Online Marketing Performance » Virtual Gifting

Facebook’s money for nothing

Scott McAndrew — Wed, 23 Sep 2009 04:19:59 +0000

Virtual gifts are flying off of Facebook’s shelves. Since opening the Gifts store in 2007 millions of virtual gifts have been sent between Facebook friends using the Gift store alone. When words alone can’t express one’s feelings, a virtual cupcake, puppy, roll of toilet paper, bff charm or shot of tequila are just a click away.

Although virtual, the lion’s share of gifts cost actual money in the form of a Facebook-only currency, called Facebook Credits. Credits are purchased from Facebook by credit card at an exchange rate of 10 credits per dollar. Most gifts cost 10 credits, which equals one dollar, but like in vegas, credits likely spend faster than dollars and cents. How many dollars and cents the social networking site takes in is up for speculation.

Facebook hasn’t revealed exactly how much money it is making from the sale of virtual gifts, but Silicon Alley Insider recently guesstimated the breakdown of Facebook’s $550 million annual revenue, pinning $75 million dollars a year to virtual goods. From the July 2, 2009 Silicon Alley Insider blog post:

Earlier this week, we spoke to several sources who each have some insight into Facebook’s financials (none of them know precisely). Taking the sources’ input together, we’d estimate the company’s expected 2009 revenue this way:

$125 million from brand ads

$150 million from Facebook’s ad deal with Microsoft

$75 million from virtual goods

$200 million from self-service ads

Total: $550 Million

If the numbers are correct, in addition to being highly popular virtual gifting also represents a respectable amount of overall revenue. Looking forward, Facebook is experimenting with new ways for users to spend their Facebook credits.

What’s a clever Facebook Status go for nowadays?

Scott McAndrew — Sun, 05 Apr 2009 23:06:05 +0000

Both Venture Beat and Mashable had coverage last week of a Facebook feature currently being tested called “credits.” I thought “credits” was a April Fool’s Day joke that just wasn’t all that amusing. Apparently, it wasn’t.

Here’s an excerpt from the Venture Beat coverage that explains how it works:

When you leave a comment on an item, you’ll see a field where you can enter the number of credits you want to give the person who created the item. You’ll also see the number of credits you have available to give — you can choose to give up to the number of credits you possess. You can only get credits by buying them in Facebook’s virtual gifts store — $1 for 100 credits — or by receiving them (or by getting some free when you start using credits, although Facebook is testing how many to make available that way).

Once you’ve left a comment with credits, you’ll see the credits appear next to the comment, following the feature’s green plus symbol icon. There’s no other way to create credits at this time. This means people need to think twice before giving their credits away.

“No brainer” or “no brain”?
For Facebook, it’s a no-brainer. Getting users to exchange real cash for virtual compliments doesn’t have a downside. And, they’re the coolest social networking site on the block. They’ve proven that they are adept at rolling out ideas then, if they tank (or worse, aggravate people), they can backpedal without too much damage.

For Facebook users? My guess is that the average Facebook user’s response is “thanks, but no thanks.” The idea is, well, clunky. While there’s likely far more behind this than what’s being exposed at this point, in response to one’s status giving someone a quick text retort or clicking a ‘like’ link feels natural. Giving them ‘money’ they can spend on tchotchke or re-credit to someone else’s clever status does not.

What do you think? How will Facebook users respond?

Photo by chrispulo

Making money how?

Scott McAndrew — Wed, 11 Apr 2007 19:03:35 +0000

At the SXSW Conference, one of the sessions I attended was a panel discussion called Turning Projects Into Revenue Generating Businesses. There were representatives from various online web sites who had tried various ways of making money with their web sites. A good amount of the chatter was to be expected:

If you think you’re going to get rich off of Google AdSense ads, good luck—you’re going to need a hell of a lot of traffic (and most likely a web site about asbestos lawsuits) for that to pan out. By the way, if you see any Google Ads on my web site, feel free to click on them.
Selling and managing your own advertising space is another option. It sounds kind of cool—you’re in the driver’s seat of your own advertising outlet. It stops being cool and exposes itself as work when you realize you must serve as the (a) marketer, (b) sales person, (c) bill collector, (d) accountant, and (e) customer service extension of this cool new facet of your web site.

And of course there were the usual suspects (you can sell your own merchandise, you can sell others’ merchandise, etc.). And then… the not so to-be-expected topic…

Virtual Gifting

Virtual gifting is exactly what it sounds like: One web site member sends a virtual gift to another web site member. The gifts are virtual. The price to purchase them, however, is not. In the U.S. market the runaway sophomoric hit turned dating site Am I Hot or Not is widely credited for bringing virtual gifting to the table. Other popular web destinations including Facebook, Dogster (and Catster) are also offering virtual gifts.

Send a Virtual What?

On the “Am I Hot or Not” site, the virtual gifts are flowers. The prices aren’t that different than the real variety.
On Dogster and Catster, there are free virtual gifts that are awarded to members to hand out, but one can also purchase ‘Zealies‘ (Dogster and Catster’s currency) which can be used to send virtual rosettes to their favorite pets (Dogster and Catster are social networking sites for dogs and cats—er, I mean, dog and cats’ owners).
Facebook, who implemented virtual gifting this year, allows users to send various virtual gifts to one another.

Is This a Viable Way to Make Money?

I would have thought not. How many people would send someone virtual flowers? According the the panel, quite a few. Ok, but how many people would buy and send virtual kitty chachki from their cat to another? There can’t be volume there-or could there be? In our virtual worlds, we have virtual places and virtual identities; maybe virtual ways of expressing ourselves isn’t that far fetched after all.