From The Motley Fool:
That innocuous-looking "From Around the Web" is an ad unit meant to look like editorial content.Ok, I know the last thing any of us need right now is another scandal. Given the content of those from around the web boxes, I always suspected they were advertisements from HuffPo because, well, a lot of those ads remind me of their feature content. On the bright side it isn't just us and Forbes:
The company behind that ad unit is HowLifeWorks, which eschews traditional display advertising in favor of "advertorials" -- ads that masquerade as legitimate article content.
The first advertorial above, "Small Investors Are Making Huge Returns Trading Penny Stocks," is an effective advertisement for a penny stock operation called PennyStocks.com. Once you click from the advertorial to PennyStocks.com, the site aggressively pushes you to sign up for its alerts newsletter.
The ploy, then:
Buy nontraditional advertising (advertorials) on legitimate websites like Forbes.com.
Get readers to click from a Forbes.com article to what seems like another article but is actually a hardly veiled advertisement.
Use the faux editorial to push folks from the advertorial site to PennyStocks.com.
Blogs and bribesand
On April 2, just as the hype game was getting going, a Motley Fool blogger was asked privately about writing a blog post on Goff.
A person calling himself "John O'Connell," purportedly representing "Investor Associates, LLC," contacted the blogger via LinkedIn. O'Connell offered "four-figure" compensation to write a positive article about the company -- and when our blogger declined the offer, O'Connell even offered to write it for him, if the blogger would simply post under his own byline.
The blogger still declined, and immediately thereafter brought it to our attention. When I spoke with O'Connell by phone, he told me he had only reached out to two people, neither one taking him up on the offer. He ceased such blogger outreach once realizing it was against Fool rules, he said.
And yet, in a stroke of incredible good fortune and unbelievable coincidence for the stock promoters, somehow blogs got written -- glowing blogs, each writing optimistically about a company that, to recap, (1) has never made a single cent and (2) went through a wholesale management and business-model change less than 90 days prior.
Over on SeekingAlpha, another open blog platform, four positive posts were written during the stock's rapid ascent -- and those four were syndicated to major financial portals like Yahoo! Finance.I have to wonder if Penny Stocks are not just the tip of the iceberg. Sure seems like their have been a lot of blogs on financial websites pushing questionable investments in gold on people who really should not be speculating in commodities.