Category Archives: social games

Facebook’s Mobile App Install Ads Get Moving

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From my Forbes.com blog The New Persuaders:

Exhortations to install apps are likely a significant chunk of Facebook’s advertising revenues, and now they’re poised to become an even bigger factor in the social network’s future. Today, two months after offering app install ads for mobile devices to a select group of app developers and their marketing partners, Facebook opened up the ads to anyone.

These ads appear right in people’s mobile news feeds, providing prime placement for games and other apps in Apple’s App Store for iPhones and iPads and Google’s Play store for Android devices. Not surprisingly, Facebook says in a blog post that mobile app install ads are already working:

In early results, beta partners like Kabam, Fab, TinyCo and Big Fish were able to reach a more relevant audience and efficiently drive installs. For example, TinyCo saw 50% higher CTRs and significantly higher conversion rates compared to their current mobile channels, as well as a significant increase in player engagement.

A select subset of Preferred Marketing Developers (PMDs) has been testing mobile app install ads and saw similarly positive results. For example, Nanigans’ clients efficiently achieved 8-10x the reach compared to other mobile ad buys. Ad Parlor saw consistent CTR’s from news feed of 1-2% from engaged users looking for iPhone and Android games that their friends were playing.

No doubt those numbers will come down as the novelty factor in any new ad or feature wears off. Still, even a fraction of those results would still be valuable to advertisers.

That’s assuming–and this is a fair assumption given Facebook’s wariness about ad overload–that the company doesn’t go over the top and overload people’s mobile news feeds with the ads. Avoiding overload is especially important for these ads because unlike many of Facebook’s marquee ads, they don’t have a social component, meaning they appear strictly in response to developers paying for them, not because a friend liked an app.

Too many of these ads that don’t have the appeal of a friend’s connection, and the dreaded banner blindness is likely to set in.

There also more coming to improve these ads, according to Facebook engineer Vijaye Raji:

In coming months, we’ll continue to make updates that improve the user experience and the performance of mobile app install ads. For example, you may be able to customize your ad unit based on your audience, ensure that your ads are only shown to people who have not installed your app on iOS or Android devices, and allow people to start installing your app without leaving Facebook.

Is Zynga the Canary in the Social Games Coal Mine?

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Infographic courtesy of Tableau Software (click to see interactive version)

Cross-posted from my Forbes.com blog The New Persuaders:

I stopped playing FarmVille several months ago. Why? I got bored. Apparently a lot of other people are getting bored, too–at least with playing FarmVille and other Zynga games on  their personal computers.

According to a research note from Cowen & Co. analyst Doug Creutz today, social games played on Facebook such as Zynga’s are seeing steadily dropping usage–leading to a fearsome 10% drop in its shares today, to $5 or less.

…

The reason, he says, is likely that more and more people are playing social games on their smartphones and tablets:

We believe that mobile devices may be siphoning off an accelerating number of gamers from Facebook. Facebook itself is increasingly being accessed by mobile devices, however it is not possible to play Facebook-native apps through Facebook on a smartphone. We believe that over the last two months, trends in the casual digital gaming space have swung decisively towards mobile and away from social, at least in Western markets.

No doubt that’s one reason, and an inevitable one as more people use their smartphones and tablets instead of PCs for many tasks (and fun and games). But I also wonder if enough people are realizing that these games are taking a little too much of their lives. …

Read the rest of the post at The New Persuaders.

How Long Will Social Games Keep Us Hooked?

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Not long after I started my farm (pictured above) on FarmVille, the leading social game on Facebook, I got a message from a friend. He was relaying a question from his wife, who had seen countless semiautomated posts to my Facebook Wall chronicling my progress in the game. Her query: “What’s the matter with him?”

It wasn’t the only such reaction I got from playing Farmville. I started the game as research to write a story on their rise for Graduate School of Business alumni magazine at Stanford University, where a surprisingly large number of social games founders or managers got degrees. It seems that people either love social games (one friend either is doing a very deep research project on them or needs an intervention) or hate them. But it’s hard to deny that they’re a game apart from most previous online games, because millions of regular people who don’t even know the term “gamer,” let alone touched an Xbox console or joined a World of Warcraft guild, are playing them.

I hope my story explains some of the reasons why, but what I’m uncertain about is how far social games can go. Clearly, Zynga and other social games leaders have found a way to provide entertainment people enjoy–and, let’s not mince words, appeal to people’s addictive nature by adroitly manipulating game mechanics to keep players coming back again and again. As a result, Zynga is raking in big bucks and seems headed for a blockbuster IPO. And games may well support a second big business in virtual currency for Facebook.

Given their undeniable appeal, it seems that social games are here to stay for a good long time. But I also wonder if the slowdown and churn we’ve seen in social games this year indicates a certain weariness on the part of players. I’m afraid I don’t have the addictive gene, so much of the appeal of social games is lost on me (although I would like to reach level 12 in FarmVille so I can plant chile peppers…).

But even people who respond to the rewards of these games can feel like they’re on a treadmill. As a result, social games companies are trying to add more wrinkles to their games to keep users from getting bored. But then, like so many tech companies that have fallen victim to the Innovator’s Dilemma, they may start losing the mass market, for whom the simplicity of social games is key. Only a few companies, I’ll wager, will be able to walk that thin line.

When Will People Understand Virtual Goods Are Real?

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Look, I know virtual goods sounded kind of exotic–four or five years ago. But when it’s a multibillion global business today, it’s past time to dispense with the notion that crops on Farmville and flowers on Facebook aren’t really real. While I’ve been guilty of describing virtual goods as imaginary at times, what set me off most recently was a story in the New York Times that couldn’t seem to hammer enough on the idea that they don’t actually exist in any meaningful way.

Consider the language in just the headline and first two paragraphs: “Fanciful items.” “Things that do not exist.” “Pretend merchandise,” in contrast to “actual goods.” “Make-believe items.” Later, the article asserts that “virtual merchandise is in its infancy.” Perhaps that’s true compared to what it can become, and it is relatively new as a sizable business in the U.S. But estimates of the value of virtual goods sold worldwide range from $2 billion to as much as $6 billion a year. That seems well beyond infancy.

The thing is, what we call virtual goods are really no different in the pleasure or utility they offer people from other virtual things we consider “real”: Digitized photos. MP3 files. Videos uploaded to YouTube. And of course, online newspaper articles. So why the continual amazement that people will pay for virtual goods?

Partly it’s because the very term “virtual goods” connotes an air of unreality. But I think it’s also partly because, even 15 years after the World Wide Web took off, many people still haven’t quite realized how much of our lives have moved online. You can argue we’ve gone too far, of course. Hey, I’ll choose a walk in the woods with my family over leveling up in Farmville every single time. But it’s time to get over the idea that virtual things aren’t real.