As companies like GroupOn and Living Social can tell you, giving things away at steep discounts has become a viable form of advertising. But what about handing out products and services for free, with no strings attached? Well, the folks over at a fresh startup called Kiip believe this methodology will be a major part of the future of mobile advertising.

The company, pronounced "keep," recently unveiled an innovative business model where they provide real rewards for virtual achievements. Kiip partners with mobile game developers and major advertisers to offer incentives for in-game accomplishments. The model is quite simple: get a high score, win a free case of soda. Beat level 15, get a gift certificate.

Kiip is basically looking to replace the current model of free game apps, where users are often bothered with banner ads that help subsidize the free offering but get in the way of game play. With Kiip, pop-ups will appear only after an objective is reached. Once the pop-up is clicked, a free gift of real value will be sent to the user's email.

Nineteen-year-old Brain Wong, co-founder of Kiip, told The Globe and Mail that giving away freebies will help build customer loyalty and persuade users to make other purchases down the road. He also noted that the company is only making agreements with advertisers that will provide users with an actual gift.

“I had people come up to us and say ‘Ooh, let's give away five per cent coupons,' and I said, ‘Absolutely not, that's not what we're all about,' We're not a coupon distribution channel, we're about value, we're about rewards, we're about gifting, we're about making people feel like they've received something meaningful," Wong told the news source.

So far, Kiip has inked partnership agreements with about 15 sponsors, including Dr. Pepper, Vitamin Water, Sony, GNC and 1-800-Flowers. Wong has yet to reveal which games will include the pop-up gifts, but said an announcement will be coming soon. The minimum value of a gift is priced at around $5, he added.

In limited trials, around 50 percent of users went through the steps to redeem their prize, according to Wired. If that success rate translates to the real world, you may continue to hear from Kiip.

Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Janice McDuffee