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I’ve written before about the “scan and scare” tactics used by antispyware companies (similar are the “scan and find errors” used by registry cleaners). And recently, Larry Jaffe, our outspoken editor of CounterSpy News, also wrote about this and received mail by the ton. It’s a burning hot topic in the minds of users.

Here’s how it works: You download a “free trial”, which scans your drive, finds a bunch of terrifying things on your PC, demands payment in order to clean your system. And it works even better when the antispyware product has false positives.

It’s even something that the reputable Robert Vamosi at CNET mentions in his antispyware roundup recently:

The free trial copy … will not remove any spyware found until you purchase the full product. We think this is wrong, and a crude way to force sales.

He’s absolutely right. It is wrong.

But this model is, in fact, implicitly driven by places like, TuCows, etc., which base a large part of their revenue model by selling manufacturers higher visibility.

Here’s why: For every download, a developer will get a certain percentage of people actually buying the product. So, if you get 100 downloads, you might get 2 people who buy the product, a conversion rate of 2%. And that 2%, by the way, holds pretty standard throughout the industry.

But many companies in the antispyware space (and earlier, in the registry cleaner area) learned that by scanning the machine, but refusing to clean until paid, their conversion rates soared. I spoke with an antispyware vendor a while back who told me that by using the “scan and scare” tactics, they were able to get a conversion rate of almost 30%. Another conversation with a commissioned affiliate of an antispyware vendor said that their tests showed a 10x higher conversion rate when they moved to the scan-and-scare model.

And so there’s the reason why virtually the entire industry has moved to this model: the conversion rates are astounding — especially in security. It really pays to scare the crap out of people.

Our conversion rates? Maybe 2%, because we refuse to do the scan-and-scare thing — we provide a fully functional trial version. But that means that for every million downloads of CounterSpy, we get (maybe) 20,000 sales. If we were on the “scan-and-scare” model, that number would likely increase to something like 200,000 sales. The difference in math is staggering.

This puts companies like Sunbelt at a considerable disadvantage over the competition, for the reason that the competition can buy up vast amounts of ad space and pay-for-download programs on places like CNET and TuCows, virtually guaranteeing themselves a healthy return.

Look at the math — a pay-per-download program at a major download site might cost you as high as $1.00 per download, getting you listed in a premier location, driving huge download numbers. If you’re getting a 2% conversion rate on a $20 product, you’re losing money. But if you’re getting a 20% conversion rate, you’re making money hand over fist. By using these types of marketing practices, you win. So even highly reputable companies like WebRoot have moved to the scan-and-scare model, because of the sheer difference in numbers.

Another hidden secret of the antispyware business is that independent “review” sites rank products higher based on the commission paid. We had one major review site offer us a high spot in their review if we promised a higher commission — and then, he would only list us a “#2”, because our price point was too low ($19.95, vs. $29.95 for the “#1 player”). This is why for reviews, your best bet is to look at user reviews and reviews by reputable organizations, like PC Mag, PC World, CNET, etc. Sleazy? Yes. But it’s the nature of the business, and it’s something that very few people know about.

It has been rumored that a major state attorney general’s office was sniffing around the scan-and-scare practices in the registry cleaning business. Perhaps they need to look at it for the antispyware side of the business.

In the meantime, you can trust that we will always offer a fully-functional trial version. To hell with the money.

Alex Eckelberry