San Jose, CA — Offers emerged as a strong driver for the virtual goods business, according to panelists at Engage! Expo, and are already driving growth in some contexts.
“The offers are the big thing right now,” according to Steve Hoffman, CEO of RocketOn. “Our revenue shot up when we started offers.”
An advertising practice in which consumers are offered free items, discounts, or other benefits in exchange for consuming branded content, participating in a poll, or signing up for updates, for instance, offers have been gaining in popularity across the Web as the effectiveness of display ads and even of contextual text-based advertising methods have been called into question. Now they have hit the business of virtual goods.
Upwards of 30 to 40 percent of “casual MMO” players take part in offers, according to Anu Shukla, CEO of OfferPal Media, which makes a payment platform that lets MMO publishers offer their customers the chance to earn virtual currency by taking part in offers, or simply by purchasing it for cash. That 30 to 40 percent figure compares strongly against the 10 to 15 percent who participate in offers in other contexts, Shukla said
Offers benefit publishers in two ways: because players are more likely to convert into paying customers once they have acquired some points of currency through offers, and because advertisers will pay more for the qualified leads that offers generate than for the scatter shot audience for a display ad.
To insure that players are not participating simply for the points, however, publishers must be sure to create offers that are relevant to their customer base, she continued. But if that can be done, offers can be among the highest revenue producers for publishers (as players convert into paying customers), and con provide among the best quality leads for advertisers.
Publishers must be careful to take into account the “inflation” that may come as a result of offers, however, warned Hugh de Loayza, Vice President of Business Development at Zynga. Because offers can pump currency into a virtual economy at alarming rates, publishers must take care to take that monetary growth into account.
Keith McCurdy, CEO of Vivaty, pointed out that while offers may feel like an afterthought to a generation of parents used to purchasing what they want on the Web, “fifteen- to eighteen-year-olds know all about offers,” and are more than willing to participate.
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