A big part of the debate about the lead gen scams plaguing Facebook and MySpace via social games is over how much money is being made on these “offers.” Zynga, by far the most successful at building and monetizing these games, is now telling us exactly how much – 1/3 of total revenues, according to Andrew Trader, a co-founder of Zynga:

Andrew Trader, co-founder of Zynga, said the company makes about a third of its revenue from advertising and another third from virtual goods transactions. The last third comes from companies that provide commercial offers, trading Netflix memberships and marketing surveys for in-game cash.

Zynga revenue guesses range all over the place, but are likely $250 million a year or more. That means $80+ million/year is being brought in from legitimate offers like Netflix subscriptions, as well as the really smelly stuff like recurring mobile phone and learning CD subscriptions that trick users into paying big dollars for little or no return value.

What percentage of offer revenue is scammy? We believe it varies over time, and is heading in the wrong direction. Legitimate advertisers like Netflix and Blockbuster, hit with countless laundered subscriptions from repeat subscripers, are said to be dramatically lowering bounty fees paid on signup. Far less scrupulous advertisers like Video Professor and Tatto take their place.

HotOrNot cofounder James Hong said it best in a comment to our post yesterday outlining the scams: “In a nutshell, the offers that monetize the best are the ones that scam/trick users. Sure we had netflix ads show up, and clearly those do convert to some degree, but i’m pretty sure most of the money ended up getting our users hooked into auto-recurring SMS subscriptions for horoscopes and stuff.”

Offerpal and others, who provide these offers to game developers, try to downplay the percentage of revenue that comes from scams. Clearly they are obfuscating the truth, to put it kindly.

Facebook and MySpace must takes steps to address this.

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MySpace has just announced the appointment of four new members to its executive team, which saw a major shakeup last April. The new hires include Nada Stirratt, who will serve as Chief Revenue Officer and Dustin Finer, who is now Chief People Officer. Joining them will be iLike founders (and brothers) Ali Partovi, who is now SVP of Business Development based in San Francisco, and Hadi Partovi as SVP of Technology, based out of Seattle.

MySpace acquired streaming music service iLike in August for $20 million.

Other recent MySpace hires include Mark Rosenbaum as CFO and Alex Maghen as CTO (he was formerly CTO of MySpace Music, now he heads technology at MySpace proper as well).

Below is MySpace’s bio about Stirratt, who served as EVP of Digital Advertising at MTV before joining MySpace:

Prior to MySpace, Stirratt served as Executive Vice President of Digital Advertising at MTV Networks where she oversaw advertising sales and strategy, ad operations, Digital Fusion-integrated marketing, and Tribes, the company’s third-party vertical affiliate network. Before MTV, Nada served as Senior Vice President and General Manager of advertising sales at Advertising.com. Earlier in her career, Stirratt worked in ad sales and business development for such entertainment brands as AOL-Time Warner, Moviefone, Allure and Cosmopolitan.

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