up not getting valuable information that it could sell to advertisers -- what, did you think they were providing these scanners for "free" out of the goodness of their hearts? -- which of course killed that end of their business model. The company went belly-up -- and good riddance.

Why do I mention this? Because any promotional marketing model that depends on secrecy or encryption is going to be hacked, unless of course the trouble it takes to do the hack is more than the payoff is worth. It turned out to be very easy to hack the CueCats, and the payoff was a handy bar code scanner (and the chance to diss advertisers). The Apple-Pepsi "hack" is very easy as well, but the only folks who will do it are the ones who value getting their iTune and Pepsi at half-price -- strange as it may seem, there are plenty of folks who will still buy the drink and not care whether they get to download a free song. Digital Convergence lost, big time, because so much of their business model was based on getting the kind of information that most folks wouldn't willingly turn over, and selling it to advertisers. So the take-home lessons are simple: don't put up in the promotion more than you're prepared to lose, and don't lie about what folks are getting into when they buy into your promotion.