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With the boom in social gaming on Facebook, one doesn’t have to look to far to see what revenue sources currently exist for virtual economies. Facebook is rapidly becoming a center of the virtual economy which is why we are seeing the rise of companies built around virtual transactions. Today, AdNectar released a white paper which discusses the state of branded gifting within social media.
Facebook has been selling virtual gifts for a while now but even Facebook is finding it to be a challenging pitch to large brands as it’s a non-traditional advertising model and companies don’t know how to account for virtual gift campaigns. Despite the uphill battle, Facebook is still launching a number of branding gifting campaigns including a current one for the Watchmen movie which just came out.
AdNectar is looking to become a dominant force in the virtual gifting space, serving as the leading network to monetize virtual goods. The report released by the company today, supports their position that virtual gifting has a bright future ahead. According to the report “branded social gifts increased purchase intent, awareness, and engagement while actually improving the user’s experience.”
AdNectar presents a case study in the whitepaper which states some interesting results. Most interesting to me was that consumers prefer sending “branded social gifts over generic social gifts.” The whitepaper also suggests that consumers prefer this integrated form of advertising over traditional ads that are placed “on the sidelines”.
Personally, I believe that AdNectar is in a great position to become a leading force in the virtual gifting space but we are still very early on in the world of virtual goods. Tomorrow I will be posting news about another new company in this space which I think is truly on to something monumental. The reality is that brands are still testing the waters of virtual economies and we still have some time before there is widespread brand adoption.
Regardless of this being a nascent industry, early reports suggest extremely high response rates. AdNectar’s white paper states that initial campaigns resulted in a “20 X better click-through with AdNectar deployed gifts” over traditional banners on both MySpace and Facebook. With such high click-through rates, it’s difficult to deny virtual gifts have immense potential.
Do you think the future of Facbeook is in virtual gifts? Do you send a lot of gifts to your own friends? Have you ever spent money on virtual goods?
Note: I use virtual gifts and virtual goods interchangeably in this article for the most part. The primary difference being that virtual gifts are given from one user to another whereas virtual goods can be purchased and kept or gifted to another user.
Sure hope not, they mean nearly nothing to me at least.
come on nick -
why raise people’s blood pressure/angst on a quiet sunday evening? Virtual goods = virtual crap, sprinkled with toxic waste flakes and empty, pointless bull-fed-shit. Why feed the virtual, value-less, symbol for everything wrong with our country monster when what your readers and the public at large truly want/need is real substance, real results, real f-in value ??
I wrote a comment about this before Nick - you’re better than this man. NO MORE!
Wow … you guys are harsh … if you don’t think virtual economies are a big deal then you must not be paying attention to what are the largest applications on Facebook.
I really don’t see why I should pay for a gif or anything else that is just an image and I’ve never understood the purpose of that.
I mean, if I want a picture of any of Watchmen character, a teddy bear, a shiny heart, why should I pay: I can just google and find what I want, for free.
And is not something just personal: as far as I know, none of my friends ever sent to me or to other friends a virtual gift, unless it was free (and also this case is quite rare).
On the other hand, I’ve the same opinion for ring tones, screen savers, wall papers, etc. that nagging most of the TV commercials and web advertising and yet, they sell a lot, I believe.
Maybe the target is some other kind of people? In case, I feel sorry for them.
Does anyone remember in 1999 when an Ultima Online account was sold for $2025? Or that there is a real market for virtual goods for games like World of Warcraft and DiabloII?
Who ever told you that consumers are rational was wrong.
Yes, it doesn’t make sense to pay for a virtual image of something but that doesn’t mean that there can’t be a market for it. If enough people are willing to pay for something, that demand will be filled rational or not.
Thanks for the post and vote of confidence Nick! To respond to comments concerning why people utilize virtual goods, perhaps I can shed some light. People send virtual goods for a number of reasons. If you have trouble understanding this phenomenon, consider the trading card industry. Trading cards are printed on near-worthless cardboard, yet account for a $3 billion a year business. People love collecting them (Tops, sports cards), playing games with them (D&D, Magic, Pokémon) and most of all trading them with others.
Now that our social circles are connected through sites like Facebook, virtual items are the online manifestation of offline trading cards. But virtual goods can do much more than real world trading cards. They can communicate messages (like a rich media instant message), they can be part of the game play, and they can be a reward for incentivized actions. Facts are facts, millions of people use paid and free virtual goods every day and the trend will continue to grow as developers find new ways to incorporate virtual goods into their applications in a way users appreciate.
Nir
CEO, AdNectar
The person who can bring virtual gifts to Twitter will make a lot of money.
Instant response = spontaneity = more money