Facebook Credits and Social Video

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Facebook Credits and Social Video

  1. 1. Facebook Credits & Social Video The New Marketing Opportunity Brought to you by: Grant Crowell, GC Interactive Duncan Alney, Firebelly Marketing
  2. 2. What Is “Virtual Currency?” © iStockPhoto #1115215
  3. 3. Virtual currency is another way of describing “electronic money” It is used to purchase virtual goods within a variety of online communities ; which include social networking websites, virtual worlds and online gaming sites
  4. 5. <ul><li>Virtual goods have no intrinsic value and, by definition, are intangible. </li></ul>Virtual goods are non-physical objects purchased for use in online communities or online games.
  5. 6. <ul><li>A large majority of the sale of virtual goods has been in Asia. (70% as of 2010.) </li></ul><ul><li>Many online games now derive their revenue from the sale of virtual goods. </li></ul><ul><li>In 2009, $7.3 billion was made from virtual goods sold worldwide. </li></ul><ul><li>$1 billion of that was made from the </li></ul><ul><li>sale of virtual goods played on </li></ul><ul><li>social networks such as Facebook . </li></ul>“ Virtual Goods” Trends
  6. 7. and in 2014, reach $14 billion according to a different analyst. $ $ $ That figure was estimated as 1.6 billion in 2010. 2013 sales will be $4 billion according to one analyst,
  7. 8. What are “Facebook Credits?”
  8. 9. <ul><li>Facebook Credits were introduced in 2010 as a virtual currency you can use to buy virtual goods in many games and apps on the Facebook platform. </li></ul>
  9. 11. Why has Facebook launched “Credits?”
  10. 12. <ul><li>- Generate additional revenue streams beyond advertising </li></ul><ul><li>Gather data on users including browsing & shopping activity </li></ul><ul><li>Have “virtual game economy” with developer revenue stream </li></ul>Why Facebook launched “Credits”
  11. 13. How does “Facebook Credits” work?
  12. 14. <ul><li>Facebook redeems credits at the rate of $0.10 per credit. </li></ul><ul><li>Purchase Facebook Credits through the Payments tab in your Facebook account settings, or you can buy a gift card at many retail stores like Target, Walmart and Best Buy, or get credits through social promotions. </li></ul><ul><li>You can also purchase credits within many of the games themselves and some of the video apps on Facebook. </li></ul><ul><li>After making an initial payment, you are able buy Facebook Credits and get back to your games or other Facebook Credit-related activity very quickly. </li></ul>How “Facebook Credits” works…
  13. 15. Who i s using “Facebook Credits?”
  14. 16. <ul><li>Creating a platform, service or product and gaining FB credits from their use. </li></ul>Developers are using Facebook Credits
  15. 17. Social game developers are using Facebook Credits to provide a reward system into their games for users who engage in a certain type and degree of activity. “ Most leading developers have already integrated [Facebook] Credits as the only way of paying using credit Cards” – Inside Social Games , January 11, 2011
  16. 18. <ul><li>Incentivize users to participate in a special promotion </li></ul><ul><li>Watch a video ad inside of a social game online, or other content. </li></ul><ul><li>Take a survey </li></ul><ul><li>Reward fans who watch your videos </li></ul><ul><ul><li>(Why pay an ad network or other middleman for views you can pay the consumer directly?) </li></ul></ul><ul><li>Trade membership rewards for Facebook Credits. ( American Express ) </li></ul>Brands are using Facebook Credits to…
  17. 19. Brands are using Facebook Credits…
  18. 20. Facebook Credits earned outside of Facebook <ul><li>4loot.com - A search engine like Google, only every day you use it you gain coins which you can convert FB credits. </li></ul><ul><li>(If you have your friends join, you can win coins when they win.) </li></ul>
  19. 21. Why should we care?
  20. 22. <ul><li>Only July 1 st , 2011, FB Credits became the exclusive payment system in all FB-hosted social games </li></ul><ul><li>“ Facebook has steadily worked to make Credits the only payments option on its platform.” – Inside Social Games. </li></ul><ul><li>FB Credits has already achieved considerable traction as a virtual currency. </li></ul><ul><li>FB Credits will only gain more momentum. It will continue its penetration into mass retail chains such as Target, Best Buy and Walmart. </li></ul>
  21. 23. So why is Facebook paying users to watch ads?
  22. 24. “ Facebook is hoping to grow the use of Facebook Credits, if only by 3 to 5 percent.” - Business Insider “ Facebook is hoping the new incentive-driven model will remedy its categorically low click-through rates on banner ads.” - AdWeek
  23. 25. <ul><li>“ Paying consumers in FB credits seems a viable way to get them to engage with certain types of branded content </li></ul><ul><li>“ Gamers who are already invested in the FB Credits ecosystem will probably appreciate the opportunity to earn a few extra credits for watching an ad. </li></ul><ul><li>“ FB might even draw some new users to social games on the promise of credits for ad views.” </li></ul>What analysts are saying… – eMarketer reports, 2010-2011
  24. 26. Forecasts
  25. 27. <ul><li>“ Facebook Credits poised for a massive 2011.” </li></ul><ul><li>– Virtual Currency News, Nov 15, 2010 </li></ul>
  26. 28. <ul><li>“ Facebook Credits became the mandatory payment method for third party app developers on the social network on July 1 2011, positioning the virtual currency for explosive growth .” </li></ul><ul><li>“ This growth will likely be driven in great part by daily active players of social games , who now comprise well over 150 million users .” </li></ul><ul><li>Sources: Mediabistro.com reports: </li></ul><ul><li>“ Facebook Credits: Deployment Strategies in Facebook Games” </li></ul><ul><li>“ Facebook Ad Networks: A Guide to Monetizing Facebook Games & Apps.” </li></ul>
  27. 29. Challenges for Facebook Credits
  28. 30. Facebook’s Share will deter many game developers <ul><li>Facebook takes a 30% cut of the developer’ s share of the transaction </li></ul><ul><li>FB’s share size is more akin to Apple’s and Amazon’s share of content sold on their digital storefronts, than on a purely transactional system such as PayPal. </li></ul><ul><li>Given that dynamic, the penetration of FB Credits will be limited by the number of developers (esp. game publishers) who decide to go along with this system. </li></ul><ul><li>Many of the larger developers have already signed on, but… </li></ul><ul><li>a large contingent of smaller and mid-sized players have expressed strong objections to the size of FB ’s share. </li></ul>
  29. 31. Privacy concerns pose a big hurdle <ul><li>“ Nearly eight in 10 American and British adults expressed worries about the privacy implications of shopping directly on Facebook. ” </li></ul><ul><li>Three-quarters said they &quot;don't think Facebook is secure enough to make purchases on,&quot; and almost that many said they &quot;wouldn't use a shopping application on Facebook because of concerns that it could compromise my privacy -- e.g., shared with third parties.” </li></ul><ul><li>– MediaPost, July 7, 2011 – Facebook Commerce: Privacy Big Hurdle to Success </li></ul>
  30. 32. Are Consumers Really Interested? <ul><li>Tedious way for users to gain credits </li></ul><ul><li>Requires a lot of their continual time </li></ul><ul><li>Limited uses for earning something of value. </li></ul>© iStockPhoto #16320598
  31. 33. Virtual Goods Have A Limited Appeal <ul><li>No plans from FB yet on allowing credits for use of purchases on tangible goods or services </li></ul><ul><ul><li>(Aside from social games, FB Credits is currently only available for purchases of digital content. ) </li></ul></ul><ul><li>- No plans announced by developers for real currency integration </li></ul><ul><li>- No plans for real currency integration by regular retail/ecommerce vendors either </li></ul>
  32. 34. Anti-Trust Violations? - Consumer Watchdog, a nonprofit consumer advocacy group, has filed a complaint with the Federal Trade Commission accusing Facebook's virtual currency system of anti-competitive behavior. - The complaint asks that the FTC issue an injunction stopping Facebook from continuing its behavior; and that it investigate Facebook's relationship with social gaming giant Zynga.
  33. 35. New Marketing Uses for Facebook Credits
  34. 36. <ul><li>Virtual - to-real credit transactions : Brands take the lead in allowing X amount of Credits for real-world purchases on their own FB eCommerce store. </li></ul><ul><li>Education – Improving Education through incentivized social gaming. FB Credits could be used as an incentive and reward system for finishing homework, extra credit, extra assignments, etc. </li></ul><ul><li>Cause marketing – social gaming w/ video towards social change. </li></ul>New Marketing Uses for Facebook Credits
  35. 37. Marketing Shifts Point To Video
  36. 38. <ul><li>“ For many businesses, having a branded Facebook page has become a near-essential part of their marketing arsenal. In the year since Facebook began encouraging businesses to deploy the thumbs-up button across the web, brands have been racing to rack up “likes.” </li></ul><ul><li>“ To be successful in this post- “like” phase of Facebook marketing , companies will need to excite their fan base with compelling posts, interactions that spur a sense of community, and rewards for their ongoing support. Brands that do not make Facebook marketing a priority will risk seeing their hard-earned “likes” churn away.” </li></ul><ul><li>Source : Grant Crowell ’s interview with Paul Verna, eMarketer, senior analyst </li></ul>Going Beyond “Likes”
  37. 40. <ul><li>Video is the most shared media online </li></ul>Consumers are creating video more rapidly today than at any other time in recorded history; and video is ideally suited for the social media space
  38. 41. <ul><li>Audience  – Facebook is the 2nd largest trafficked website, with over 750 million active users </li></ul><ul><li>Referrals  – Facebook is the 2nd largest referral source for video </li></ul><ul><li>Mobile  – 150 million active users take Facebook with them everywhere they go. </li></ul><ul><li>Time  – Many people spend a lot more time on Facebook than on Google </li></ul><ul><li>Versatility  – Many video formats are supported for uploading </li></ul>10 good reasons for video marketing on Facebook
  39. 42. <ul><li>Length  – Facebook allows up to 20 minutes, 5 minutes more than YouTube </li></ul><ul><li>Connectivity - wide range of sharing features & engagement opportunities. </li></ul><ul><li>Search Engine Visibility  – Facebook videos are visible within Google Search. </li></ul><ul><li>SMO  (Social Media Optimization) – Excellent keyword encoding (aka, “tagging”) capabilities. </li></ul><ul><li>Conversions  – Hot triggers around the video for taking an intended action </li></ul>10 good reasons for video marketing on Facebook
  40. 43. Facebook is the fastest-growing site for video sharing. – TubeMogul report Online retailers are bringing video to the social web through a suite of tools focused on broadening video's impact while connecting it directly to revenue.
  41. 44. Use Video To Build Conversation & Community
  42. 46. What Is Social Video?
  43. 47. <ul><li>“ Social video is the blending of video into human relationships for the co-creation of value.” – Grant Crowell </li></ul><ul><li>The value of social video comes not only from the interesting video content itself, but on the dissemination and communication around the video as well. </li></ul><ul><li>Social video is more about earned attention and focused attention , which gradually increases over time (and becomes more valuable to more people). </li></ul><ul><li>The lasting power of social video is based on trusting the source and the message. Thus, it must always be transparent and authentic . </li></ul>
  44. 48. Social video platforms will help adoption of FB Credits <ul><li>Liveclicker launches social video platform – February 24, 2011 </li></ul><ul><li>Allows consumers and Facebook friends to post interactive videos directly to their own pages to create the ultimate social shopping experience. </li></ul><ul><li>Includes delivering interactive video experiences throughout Facebook and onto their websites. </li></ul><ul><li>Interactive videos are easily shared and commented on. Customers receive guidance and feedback from their Facebook friends, creating an interactive and fun social shopping experience while driving social traffic back to your main website. </li></ul>
  45. 49. Social Video Commerce example on Facebook Fan Pages <ul><li>Liveclicker integrates client’s interactive video library with their Facebook Pages through the videos tab. </li></ul><ul><li>How-to videos placed on Facebook (Business) Fan Pages. </li></ul><ul><li>All examples feature the Liveclicker video technology platform. </li></ul><ul><li>Browse, shop, and buy other products right within the video player. </li></ul><ul><li>Examples include: </li></ul><ul><li>Advance Auto Parts OnlineShoes.com </li></ul><ul><li>eBags Vitamin Shoppe </li></ul>
  46. 50. SOCIAL VIDEO in Retail & Ecommerce on Facebook
  47. 55. Music industry examples of SOCIAL VIDEO on Facebook
  48. 56. <ul><li>Musicians have begun allowing fans to exchange Facebook Credits for access to pay-per-view streams of concerts, at a standard price of 50 credits, or 5 dollars, per show. </li></ul><ul><li>The hook is access to premium “entertainment” content and value. </li></ul><ul><li>New revenue stream with built in audience despite the 30% cut. </li></ul>
  49. 58. Band “Widespread Panic” live on Facebook <ul><li>2 day concert in Mid-June utilized Milyoni live event plaftorm. </li></ul><ul><li>All purchased tickets to attend the first Social Theater concert on the Facebook platform  </li></ul><ul><li>2,300 tuned in across 19 countries and all used Facebook Credits </li></ul><ul><li>The average concert attendee was 33, with 75% male and the remainder female </li></ul><ul><li>More than 19 countries, including the United Kingdom, South Korea, Australia, Germany, Brazil, and South Africa </li></ul><ul><li>The music group increased Fan followers by 20,000. Austin City Limits' Facebook Fan base grew by 40%. </li></ul><ul><li>Source: MediaPost </li></ul>
  50. 59. Brand Marketing Examples
  51. 60. “ Green Works” Users watch a video ad from Clorox in its entirety and then receive FB credits in exchange.
  52. 61. Facebook commenting in videos <ul><li>Facebook video comments are integrated in your brand's own site and product pages, so consumers see what Facebook users have to say about your product. </li></ul>
  53. 62. Movie Examples
  54. 63. Warner Brothers movie rentals <ul><li>In March 2011, Warner Brothers launched a service allowing Facebook users to rent and stream popular movies, using Facebook credits as a form of payment. </li></ul><ul><li>Most movies are 30 credits, or 3 dollars each, and can be launched from their respective fan pages. </li></ul>
  55. 64. Warner Brothers movie rentals
  56. 65. Questions Remain… <ul><li>Are Facebook Credits a real opportunity for more businesses than just social games? </li></ul><ul><li>Are they really the right incentive? </li></ul><ul><li>Do they really qualify customers? </li></ul><ul><li>Can it ever be suitable for tangible goods and real currency exchange? </li></ul><ul><li>Is social video commerce a viable strategy for Facebook Credits to go mainstream? </li></ul><ul><li>Are FB a violation of anti-trust laws? </li></ul><ul><li>Will developers and businesses be willing to accept FB ’ s 30% cut? </li></ul>
  57. 66. Grant Crowell Grant Crowell is the senior media analyst, podcast show host, video interviewer vlogger for ReelSEO.com – the #1 online magazine dedicated to the business, culture, and technology of online video. [email_address] Follow on twitter: @grantcrowell Duncan Alney Duncan Alney is the vision behind Firebelly Marketing and a nationally recognized social media provocateur who speaks across the country. [email_address] Follow on twitter: @firebelly

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