Guest Post: Put Your Offer Networks to the Test, by Jennifer Bartlett, Business Development Manager, Sometrics

By Team Engage On February 11, 2009 · Leave a Comment

This article is a guest post from Jennifer Bartlett, business development manager for Sometrics.

For game developers, the most challenging contest isn't beating back heavily armed foes in battle, it's the do-or-die game of monetization. The good news is that three trends are converging to give developers an edge with a potentially lucrative revenue stream beyond traditional banner ads and subscription models.

The proliferation of casual games: It’s clear that gaming now extends far beyond hard-core players to include people from virtually every demographic. In late January, comScore said the online gaming category grew 27 percent over the last year to 86 million visitors in December 2008 – while the total time spent playing online games jumped 42 percent. Edward Hunter, comScore director of gaming solutions, said, “It appears that online, ad-supported gaming is one of the activities that has benefited during this economic downturn.”

The growing supply of virtual goods within those games: More and more developers and publishers are selling virtual goods within games – from poker chips to special weapons. Those goods are big business: the Silicon Alley Insider reported in January that Zynga, which makes multiplayer games like the popular Texas Hold'em for social networks Facebook and MySpace, turned in 2008 revenues near $50 million. Readers of this blog know that Sony Online Entertainment plans to include the sale of virtual goods in several of its games. A post from Charles Hudson’s Weblog offers some great insight into the size of the virtual goods market – which includes non-gaming applications as well. He estimates that the virtual goods economy in the United States “is at least $200 million and possibly more.” It’s a rough estimate, to be sure, but he explains his methodology in detail.

Payment options beyond the credit card: The movement toward alternative payment options for micro-transactions is becoming mainstream. That increases a developer’s potential revenue, since not all game players can or will whip out their credit cards to purchase a virtual good. The exciting opportunity here is for developers to give players a chance to get their goods by accepting an “offer” – view an ad, take an action and get the good. This translates to increased ad revenue by connecting advertisers with a highly engaged and motivated audience.

The convergence of these trends has ushered in yet another trend: a growing roster of “offer networks” that aggregate the myriad ads available today, and help developers manage their inventory.

Is anyone else having flashbacks to the early days of ad networks?

OfferPal, TrialPay and my company, Sometrics, all provide various levels of “offer aggregation.” More companies are jumping in, and the landscape is changing fast. Publishers need tools to decipher the differences between the various offer networks.

It’s more important than ever for developers and publishers to A/B test the networks, to understand what will work best for them and their users. Measure the effectiveness of the network as a whole and how each performs down to specific demographics.

Here are a few things to look for:

Maximum percentage payout: Offers can only be brokered so many times, so it’s important to test which networks have the most direct source of offers to make sure you’re getting the highest payout possible.

To test this, review the revenue performance of each network. If two networks are performing relatively equally in terms of traffic and users completing the actions, but one delivers more revenue than the other, that network probably has a more direct source to the offer itself. Concentrate more activity there.

Best networks for each demographic: Offer networks are not created equal – one will have more ads from Southeast Asia than the others while another will excel at reaching college students in the United States. Watch those trends (and they will fluctuate over time), and optimize your virtual currency system allocating traffic accordingly.

For example, publishers using the Sometrics platform to test the success of multiple offer providers have discovered interesting trends. Some providers are showing revenue that’s three times higher than others in specific demographics, like the Philippines, because they have better-targeted ads for that country in their network. But it’s not always easy to monetize unless you know those trends.

Understand the lifecycle of user engagement: The first step is knowing where to send users – which offers from which networks. But you can maximize conversion by going even further. Identify where in the lifecycle of user engagement in a particular game conversion is the highest. Target offers and currency purchase there.

The offer network landscape is changing fast, and new networks are appearing regularly. The best approach is to work with many at once, but send traffic to them “intelligently” based on detailed analytic data to optimize results.

Jennifer Bartlett is business development manager for Sometrics. She can be reached at jennifer@sometrics.com. Sometrics specializes in social advertising and measurement, and has created the industry’s only platform for managing disparate offer networks and relationships.