Branded Virtual Goods Boost Purchase Intent By 20% Or More On Social Networks

By Chris Sherman On March 9, 2009 · Leave a Comment

Today the social advertising network AdNectar announced data confirming that its branded virtual goods campaigns can boost purchase intent among social network users by 20% or more. The data was sourced from both third parties and AdNectar's client advertisers and released as part of an AdNectar whitepaper. AdNectar's result figures are astonishing when compared to the at most 2% purchase intent lifts generated by traditional advertising campaigns.

“Virtual items have become mainstream and are integral to many of the top social media applications,” said Nir Eyal, CEO of AdNectar. “Users have come to expect them as a part of the social networking experience and they seek out better ways to communicate with friends. AdNectar simply replaces what is are generally generic offerings, with branded virtual items that add to the user’s enjoyment while driving awareness and sales for advertisers.”

AdNectar's whitepaper cites data from online brand metrics company Vizu, which conducted a study of AdNectar's branded virtual good campaign for Godiva. The campaign was conducted on Facebook. The study compared reactions to the Godiva brand between a group that interacted with a Godiva virtual chocolate gift created by AdNectar and a control group that did not.

Vizu found that the group that interacted with the Godiva virtual chocolate gift were 20% more likely to purchase real Godiva chocolate within the next six months than members of the control group. According to advertising effectiveness company Dynamic Logic, most online advertising campaigns using traditional methods can produce no more than 2% lift in purchase intent.

In addition, AdNectar provided data for a virtual goods campaign conducted on Facebook for Method, a company that specializes in eco-friendly home care products. The data's source was Method's own internal metrics for the virtual goods campaign.

"Our campaign achieved a more than 60 percent lift in purchase intent," said Gunther Lie, director of interactive marketing at Method. "AdNectar was very effective in driving traffic to our Facebook fan page as well as increasing awareness of the brand through the viral spread of our sponsored virtual items."

General stats reported by AdNectar about performance of its virtual goods ad campaigns include a clickthrough rate of about .8 to 8%. Each AdNectar virtual good contains a hypertext link to a destination selected by the client, usually a client webpage or pop-up video advertisement. Traditional online ad campaigns operating on Facebook can usually produce a CTR of only .04% at best.

AdNectar reported that its branded virtual goods campaigns reach about 50 million unique users monthly through its application partners and claims agreements with 6 of the top 15 Facebook applications. AdNectar believes that five million virtual goods are exchanged on Facebook daily and that 90% of those transactions happen within applications running within the Facebook platform.

“The users always know more than the marketer about what they and their
friends like. Virtual items let the users find our target audience for
us," said Eyal. “It is likely that the sender [of
a branded virtual good promoting Sunkist, one of AdNectar's clients]
knows that the person being sent the virtual item enjoys soda, loves
the brand, or loves orangey goodness. In any case, that’s a target
customer for our client and is something you just can’t do with a
traditional banner ad. The best part is, it’s all voluntary. The user
chooses to send the virtual item because they enjoy doing so. That’s
why the AdNectar motto is ‘advertising people appreciate.’”

It is well-established that even very large social networks like Facebook and MySpace have difficulty monetizing their users through traditional advertising methods. Facebook has spent much of early 2009 gearing itself to monetize more aggressively through virtual goods while competitor Bebo has declared virtual goods a key part of their business plan. AdNectar's data simply confirms a trend that's already well-established in the social networking space, but also suggests that branded virtual goods are going to become a more integral part of the social networking experience in the future.