One of the great things about the Facebook platform is that it provides you access to a large audience of more than 200 million people worldwide at a low cost. But that doesn't mean you shouldn't have a strategy in place for what you are trying to achieve. Whether you are a small local business, or even a well-known product or service, you will need to give some thought to your audience, like: who are they; how do they want to be spoken to; what messages would you want them to receive; and what are the tactics for having them interact with your message. So let's go through some of your options when it comes to social networking marketing.
HAVE A STRONG PRESENCE
A Facebook presence, like a Web site, is a fundamental tactic and should be on everyone's list of must-haves for social network marketing. Similar to the dot-com land grab that happened in the late 90's, you should secure your company name on as many social sites as you can.
Once you have your presence, you will need a strategy for posting updates with interesting content as frequently as you can. Be sure to get your employees involved. Encourage them to become fans, and drive the conversations to create a thriving community. The reason being, you will want Facebook users to be able to discover your Facebook page through their friends' profiles and with Facebook searches. This is the key to growing your fan base “virally.” Also keep in mind Facebook pages are indexable, so be sure to write your content with good SEO in mind.
DO SOME ADVERTISING
You will find that advertising on Facebook is unlike any other advertising experience you have ever had. This is mainly because of the unique ways in which you can precisely target a specific ad down to the person's profile. For example, if you want to target M.B.A. graduates who are 3-to-5 years out of school, working in Southern Connecticut, like classic rock and whose favorite food is sushi—you can do that!
There are two basic types of ads—display ads and social ads—and they can be purchased like banner ads with cost-per-click (CPC) and cost-per-thousand (CPM). While they work similarly to online banner ads, do try not to use them in the same way. Most Facebook users feel more comfortable staying within the Facebook environment. So try to direct them to somewhere on your Facebook Fan page. With the new Facebook Fan page design, you can send them directly to a tab of your Fan page since each tab has a unique URL.
CREATE AN APPLICATION
If you are going to send your ads to a specific tab, why not send them to an application you built to engage them with your brand. Facebook applications are similar to widgets, or snippets of code, which can be embedded in any Facebook Fan page to make it more distinguished. You can think of them like interactive spaces that can allow the user to take a poll, play a short game or anything you can dream up.
Creating a Facebook application has become widely popular because custom applications are not that hard or expensive to build. Some Facebook applications have seen tremendous growth because they were built to take advantage of the viral nature of Facebook.
SYNDICATE YOUR CONTENT
Another tactic to consider if you already have a steady stream of rich content is to use Facebook as an outpost for your content. If you already have a blog, podcast or video series, you can effectively use Facebook to attract another audience to interact with those assets.
There are a variety of ways to syndicate content on your Fan page. You can use the Notes page to import blog posts to your Fan page. You can use the My Del.icio.us application to import any bookmarks you may have made in your Del.icio.us account. You can use the Simply RSS application to bring in all the RSS feeds you may have on your company Web site. You can edit your Links section and have a variety of blogs or Web sites you may want to highlight—perhaps by employees or partners of your company. And don't forget to edit your Feed settings to include the complete versions of all your blog posts so they appear not only on your Fan page but on the Feeds of all your fans.
THROW AN EVENT
Facebook events are a great way of getting people together virtually or in person in support of your local business, brand or product. They are also a very economical way of getting the word out beyond your normal in-house marketing list by inviting the Fans of your page. Fans can also help you promote your Facebook event to their friends by sharing the event if it seems of value to a group of their friends.
Don't forget to follow-up after your event; it's just good protocol to do so. If you had a very healthy debate with lots of questions, consider sending a transcript out to everyone who attended or even those that didn't. If some questions didn't get answered because of time constraints, try writing up the answers and sending them to the all attendees, too.
The key point is try not to take a “set it and forget it” mentality to any social presence. While the costs of social marketing are low, don't let that fool you. The true cost is found in the creation of content. And your key to success will be the consistent participation and willingness to engage your customers you can create by using great content.
Wednesday 27 May 2009
In-Game Advertising Spend to Reach $1bn
Spending on in-game advertising will reach $1bn by 2014.
Media & Marketing 26th May 2009.
In its latest report, In-Game Advertising: Market Assessment and Forecasts to 2014, media analyst Screen Digest predicts that in the future it will become impossible for brands to ignore the audience share that video games attracts.
For the report Screen Digest explored the in-games advertising industry and surveyed digital planners from GroupM’s global agency network. It was revealed that the combination of audience media habits and the unique advertising opportunities it provides will turn in-game advertising into a major growth medium. Screen Digest estimates that dynamic in-game ads will account for around 1.5% of annual spending in 2014.
According to the report, areas of in-game advertising that made it attractive to brand owners and digital planners included: scalability, accountability, high levels of audience engagement and positive brand associations.
“Games are proven recession-beaters with an ad-funded online model that actually works,” said Adam Smith, futures director at GroupM. “There are many ways in which advertising can help evolve business models for video games and we have only just begun to explore that potential. Given gaming is now a mainstream leisure interest, in-game deserves the same consideration as mobile and social media.”
Media & Marketing 26th May 2009.
In its latest report, In-Game Advertising: Market Assessment and Forecasts to 2014, media analyst Screen Digest predicts that in the future it will become impossible for brands to ignore the audience share that video games attracts.
For the report Screen Digest explored the in-games advertising industry and surveyed digital planners from GroupM’s global agency network. It was revealed that the combination of audience media habits and the unique advertising opportunities it provides will turn in-game advertising into a major growth medium. Screen Digest estimates that dynamic in-game ads will account for around 1.5% of annual spending in 2014.
According to the report, areas of in-game advertising that made it attractive to brand owners and digital planners included: scalability, accountability, high levels of audience engagement and positive brand associations.
“Games are proven recession-beaters with an ad-funded online model that actually works,” said Adam Smith, futures director at GroupM. “There are many ways in which advertising can help evolve business models for video games and we have only just begun to explore that potential. Given gaming is now a mainstream leisure interest, in-game deserves the same consideration as mobile and social media.”
Tuesday 26 May 2009
Three Wolves Release The Power of Internet Culture
Here is a great and "out of the box" viral concept. It really shows the power of Internet culture affects even the most mundane of things. However, the 3 Wolves howling at the Moon is pretty awesome. I'm definitely getting one!
Think a T-Shirt Can’t Change Your Life? A Skeptic Thinks Again
The New York Times, Published: May 24, 2009
As the kind of guy who doesn’t need any particular item of apparel to get in touch with my inner animal spirit, I was skeptical when my friend Steve and his daughter Dorothy started enthusing about the Three Wolf Moon T-shirt and attendant Internet culture phenomenon. Yeah, right, I thought.
But ... after I put on the T-shirt, immediately grew back all the hair I’d lost decades ago and got a seven-figure contract to star in a kung fu romantic comedy along with Maria Sharapova and Scarlett Johansson, I had to admit I was wrong.
Brian Govern, a 32-year-old law student in Glassboro, N.J., had no idea what he had started when he wrote a similarly over-the-top review on Amazon.com of the T-shirt, which shows three wolves howling at the moon. Employing the snarky spirit of online humor, the review began:
“This item has wolves on it which makes it intrinsically sweet and worth 5 stars by itself, but once I tried it on, that’s when the magic happened.”
The magic, it turned out, was not so much the undeniably totemic power of the shirt, now endorsed by about 700 other similarly rapturous, if not entirely serious, reviewers, but the lesson in the inscrutable power of online culture that it provided. Like the butterfly wings creating the tornado, Mr. Govern inadvertently helped set off an almost impossible marketing bonanza and pop-culture craze: The shirt has been Amazon’s top-selling item of apparel every day since May 19, and it has morphed into one of those instant icons of Internet culture.
“This is something a lot of companies spend $100 million trying to do and for us it just happened, and we embraced it early on,” said Michael McGloin, an art school dropout and creative director of the Mountain, the New Hampshire-based company that made the shirt. The Mountain has gone from selling 2 or 3 of the shirts a day to 100 an hour on Amazon. “You could not dream of getting this worldwide notoriety for a T-shirt, but it became a viral visual,” Mr. McGloin said.
Mr. Govern, a student at the Rutgers School of Law in Camden, N.J., who hopes to go into intellectual property law, picked up on the shirt’s somewhat unfashionable, blue-collar appeal when he came across it on Amazon. (Note to commentators on patrol for liberal elitists — his politics are mostly conservative.) He reported that once he put the shirt on, women, apparently sensing some irresistible, brooding lone-wolf power, began flocking to him in droves. Just for wearing the shirt!
He concluded: “Pros: Fits my girthy frame, has wolves on it, attracts women.
“Cons: Only 3 wolves (could probably use a few more on the ‘guns’), cannot see wolves when sitting with arms crossed, wolves would have been better if they glowed in the dark.”
A few others chimed in over the coming months until the shirt and Mr. Govern’s comment were picked up first by a site called CollegeHumor.com in early May, then by Digg.com and others. Suddenly, everyone and his dog had a similar experience to share.
“When I opened the package, the focused radiance of the shirt actually burned my shadow onto the wall.”
“When I put this shirt on each morning I swear it vibrates like those fancy tooth brushes.”
“As soon as I put this shirt on the Bank called to apologize about trying to foreclose on my home.”
“I have been wearing this shirt for about 15 weeks and I have not needed to wash it! You don’t put this shirt on your torso you put it on your soul.”
Etc.
Some had caveats — they attracted no supermodels, experienced major increases in body hair, thought the shirt would be better with one wolf and three moons. Wolves might seem like a guy thing but the T-shirt artist, Antonia Neshev, is a woman, as are some of the enthusiasts. One wrote that buying the shirt “was the best decision I’ve ever made, including the decisions I made to go to college, to marry my husband and to continue taking A.D.H.D. medication.”
Even if some of it is pretty un-P.C. toward the stereotypical wolf-shirt wearer (way too many references to meth labs, Chuck Norris and trailer parks), the communal commentary is like a new shared literary art form.
Mr. Govern, whose review has been rated as helpful by more than 7,000 Amazon readers, said he was not even aware of the online frenzy until an Amazon representative contacted him on Friday to see if he would talk about it. “I tell my parents and friends that it’s sad, but this is probably the most impact I’ll have on the world in my life,” he said.
Mr. McGloin says wolves are perennial best sellers, ahead of horses, tigers, dolphins, dragons, Celtic crosses and the rest, so the wolf spirit had the potential to go viral. Still, to move from parody to icon at such warp speed is stunning. A competing T-shirt seller, Zazzle.com, has already jumped in, promising a classy wolf shirt for refined tastes: “Have your wolf and eat it too with this modern take on a classic garment.”
On an understated black background, it reads:
Three Wolves
Howling At
The Moon.
Think a T-Shirt Can’t Change Your Life? A Skeptic Thinks Again
The New York Times, Published: May 24, 2009
As the kind of guy who doesn’t need any particular item of apparel to get in touch with my inner animal spirit, I was skeptical when my friend Steve and his daughter Dorothy started enthusing about the Three Wolf Moon T-shirt and attendant Internet culture phenomenon. Yeah, right, I thought.
But ... after I put on the T-shirt, immediately grew back all the hair I’d lost decades ago and got a seven-figure contract to star in a kung fu romantic comedy along with Maria Sharapova and Scarlett Johansson, I had to admit I was wrong.
Brian Govern, a 32-year-old law student in Glassboro, N.J., had no idea what he had started when he wrote a similarly over-the-top review on Amazon.com of the T-shirt, which shows three wolves howling at the moon. Employing the snarky spirit of online humor, the review began:
“This item has wolves on it which makes it intrinsically sweet and worth 5 stars by itself, but once I tried it on, that’s when the magic happened.”
The magic, it turned out, was not so much the undeniably totemic power of the shirt, now endorsed by about 700 other similarly rapturous, if not entirely serious, reviewers, but the lesson in the inscrutable power of online culture that it provided. Like the butterfly wings creating the tornado, Mr. Govern inadvertently helped set off an almost impossible marketing bonanza and pop-culture craze: The shirt has been Amazon’s top-selling item of apparel every day since May 19, and it has morphed into one of those instant icons of Internet culture.
“This is something a lot of companies spend $100 million trying to do and for us it just happened, and we embraced it early on,” said Michael McGloin, an art school dropout and creative director of the Mountain, the New Hampshire-based company that made the shirt. The Mountain has gone from selling 2 or 3 of the shirts a day to 100 an hour on Amazon. “You could not dream of getting this worldwide notoriety for a T-shirt, but it became a viral visual,” Mr. McGloin said.
Mr. Govern, a student at the Rutgers School of Law in Camden, N.J., who hopes to go into intellectual property law, picked up on the shirt’s somewhat unfashionable, blue-collar appeal when he came across it on Amazon. (Note to commentators on patrol for liberal elitists — his politics are mostly conservative.) He reported that once he put the shirt on, women, apparently sensing some irresistible, brooding lone-wolf power, began flocking to him in droves. Just for wearing the shirt!
He concluded: “Pros: Fits my girthy frame, has wolves on it, attracts women.
“Cons: Only 3 wolves (could probably use a few more on the ‘guns’), cannot see wolves when sitting with arms crossed, wolves would have been better if they glowed in the dark.”
A few others chimed in over the coming months until the shirt and Mr. Govern’s comment were picked up first by a site called CollegeHumor.com in early May, then by Digg.com and others. Suddenly, everyone and his dog had a similar experience to share.
“When I opened the package, the focused radiance of the shirt actually burned my shadow onto the wall.”
“When I put this shirt on each morning I swear it vibrates like those fancy tooth brushes.”
“As soon as I put this shirt on the Bank called to apologize about trying to foreclose on my home.”
“I have been wearing this shirt for about 15 weeks and I have not needed to wash it! You don’t put this shirt on your torso you put it on your soul.”
Etc.
Some had caveats — they attracted no supermodels, experienced major increases in body hair, thought the shirt would be better with one wolf and three moons. Wolves might seem like a guy thing but the T-shirt artist, Antonia Neshev, is a woman, as are some of the enthusiasts. One wrote that buying the shirt “was the best decision I’ve ever made, including the decisions I made to go to college, to marry my husband and to continue taking A.D.H.D. medication.”
Even if some of it is pretty un-P.C. toward the stereotypical wolf-shirt wearer (way too many references to meth labs, Chuck Norris and trailer parks), the communal commentary is like a new shared literary art form.
Mr. Govern, whose review has been rated as helpful by more than 7,000 Amazon readers, said he was not even aware of the online frenzy until an Amazon representative contacted him on Friday to see if he would talk about it. “I tell my parents and friends that it’s sad, but this is probably the most impact I’ll have on the world in my life,” he said.
Mr. McGloin says wolves are perennial best sellers, ahead of horses, tigers, dolphins, dragons, Celtic crosses and the rest, so the wolf spirit had the potential to go viral. Still, to move from parody to icon at such warp speed is stunning. A competing T-shirt seller, Zazzle.com, has already jumped in, promising a classy wolf shirt for refined tastes: “Have your wolf and eat it too with this modern take on a classic garment.”
On an understated black background, it reads:
Three Wolves
Howling At
The Moon.
Saturday 9 May 2009
Making Content King
We all know that content is king, but some companies are going to extraordinary lengths to finding the right content for their web properties. Demand Media is one such company - now using over 2,000 freelancers to produce over 100,000 pieces of content.
Start-Up's Algorithm for Success
By EMILY STEEL, WSJ.com, May 8th 2009.
There's no formula to make sure a sitcom, a magazine article or a movie will draw audiences, let alone ad dollars. Figuring out what to write or produce often comes down to a crapshoot.
Demand Media thinks it has come up with a solution for that age-old dilemma. The start-up, which has raised $355 million since its inception in 2006 and is run by former MySpace Chairman Richard Rosenblatt, has spent the past three years refining a set of algorithms that it uses as a guide for mass-producing content that it publishes on its many Web properties.
The result is a network of 2,000 freelancers who create 100,000 pieces of niche content a month. These range from a video about diet tips for parakeets, featured on Demand Media's instructional site eHow.com, to an article about three ways to identify triggers for spikes in blood pressure on its site Livestrong.com, a partnership with the Lance Armstrong Foundation.
"We are taking splinters of content and bundling them together. That bundle of sticks is quite valuable," says Mr. Rosenblatt, who ran MySpace's parent company, Intermix Media, and negotiated its sale to News Corp. (News Corp. also owns Dow Jones, publisher of The Wall Street Journal.)
Ace Hardware's sponsorship of the Home & Garden section of eHow.com included Ace-created instructional videos.
Demand Media is one of several companies, from start-ups like Associated Content and Howcast to portals like Time Warner's AOL, that are trying to develop cheaper models for creating and distributing content online. It is the 30th-largest Web property in the U.S., with 25.9 million unique visitors in March, according to comScore.
Now, Demand Media's business model and its ability to attract ad dollars from major marketers is being put to the test as it starts selling the idea to Madison Avenue.
Demand's system works by analyzing data from thousands of sources, ranging from search engines and online advertising networks to Web analytics firms and the million domain names Demand Media owns. The algorithm finds search phrases with three common characteristics: demand from audiences, demand from advertisers and an ability to generate traffic.
The system spits out tens of thousands of title suggestions for articles and videos. These titles are sent to a reserve where the company's network of freelancers looks for available assignments. The freelancer writes the story or produces the video, then it's sent through a system to check for plagiarism and edited by a copy editor. After a separate editorial team approves the article, it's published on a Demand Media site and syndicated across other Web sites. Freelancers are paid about $20 per article or video.
Demand Media has been relying on third-party ad networks to broker most of the ads on its sites and has a revenue-sharing agreement with other sites where it syndicates its content, such as Google's YouTube. The company says it has been profitable since inception, thanks to ad revenues generated on its portfolio of more than a million generic domain names.
Instead of selling standard online ads, Demand Media is selling integrated sponsorships of its sites, as illustrated by a recent campaign for Ace Hardware on eHow.com, in which Ace sponsored the Home & Garden section of the site, which featured Ace-created how-to guides and videos.
One holdup is that most of Demand's individual sites lack the big audiences major marketers need to warrant big ad deals, says Jean-Philippe Maheu, chief digital officer at WPP's Ogilvy North America.
Other ad executives question whether Demand Media's model is polluting search results with articles from unfamiliar sources. "It seems like you are backfilling search results with content after the fact versus being an organically created, legitimate or interesting source of content beforehand," says Tim Hanlon at VivaKi Ventures, a digital marketing unit owned by Publicis Groupe.
To address editorial concerns, Demand Media puts its content through a series of screenings, Mr. Rosenblatt says.
Start-Up's Algorithm for Success
By EMILY STEEL, WSJ.com, May 8th 2009.
There's no formula to make sure a sitcom, a magazine article or a movie will draw audiences, let alone ad dollars. Figuring out what to write or produce often comes down to a crapshoot.
Demand Media thinks it has come up with a solution for that age-old dilemma. The start-up, which has raised $355 million since its inception in 2006 and is run by former MySpace Chairman Richard Rosenblatt, has spent the past three years refining a set of algorithms that it uses as a guide for mass-producing content that it publishes on its many Web properties.
The result is a network of 2,000 freelancers who create 100,000 pieces of niche content a month. These range from a video about diet tips for parakeets, featured on Demand Media's instructional site eHow.com, to an article about three ways to identify triggers for spikes in blood pressure on its site Livestrong.com, a partnership with the Lance Armstrong Foundation.
"We are taking splinters of content and bundling them together. That bundle of sticks is quite valuable," says Mr. Rosenblatt, who ran MySpace's parent company, Intermix Media, and negotiated its sale to News Corp. (News Corp. also owns Dow Jones, publisher of The Wall Street Journal.)
Ace Hardware's sponsorship of the Home & Garden section of eHow.com included Ace-created instructional videos.
Demand Media is one of several companies, from start-ups like Associated Content and Howcast to portals like Time Warner's AOL, that are trying to develop cheaper models for creating and distributing content online. It is the 30th-largest Web property in the U.S., with 25.9 million unique visitors in March, according to comScore.
Now, Demand Media's business model and its ability to attract ad dollars from major marketers is being put to the test as it starts selling the idea to Madison Avenue.
Demand's system works by analyzing data from thousands of sources, ranging from search engines and online advertising networks to Web analytics firms and the million domain names Demand Media owns. The algorithm finds search phrases with three common characteristics: demand from audiences, demand from advertisers and an ability to generate traffic.
The system spits out tens of thousands of title suggestions for articles and videos. These titles are sent to a reserve where the company's network of freelancers looks for available assignments. The freelancer writes the story or produces the video, then it's sent through a system to check for plagiarism and edited by a copy editor. After a separate editorial team approves the article, it's published on a Demand Media site and syndicated across other Web sites. Freelancers are paid about $20 per article or video.
Demand Media has been relying on third-party ad networks to broker most of the ads on its sites and has a revenue-sharing agreement with other sites where it syndicates its content, such as Google's YouTube. The company says it has been profitable since inception, thanks to ad revenues generated on its portfolio of more than a million generic domain names.
Instead of selling standard online ads, Demand Media is selling integrated sponsorships of its sites, as illustrated by a recent campaign for Ace Hardware on eHow.com, in which Ace sponsored the Home & Garden section of the site, which featured Ace-created how-to guides and videos.
One holdup is that most of Demand's individual sites lack the big audiences major marketers need to warrant big ad deals, says Jean-Philippe Maheu, chief digital officer at WPP's Ogilvy North America.
Other ad executives question whether Demand Media's model is polluting search results with articles from unfamiliar sources. "It seems like you are backfilling search results with content after the fact versus being an organically created, legitimate or interesting source of content beforehand," says Tim Hanlon at VivaKi Ventures, a digital marketing unit owned by Publicis Groupe.
To address editorial concerns, Demand Media puts its content through a series of screenings, Mr. Rosenblatt says.
Sunday 3 May 2009
Social Gaming - The Next Big Thing?
The economic downturn has taken a huge chunk of revenue from traditional media players but there are some surprising winners in the new media landscape. One of the more recent trends is social gaming (online games such as Texas Holdem Poker) but will it be more than a passing fad? This article from BusinessWeek explores the topic.
Social Gaming Scores in the Recession
Zynga, the company behind Texas Hold 'Em on Facebook, and other game makers are attracting millions of users. Will the shine wear off?
By Sarah Lacy, BusinessWeek.com
Gaming goes gangbusters in a downturn. In 2001, the Nasdaq was plunging and such tech mainstays as telecom, e-commerce, and enterprise computing were in a tailspin. But gaming giants Electronic Arts (ERTS) and Activision (ATVI) soared. Titles including The Sims, Grand Theft Auto, Halo, and the Madden sports series became national big-budget obsessions.
In the current recession, amid declines in computing and online advertising, gaming again is on a tear. Only this time around, it takes more than producing a pricey console or a slick blockbuster in a shrink-wrapped box to win big at gaming. In a way, it takes a lot less.
Some of the most impressive growth of late is in technologically stripped-down games that offer players social, communal experiences. The most talked about are Guitar Hero, Rock Band, and several interactive titles associated with Nintendo's (7974.T) Wii. And the trend isn't confined to the living room. Less talked about is a surge in social games, played with friends on smartphone platforms such as Apple's (AAPL) iPhone and on mass-market sites such as Facebook and News Corp.'s (NWS) MySpace.
Many Games Are Free
Social gaming is less about killer graphics and quicksilver hand-eye coordination and more about connecting with friends. The best games aren't impressive in terms of technology, though they're quite adept at harnessing media that let players interact. For games on social networking sites, that means letting far-flung friends and families share an activity, rather than just photos and wall posts. On the iPhone, games utilize sophisticated multitouch technology that lets the screen respond to more than a single touch at a time. The number of people playing social games is expected to surge to 250 million in 2009, from 50 million in 2008, by some industry estimates. During recessions, people tend to look for low-cost entertainment, often staying at home. Many social games are free; often even power users pay less than $50 a month.
Despite the low costs associated with social games, many actually make money. That's where entrepreneur Mark Pincus comes in. Pincus missed the last countercyclical gaming surge. Unlike most Silicon Valley geeks, Pincus isn't into video games; and in the early part of the decade he was too busy starting a company called Tribe, an ultimately failed effort to merge local newspapers with the burgeoning social networking trend then made popular by Friendster.
Pincus doesn't intend to make the same mistake twice. So he started Zynga, a site that specializes in social gaming. He's raised almost $40 million from some of the most well-regarded names in venture investing, including über-angels Reid Hoffman and Peter Thiel. Other investors include Union Square Ventures' Fred Wilson, and Kleiner Perkins Caufield & Byers.
Zynga's Disco Holiday Party
Zynga's most popular game is Texas Hold 'Em on Facebook. It gets 2 and a half million players a day. Across all networks, 45 million people per month play Zynga games. The bulk of that is on Facebook. In April, Zynga passed widget maker RockYou, owned by NetPickle (NetPickle), to become Facebook's top application maker, with 40 million monthly active users, according to Facebook. That's one-fifth of Facebook's 200 million users.
And here's the shocker: Zynga is actually generating a lot of revenue, and it's profitable. The site has annual sales of about $100 million, according to several people close to the company. That's about double what many blogs have speculated. Zynga has swelled to 250 employees who get Google-like perks. The site gets some revenue from selling ads, but mostly from the 2% to 10% of users who pay $1 an hour to play premium games or buy virtual goods. Even amid the recession, revenue is rising.
This recessionary disconnect was palpable during Silicon Valley's holiday party season. Zynga's fete was unlike the bare-bones holiday office lunch or the prepaid lavish affairs that came with a dour mood due to recent layoffs. Held at a club in San Francisco's North Beach district, the party featured Zynga staff in disco outfits, free drinks, and a 1970s-style band that also played at Pincus' recent wedding.
Borrowed Platform Carries Risk
So why isn't a Twitter-and-Facebook-obsessed press talking about social gaming more? You've got me. After all, Zynga isn't the only one benefiting from the surge. Playdom is the other giant of the space, reportedly generating almost $50 million in revenue. And while Zynga has big-name backing, Playdom is a much leaner and more profitable operation, according to some investors in the industry.
In Pincus' view, PlayFish represents even bigger competition. Its title Pet Fish is the most successful application on Facebook, with 2.5 million daily active users, just seven months after it launched. Then there's Social Gaming Network, better known as SGN, which is funded by David Sze of Greylock Ventures, the well-respected backer of LinkedIn, Facebook, Digg, Oodle, and other closely watched Web 2.0 names. More than 10 million people have downloaded SGN's iPhone and iPod Touch games, and more than 1 million people play its games across social networks every day.
As attractive as the social gaming phenomenon may be, it also carries risk. Building the bulk of your business on someone else's platform is always dicey. And games that do well are restricted to poker and mob war-style contests. Every big player has its own version of each, with little to set one apart from the others, critics say. Whether they can continue to build a catalog of titles that resonates with gamers remains to be seen. And like all things Web 2.0, social gaming may turn out to be a passing fad that people drop as soon as the next new shiny diversion comes along.
Disdain from Developers
There's also the risk for fraud when it comes to certain online transactions associated with social gaming, such as the sale of virtual goods. "We've found once you get into these digital-only goods and services there's massive opportunity for fraud," Pincus says. "We couldn't find a single company that could manage or solve that problem for us. We had to build the whole infrastructure in-house. We had to go out and get relationships with credit-card processing companies."
What's more, social gaming is not only bringing in a new type of gamer, but also a new type of developer. While they're highly adept at tailoring games to a social platform, these developers often don't have the high-level programming skills needed to build more advanced games. The barriers to entry have effectively dropped. Many in the gaming Old Guard look down their noses on social gaming. "I've detected disdain," Pincus says. "Critics say, 'These aren't real games. These aren't real game companies. There's no technology here.'"
Not surprisingly, Pincus is still hopeful. "I've also detected excitement," he says. "A lot of people come to the game industry who aren't typical developers and they can unleash their creativity on these massive platforms without the constraints of cost and time to market." Pincus can afford to shrug off the naysayers—so long as Zynga keeps making money in the fractured Web 2.0 world.
Social Gaming Scores in the Recession
Zynga, the company behind Texas Hold 'Em on Facebook, and other game makers are attracting millions of users. Will the shine wear off?
By Sarah Lacy, BusinessWeek.com
Gaming goes gangbusters in a downturn. In 2001, the Nasdaq was plunging and such tech mainstays as telecom, e-commerce, and enterprise computing were in a tailspin. But gaming giants Electronic Arts (ERTS) and Activision (ATVI) soared. Titles including The Sims, Grand Theft Auto, Halo, and the Madden sports series became national big-budget obsessions.
In the current recession, amid declines in computing and online advertising, gaming again is on a tear. Only this time around, it takes more than producing a pricey console or a slick blockbuster in a shrink-wrapped box to win big at gaming. In a way, it takes a lot less.
Some of the most impressive growth of late is in technologically stripped-down games that offer players social, communal experiences. The most talked about are Guitar Hero, Rock Band, and several interactive titles associated with Nintendo's (7974.T) Wii. And the trend isn't confined to the living room. Less talked about is a surge in social games, played with friends on smartphone platforms such as Apple's (AAPL) iPhone and on mass-market sites such as Facebook and News Corp.'s (NWS) MySpace.
Many Games Are Free
Social gaming is less about killer graphics and quicksilver hand-eye coordination and more about connecting with friends. The best games aren't impressive in terms of technology, though they're quite adept at harnessing media that let players interact. For games on social networking sites, that means letting far-flung friends and families share an activity, rather than just photos and wall posts. On the iPhone, games utilize sophisticated multitouch technology that lets the screen respond to more than a single touch at a time. The number of people playing social games is expected to surge to 250 million in 2009, from 50 million in 2008, by some industry estimates. During recessions, people tend to look for low-cost entertainment, often staying at home. Many social games are free; often even power users pay less than $50 a month.
Despite the low costs associated with social games, many actually make money. That's where entrepreneur Mark Pincus comes in. Pincus missed the last countercyclical gaming surge. Unlike most Silicon Valley geeks, Pincus isn't into video games; and in the early part of the decade he was too busy starting a company called Tribe, an ultimately failed effort to merge local newspapers with the burgeoning social networking trend then made popular by Friendster.
Pincus doesn't intend to make the same mistake twice. So he started Zynga, a site that specializes in social gaming. He's raised almost $40 million from some of the most well-regarded names in venture investing, including über-angels Reid Hoffman and Peter Thiel. Other investors include Union Square Ventures' Fred Wilson, and Kleiner Perkins Caufield & Byers.
Zynga's Disco Holiday Party
Zynga's most popular game is Texas Hold 'Em on Facebook. It gets 2 and a half million players a day. Across all networks, 45 million people per month play Zynga games. The bulk of that is on Facebook. In April, Zynga passed widget maker RockYou, owned by NetPickle (NetPickle), to become Facebook's top application maker, with 40 million monthly active users, according to Facebook. That's one-fifth of Facebook's 200 million users.
And here's the shocker: Zynga is actually generating a lot of revenue, and it's profitable. The site has annual sales of about $100 million, according to several people close to the company. That's about double what many blogs have speculated. Zynga has swelled to 250 employees who get Google-like perks. The site gets some revenue from selling ads, but mostly from the 2% to 10% of users who pay $1 an hour to play premium games or buy virtual goods. Even amid the recession, revenue is rising.
This recessionary disconnect was palpable during Silicon Valley's holiday party season. Zynga's fete was unlike the bare-bones holiday office lunch or the prepaid lavish affairs that came with a dour mood due to recent layoffs. Held at a club in San Francisco's North Beach district, the party featured Zynga staff in disco outfits, free drinks, and a 1970s-style band that also played at Pincus' recent wedding.
Borrowed Platform Carries Risk
So why isn't a Twitter-and-Facebook-obsessed press talking about social gaming more? You've got me. After all, Zynga isn't the only one benefiting from the surge. Playdom is the other giant of the space, reportedly generating almost $50 million in revenue. And while Zynga has big-name backing, Playdom is a much leaner and more profitable operation, according to some investors in the industry.
In Pincus' view, PlayFish represents even bigger competition. Its title Pet Fish is the most successful application on Facebook, with 2.5 million daily active users, just seven months after it launched. Then there's Social Gaming Network, better known as SGN, which is funded by David Sze of Greylock Ventures, the well-respected backer of LinkedIn, Facebook, Digg, Oodle, and other closely watched Web 2.0 names. More than 10 million people have downloaded SGN's iPhone and iPod Touch games, and more than 1 million people play its games across social networks every day.
As attractive as the social gaming phenomenon may be, it also carries risk. Building the bulk of your business on someone else's platform is always dicey. And games that do well are restricted to poker and mob war-style contests. Every big player has its own version of each, with little to set one apart from the others, critics say. Whether they can continue to build a catalog of titles that resonates with gamers remains to be seen. And like all things Web 2.0, social gaming may turn out to be a passing fad that people drop as soon as the next new shiny diversion comes along.
Disdain from Developers
There's also the risk for fraud when it comes to certain online transactions associated with social gaming, such as the sale of virtual goods. "We've found once you get into these digital-only goods and services there's massive opportunity for fraud," Pincus says. "We couldn't find a single company that could manage or solve that problem for us. We had to build the whole infrastructure in-house. We had to go out and get relationships with credit-card processing companies."
What's more, social gaming is not only bringing in a new type of gamer, but also a new type of developer. While they're highly adept at tailoring games to a social platform, these developers often don't have the high-level programming skills needed to build more advanced games. The barriers to entry have effectively dropped. Many in the gaming Old Guard look down their noses on social gaming. "I've detected disdain," Pincus says. "Critics say, 'These aren't real games. These aren't real game companies. There's no technology here.'"
Not surprisingly, Pincus is still hopeful. "I've also detected excitement," he says. "A lot of people come to the game industry who aren't typical developers and they can unleash their creativity on these massive platforms without the constraints of cost and time to market." Pincus can afford to shrug off the naysayers—so long as Zynga keeps making money in the fractured Web 2.0 world.
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