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

1. Real Money in Virtual Goods: Consumer Spending Habitsand Strategies for Growing the Pie Powering Virtual Economies Worldwide

2. Agenda About Social Gold Quick recap of Social Gaming Virtual Currency: The spend driver Consumer Behaviors & Habits Growth Strategies

3. 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

4. About Social Gold A platform that allows you to . . .  monetize through virtual currency  merchandise your virtual goods  optimize your virtual economy

7. 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

9. Timed visits

10. Casually ImmersiveUsers pay for power-up, faster ways to grow in the game

11. 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

12. Some Examples of High Spenders $14,794 $11,635 $25,540 $13,960 $19,054

14. Defining Virtual EconomyWhy do people buy Virtual Goods?

15. Virtual Currency: Means to an Experience

17. Why Virtual Currency? Separate “Value” from “Cost” Virtual currency is “cheaper” than “money” Train User Behavior Economy around user generated content

18. 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.

19. Consumer Behaviors & Habits How Much do People Spend on Virtual Goods?

20. 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

21. Virtual Goods enable much higher spending behavior in loyal users

22. Loyal Repeat Purchaser: $250 One time purchaser: $12 Loyal purchasers spend the same as about20 one time purchasers

23. Highest Spender: $25,000 Loyal Spender: $250 One high spender spent the same as about100 loyal spenders.

24. Strong Global LTV Anchored by Europe & NA Average LTV: $60

25. 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?

26. 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)

27. 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

28. Functional Goods drive more users to pay Experiment with price points Understand your user demographics and customize for them Keep them engaged for longer

29. “Sales” and “Specials” drive people to spend more money

30. Make repeat purchase experience extremely seamless “Encourage” higher price points Make sure the game is still engaging

31. How many? Average: 50% of all spenders  9% Best Farming Game: 30%  15% Worst Farming Game: 63%  4% Best Social Game: 36%  51%

33. 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

34. 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

35. http://getsocialgold.com Powering Virtual Economies Worldwide vikas@jambool.com