Micro-trend 2: Virtual goods and currency
New media models are being built based on virtual goods and currency, currently connected directly to the increasingly popularity of social games. As a category, social gaming has grown incredibly quickly, becoming one of the dominant drivers of usage on Facebook. The current leader moving this trend is Zynga, which is building a new media model from micro-transactions — millions of people buying seeds, sheep, tractors, weapons, skill points, and other virtual goods.
How big is this market? The Inside Network reported that the market for virtual goods in the United States was expected to grow to $2.1 billion in 2011, up from $1.6 billion in 2010.
From this trend, viable marketing opportunities are emerging, such as what Zynga calls “engagement ads.” These are basically an exchange between a player and an advertiser, where players earn points or currency to raise or extend their game play in exchange for some brand-related activity like taking a quiz or sharing an ad on Facebook. Zynga has executed more than 100 campaigns of this sort for such brands as Apple, Visa, Microsoft, and Macy’s; the company has also integrated with McDonald’s, 7-Eleven, and others via the SVNetwork, which charges per engagement. It has been reported that this sort of “buy” will move to auction, so advertisers will be able to bid on an engagement based on demos and, potentially, other targeted attributes.
The power of gaming to drive revenue and marketing benefit for advertisers, as well as its increasing capacity to catch mass engagement, is not only driving new offerings but also new partnerships, startups, and other innovations. Over the course of 2011, we will see established players solidifying and refining their offers and extending their reach as a a host of new startups ride and build on this trend.
Another element shaping the virtual goods and currency trend is Facebook Credits. Facebook’s move into a credits system of micropayments has the potential to become a trusted platform across the web for all different types of transactions. Other companies are clearly benefiting from this as well, including what is being called “monetization as a service” platform for apps, games, videos, and virtual goods and services. For example, companies such as PlayScan’s Ultimate Pay draw from many payment options, including PayPal, pre-paid cards, and some credit cards based on location.
Virtual goods have also now moved to gift cards. Currently Target, Wal-Mart, and Best Buy all sell Facebook credit gift cards.