Virtual Currency And Monetizing Social Media

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

Social Media growth Engagement is More Than Time Spent SN Users as % of Total Internet Users* Phenomenal Growth… Non-effective advertising • 6 out of 10 U.S. Internet users have • Interrupt-driven CPM banners: created social network profile <50c CPM • More than 70% of Facebook users use • Out of context CPC ads: <$1 CPM apps monthly • Video ads: $1-$2+ CPM • More than 6 billion minutes are spent on Facebook each day

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 – What is it? • 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

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

Size of Virtual Goods Market In the U.S., Virtual Goods Revenue Expected to Top $600 Million This Year $2,460 $2,020 $1,550 $1,100 $620 $265 2008 2009 2010 2011 2012 2013

Size of Virtual Goods Market Worldwide, Virtual Goods Revenue Expected to Reach $6 Billion by 2013 $6,000 $5,050 $4,070 $3,110 $2,220 $1,325 2008 2009 2010 2011 2012 2013

Virtual Currency Examples

Rewards and Points • 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

Users can Purchase or Earn Points

Beyond casual games… • 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

Offer is Targeted • 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 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.

Conclusions • 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)

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Virtual Currency And Monetizing Social Media

by Markus von der Luehe on Oct 01, 2009

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Virtual Currency And Monetizing Social Media — Presentation Transcript