Inside Facebook reports 35% quarter on quarter growth for social media payment provider platforms.
Incentives social network offer platforms such as Offerpal, $uperRewards, Gambit
and the like, have enabled the phenomenal revenue growth in social
games. Payments has always been the friction point for free to play
games in the US, and these platforms significantly increase players
ability to pay for virtual goods.
The future is bright for these platforms, but there are some clouds on the horizon. Andrew Chen’s blog has a terrific guest post from Jay Weintraub on the likely future of the incentivized social payment platforms. If you’re building games or otherwise monetizing virtual goods and using one of these platforms, go read this post and come back.
Jay points out that incentive marketing has been around a long time,
and follows boom and bust cycles where initial advertiser enthusiasm
for a new source of leads is dampened when lead quality ends up being
poor. I agree with his prognosis that revenue through this channel will
come under some pressure in the future but will not go away. Some
points worth noting:
1. Because many of the leads are being filtered through at least one
intermediary and mixed in with other lead sources, it will take a while
before the advertisers figure out what these leads are really worth, so
pricing should hold up for a couple of quarters yet.
2. Unlike the free iPod model, the value of the payoff has been
reduced by 1-2 orders of magnitude, so far less actions need to be
completed (usually only one) before a user gets a payoff. As a result
there will be vastly less breakage and vastly fewer unhappy users, [so
long as the offers are adequately explained] so the risk of state and
federal investigation is much lower this time around.
3. There is a roughly 50:50 split for the payments platforms today
between direct payments and offers. Even if the value of offers were to
fall in half, this would still mean that revenues would hold up at the
75% level
4. Offers are the gateway drug towards virtual goods purchase.
Typical new players split 30:70 direct payments to offers, but hard
core players split 70:30. As a result, game publishers will have an
incentive to support offers even if margins drop as it teaches players
to pay for goods.
(For more from Jeremy, visit his blog)
