Virtual Goods Summit

Although the market for virtual goods continues to expand at a phenomenal rate, the business activity around this industry is just starting to catch up. A great networking opportunity is taking place next week in San Francisco at the Westin Market Street.

The Virtual Goods Summit 2009 should be a hit. The 2009 edition of the virtual goods summit will bring together thought leaders in this space to talk about what's changed, what's working, and the key challenges facing the industry. You can use the discount code ADPARLOR to save 15% off tickets.

I will be there along with other members of the AdParlor team. Come and network with us, and more importantly, we are giving out some really neat gifts on the Friday (Oct 30th). Guess what we are giving out, and you could win an extra set.

Safer ads for the facebook platform

AdParlor launches 'SuperSafe' ads, aiming to comfort developers who are nervous about the recent facebook policy enforcement.

Article available on Inside Facebook

Elephant in the room

There is an elephant in the room. That of falling eCPM's within social media applications. I am going to discuss facebook applications as this is the most relevant in terms of volume, growth, and overall revenues in the market. Many facebook apps built revenue projections based on eCPM's they were seeing several months ago, now have to revamp their thinking, as they are now earning a half, or even a quarter, of what they were previously seeing! This is not the case for all apps, but overall the general trend seems to be downwards. First let me apologize to those blog readers who care more about the advertising side than the publishers angle. Now, let me try and explain why this is happening?

1. Mobile Advertising Regulations - Recurring billing from mobile services were one of the driving forces behind strong eCPM's. Users - whether they were aware or not - completed these offers in droves, driving revenues to the ad networks and back to the publishers. Recent media coverage required facebook to take certain actions to modify the wording, presentation, and billing of these offers.

2. User Information - A few ad networks decided to take advantage of information in an inappropriate manner. Creating deceptive ads and storing user information. This caused a major backlash from facebook users, causing facebook to impose strict guidelines. Applications can no longer pass ANY user information to ad networks. This means even the ad networks that were using this information to legitimately target advertisements, are now unable to do so.

3. Ad Fatigue - The same ads that were working/converting just a few months back now have a significantly lower CTR and a significantly lower conversion rate. Users are becoming 'bored' of clicking through on ads within social media applications and are rather sticking to the main attraction.


Is this the end of making money on social media applications? No - Definately Not! Several reasons:

1. Despite dropping eCPM's in the past 6 months, there has been a recent rebound in the past few weeks. Ad networks have been diversifying their ads, improving their technology, and optimizing galore.
   
   
2. Despite dropping eCPM's, applications are growing bigger and the overall facebook user base keeps growing - generating more impressions overall.
   
   
3. Whereas previously only impressions from certain countries were monetizable, global impressions are actually starting to see an increase in eCPM's!
   
   
4. There is a still a massive and growing revenue opportunity in the virtual currency space and more and more application developers are beginning to take advantage of this.
   
   

Looking forward to your comments on the above - and any other thoughts.

Stanford Presentation @ Always On Conference

Got a hold of the video.



Just got a hold of a MUCH better version of the video which also shows my slides in action synchronized with the presentation. Thanks to the guys at vivu for this coverage.

AdParlor presenting @ Always On

Quick note - AdParlor will be presenting at the Always On conference on Thursday around 10am PST. Watch Live: http://alwayson.goingon.com/ecom/productview/24424

Always On - AdParlor CEO ShowCase

Quick Note - On Thursday July 30th @ 9:40AM PST (12:40 PM EST) I will have 6 minutes to present AdParlor at the Always On conference at Stanford University in Palo Alto. If you are going to be attending the conference, please shoot me an e-mail so that we can meet. If you will not be attending, feel free to join 15,000 others in watching the live webcast!

http://alwayson.goingon.com/ecom/productview/24424

Virtual Currency Monetization

One of the key revenue drivers within social media - that is already big, and picking up more steam every day - is virtual currency monetization. Wanted to make a quick post about this topic from the Publisher/Application developer standpoint as well as the Advertisers perspective.

How does this work?
Let's illustrate with an example. As an application developer, you have built a facebook application that is a game of world domination. Within this game, your users collect 'gold coins' (your games 'virtual currency') which they can use to buy land, weapons, and various items. Companies such as AdParlor, Super Rewards, and OfferPal will give your users another way to get these gold coins. For example, your users can now purchase gold coins directly using their mobile phone. They can also earn gold coins by completing a quick survey. When your users make this purchase or complete this survey, they get their gold coins as promised and you, as the developer, make REAL money.

PUBLISHERS - What does this offer wall look like? How much can I make?
Here is a sample offer wall from AdParlor on an application where the virtual currency is 'Flair Credits'. Application developers have seen eCPM's that are not even on the same scale as eCPM's seen from banner advertising. If they have created a genuine desire for their users to earn virtual currency within their game, they will complete offers in order to earn. Many of the offers are actually quite useful such as allowing users to register for a book club and receive discounted books. Offers such as a book club can pay out up to $20 / new subscriber! The 'companies / offer providers' above have also invested a significant amount of time developing algorithms to bring the highest paying and most completed offers to the top of the offer wall, while taking into account the users demographic information.




ADVERTISERS - What does this mean for me?
This is interesting to advertisers for many reasons. Let's say you are a market research firm looking to have surveys filled out or an exciting new online game looking to bring on new players. This offer wall allows providers to only award users with their virtual currency upon completion of an action. For example 'Must complete survey and enter valid information to earn your Flair Credits'

Now the question may be 'Aren't these users simply completing my survey to get their virtual currency and not because they are genuinely interested in responding to my survey' The simple answer is - most of the time - YES! For this reason, there are only certain types of advertisers where this method is useful. A user signing up for a book club, would probably have a genuine interest as they are putting in their credit card number. Also, these types of campaigns count on users seeing the value of the subscription and deciding to stick with it (not canceling). Some market research firms simply need to collect a volume of valid e-mail addresses for lead gen purposes - and this method can definitely work.


Market Size
There have been lot's of estimates on the size of the virtual goods market in the US and worldwide. Instead of trying to re-hash everything here, there is a great post by Charles Hudson discussing the social networking virtual goods market versus the external virtual goods market as well as US vs. Global. Have a read here.

As always - I welcome your feedback!