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Author: Brett Brewer, President AdknowledgeGrowth of social applicationsMarket size of virtual currencyMonetization of social mediaThis talk was given at Adknowledge social media conference in Sydney
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Get Real: The Emergence of Virtual Currency and Cracking the Monetization Code
Brett Brewer: My Background
• President Adknowledge
– Most recent acquisition: Super Rewards – the leader in virtual currency
• Co-founder at Intermix Media (Parent of MySpace)
MySpace and Monetization challenges
• Founded Intermix Media in 1998
• We launched MySpace in Aug. 2003
• Initial growth was phenomenal
• MySpace initially applied old advertising models to new media (i.e. banner advertising)
• Sold the business to Newscorp in Oct. 2005
• We always struggled with effective ways of how to monetize the site
Facebook taking share
Facebook opens up to application developers
• Facebook opened their
platform to independent
developers in May 2007
to make the platform
more engaging
• Applications have to over
380,000
Phenomenal Growth…• 6 out of 10 U.S. Internet users have
created social network profile
• More than 70% of Facebook users use apps monthly
• More than 6 billion minutes are spent on Facebook each day
Non-effective advertising• Interrupt-driven CPM banners:
<50c CPM
• Out of context CPC ads: <$1 CPM
• Video ads: $1-$2+ CPM
SN Users as % of Total Internet Users*
Social Media growth
Engagement is More Than Time Spent
The rise of applications
• Number of users is growing dramatically. Games such as Farmville generated 11 million active daily users -- within 2 months of launching –and now has over 30 million monthly users. Mafia Wars has over 24 million.
• More than 250 applications have more than 1 million active users
• More than 15,000 websites, devices and apps have implemented Facebook Connect since Dec 2008
What Is Virtual Currency and What is the Market for Virtual Goods and Services ?
• Virtual currency monetizes games and apps on social networks and iPhone, multi-player game platforms, virtual worlds, and stand-alone sites.
• Direct pay (i.e. PayPal, credit card): Many players pay directly for the virtual currency to advance in games, buy better gear, or obtain virtual goods
• Indirect (by completing offers such as surveys, lead-generation programs, or product purchases): Players accept virtual currency from advertising sponsors in return for signing up for a product or filling out a form
• Multi-platform/device: Facebook, MySpace, iPhone, Twitter
Virtual Currency – What is it?
How New is Virtual Currency?
• A concept that dates back over 80 years in U.S. market
• Related to loyalty programs, rewards and frequent flyer programs, payment partners, opt in, permission marketing.
• Evolved from a relationship with consumer based purely on repeat
purchase to one based on reward for time, interactivity and word of
mouth.
• Rewards and conditions various online behaviors:
• Login, invite, purchase, inform, provide research, influence
• Social gaming has driven adoption
• Immediate reward system
$265
$620
$1,100
$1,550
$2,020
$2,460
2008 2009 2010 2011 2012 2013
In the U.S., Virtual Goods Revenue Expected to Top $600 Million This Year
Size of Virtual Goods Market
$1,325
$2,220
$3,110
$4,070
$5,050
$6,000
2008 2009 2010 2011 2012 2013
Worldwide, Virtual Goods Revenue Expected to Reach $6 Billion by 2013
Size of Virtual Goods Market
Virtual Currency Examples
• The Mob Wars game application on
Facebook allows users
to buy more items (energy, health and
weapons) to enhance
the users gaming experience
• Users are able to
acquire these points
through game play
Rewards and Points
Users can Purchase or Earn Points
• On Crunchyroll.com, users can subscribe to premium content by completing offers
from a platform such as Super Rewards
• In Be A Tycoon on MySpace, users build virtual business empires
Beyond casual games…
• Offers award game points based on the value of the CPA offer –the higher the CPA, the more
points. Higher CPA offers
typically require credit card payment/deposit
• Offers are ranked on an Effective
Earnings Per Impression (eCPM) basis within each category (taking into account CPA pricing, click
through rates and conversion
rates) and optimized on an application and user level
Offer is Targeted
Offer Example – Trial Subscription
Platform Extends to Mobile
Types of Offers
Engagement and Personalization
• Successful engagement optimizes the eco-system of consumer experience, advertiser ROI, and publisher monetization/eCPM.
• Advertisers benefit deeply from a consumer who interacts.
• It's about the emotional connection. Game worlds are a strong platform for this because they are environments in which the target audience is already emotionally invested.
• More than 25% of US online users will participate in social gaming by mid 2010, twice the current level of participation. Gaming is the new knitting. Desktop solitaire will be thought of as an old-fashioned board game.
• Online Rewards platforms will extend beyond gaming and pure points achievement or purchases. Rewards systems will extend and capture actions such as friend referrals, posts, and uploads. Influencers will emerge and a class of Super Fans will be identified and marketed to.
• The virtual Currency model will extend beyond casual gaming and into all forms of premium digital content (i.e. TV Shows, Newspapers)
Conclusions
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