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Vikas Gupta, CEO of Social Gold, presented customer spending behavior insights at Virtual Goods Forum in London, on July 24, 2010.

Vikas Gupta, CEO of Social Gold, presented customer spending behavior insights at Virtual Goods Forum in London, on July 24, 2010.

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Virtual goods forum_uk__vikas_v1_6-17-10 Virtual goods forum_uk__vikas_v1_6-17-10 Presentation Transcript

  • Real Money in Virtual Goods: Consumer Spending Habitsand Strategies for Growing the Pie
    Powering Virtual Economies Worldwide
  • Agenda
    About Social Gold
    Quick recap of Social Gaming
    Virtual Currency: The spend driver
    Consumer Behaviors & Habits
    Growth Strategies
  • About Social Gold
    The leading virtual goods monetization platform
    Launched in Sept 2008
    Grew 2000% in revenue in 2009
    Founded by ex-Amazon veterans
    In-game payments, Secure in-Flash payments
  • About Social Gold
    A platform that allows you to . . .
     monetize through virtual currency
     merchandise your virtual goods
     optimize your virtual economy
  • The Social Gold PlatformAll the Critical Tools to Help Manage Your Virtual Economy
    Micropayments
    &
    Subscriptions
    Virtual Currency
    &
    Inventory Mgmt
    Analytics
    &
    Reporting
    PLUS:
    • Fraud Management
    • Customer Service
  • About Social Gold
    Social Games | Casual Games | Virtual Worlds
  • Virtual Goods & Social Games
    Timeline
    2007 Facebook platform
    Casual Apps
    SuperPoke, FunWall, Hug Me
    2008: Dawn of the Games
    Green Patch, Mob Wars, Friends for Sale
    MySpaceplatform
    2009: Flash Based Games
    Farmville, Pet Society, Happy Aquarium
  • Virtual Goods & Social Games
    • Bite sized chunks of engagement
    • Timed visits
    • Casually Immersive
    Users pay for power-up, faster ways to grow in the game
  • Virtual Goods & Social Games
    What makes this space so exciting?
    Social Networks are an Engaged Audience
    Games act as fillers – perfect fit
    Distribution via News Feed leads to low cost viral growth
    Social Networks provide Distribution
    Games provide engagement + monetization
  • Some Examples of High Spenders
    $14,794
    $11,635
    $25,540
    $13,960
    $19,054
  • Defining Virtual EconomyWhy do people buy Virtual Goods?
  • Virtual Currency: Means to an Experience
  • Why Virtual Currency?
    Separate “Value” from “Cost”
    Virtual currency is “cheaper” than “money”
    Train User Behavior
    Economy around user generated content
  • Defining Virtual Economy
    Lessons from the Real World Economy
    “Labour is the real measure of exchangeable value.
    Wealth is power of purchasing labour.”
    Value in your economy is in your goods.
    Currency is a means, not the end.
  • Consumer Behaviors & Habits
    How Much do People Spend on Virtual Goods?
  • Some Caveats
    Data spans publishers on Social Gold network
    LTV and behavior in games varies considerably
    Social Gold tends to drive higher LTV and user spending
  • Virtual Goods enable much higher spending behavior in loyal users
  • Loyal Repeat Purchaser: $250
    One time purchaser: $12
    Loyal purchasers spend the same as about20
    one time purchasers
  • Highest Spender: $25,000
    Loyal Spender: $250
    One high spender spent the same as about100 loyal spenders.
  • Strong Global LTV Anchored by Europe & NA
    Average LTV: $60
  • Average Spender: $60
    Roughly 2-4% of all your users spend money
    “Revenue potential” from virtual currency per user:
    $1-$2
    What is your cost of customer acquisition?
    What does it cost you to serve this user?
  • How do you grow the pie?
    Get more users (peasants)
    Convert more users to spenders (farmers)
    Get spenders to spend more money (knights)
    Serve and retain your high spenders well (kings and lords)
  • Growing more users
    Viral Growth
    Viral Factor > 1 implies exponential growth
    Good Viral Factor in new games: 0.7
    Build Friends into the game
    Focus on the User Experience
    Retention reaps bigger rewards than pure viral
    Cross promote, Buy traffic
  • Functional Goods drive more users to pay
    Experiment with price points
    Understand your user demographics and customize for them
    Keep them engaged for longer
  • “Sales” and “Specials” drive people to spend more money
  • Make repeat purchase experience extremely seamless
    “Encourage” higher price points
    Make sure the game is still engaging
  • How many?
    Average: 50% of all spenders  9%
    Best Farming Game: 30%  15%
    Worst Farming Game: 63%  4%
    Best Social Game: 36%  51%
  • Growth StrategiesTop 5 Strategies to Grow the Virtual Goods Pie
    Increase conversion of “like customers” (CRM 101)
    Expand offerings to reach different consumer segments
    Increase ARPPU
    Merchandising
    Promotions (price, seasonal, etc)
    Loyalty programs (recognize “high click pressure”, feed it, reward it)
    Increase stickiness / addictiveness of the experience (eg, product innovation)
    Cross-promote and migrate users to new experiences
  • Summary
    Focus on Experience, Retention, Economy
    Loyal purchasers spend $250 for virtual goods
    Building seamless purchase experience (e.g., Social Gold in-Flash) builds more loyal repeat purchasers
    How much a user spends depends on the experience you provide them
  • http://getsocialgold.com
    Powering Virtual Economies Worldwide
    vikas@jambool.com