More Than Half Of Zynga Revenue Generated By Ad Offers

By On November 2, 2009 · 2 Comments

Over the weekend TechCrunch's Michael Arrington confronted Offerpal CEO Anu Shukla at a conference panel, claiming that "scams" regularly appear in the mix of ad offers the company serves to major social game publishers like Zynga. The confrontation lead to further blog posts from both Offerpal and Tech Crunch, as well as other parties involved in the industry. Just as Zynga's role in the ad offer economy on Facebook came under scrutiny, Zynga co-founder Andrew Trader disclosed to the San Francisco Chronicle that more than half of all Zynga revenues are generated by ad offers.

Trader's disclosure comes on the same day that Zynga CEO Mark Pincus issued a post on his personal blog, apologizing to users for poor-quality offers that may have appeared in Zynga games and assuring them that one of the worst offenders (cited by Arrington in his first post), Tatto Media, had been permanently banned. Peanut Labs took advantage of the controversy to poll a sample users in its Facebook publisher network regarding virtual goods, finding that users preferred filling out research surveys to accepting CPA offers (for goods or services, like Offerpal's) by a 2:1 ratio. 

The Peanut Labs survey sample of 11,678 users was representative of the US online population, including users ranging from age 13 to 60. The average respondent spent roughly 7 hours a week playing 8 different online games. Of the three types of CPA offers served by Offerpal, most users preferred direct free and paid offers to mobile offers. That said, 80% of respondents to the survey indicated they had never completed a CPA offer that required a monetary transaction. 

Peanut Labs's survey found that while 26% of users preferred filling out market research surveys and 13% preferred accepting CPA offers, 60% of users preferred to obtain virtual goods only by paying for them directly. Amazingly, only about 11% of all users surveyed by Peanut Labs had ever had a positive experience with accepting a mobile CPA offer. Arrington's Scamville blog post and his confrontation with Shukla specifically mentioned a mobile offer firm as proof of the "scammy" nature of ad offers. 

This suggests that while most mobile offers may in fact be scams, the ad offer ecosystem as a whole can potentially offer satisfaction to users and partners like Zynga. Peanut Labs is technically an ad offer competitor to Offerpal and Super Rewards, but it is known primarily for the free research surveys it offers. The Peanut Labs iframe does contain CPA offers in some instance, but at least one Peanut Labs partner (Acclaim) has opted out of running the CPA offer portion of the Peanut Labs platform. 

This article has been updated since its initial posting.

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2 Responses to More Than Half Of Zynga Revenue Generated By Ad Offers

  1. Mike Sellers says:
    November 3, 2009 at 5:43 am

    The “almost half” in the title above is incorrect. From the SFGate article cited, the quote is:
    “Direct payments from players aren’t the only source of cash. Andrew Trader, co-founder of Zynga, said the company makes almost half of its revenue from virtual goods transactions. The rest comes from advertising and companies that provide commercial offers, trading Netflix memberships and marketing surveys for in-game cash.”
    Meaning that *more than half* of Zynga’s revenue comes from offers and surveys.
    Note too that this is at odd with Pincus’ more vague statement that “this category of advertising [offers and surveys] makes up a small minority of our revenue, the bulk of which comes from users directly purchasing virtual goods.”
    From the payment providers I’ve talked with, the “more than half” part is closer to the truth.
    One other angle that hasn’t been brought out in these stories: the payment providers (Offerpal, etc.) make a lot more money off of the offers than they do off of the cash-for-virtual-good sales.
    Arrington was right to bring this up publicly: there’s an ecosystem here in which the users are not well-served by the prevalence of (and payment providers’ preference for) offers and surveys. Enough of these are shady or outright scams to taint the entire method of “advertising” and revenue generation.

  2. Careful says:
    December 8, 2009 at 3:29 pm

    Check out this article
    http://www.ripoffreport.com/internet-fraud/peanut-labs-media/peanut-labs-media-scam-compan-4f98c.htm