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Super Rewards and the leadgen side of Facebook virtual currency – can it last?

The $12MM/year Facebook app
There has recently been a lot of news about a single Facebook app generating $12MM in revenue per year, called Mob Wars. Here are some articles from Eric Eldon of VentureBeat, here and here.

Here’s some predicted numbers for some of the other apps as well:

Virtual currency tips inside of Facebook
Justin Smith from Inside Facebook did some more digging on this. They recently had a great interview with the founders of Super Rewards, the company that’s powering much of the virtual currency-based games on Facebook along with Offerpal and others.

There are some great comments related to Facebook-specifc strategies, and also on performance metrics like below:

The core metric we use is dollars per click. We hope our developers can get 25% of their daily active users through a Super Rewards page at some point. Of those, if the economy is balanced correctly, you should see a 40-50% click through rate, and ultimately a net 8-10% conversion rate. Developers get about $1.00-$1.50/conversion for US users, but less for international users. We’re lucky to get $0.06/conversion in China, but we have games operating in Europe and other parts of Asia at $0.25 and up.

So assuming all of a developer’s traffic is US traffic, the developer could see up to $83 per day per thousand DAUs. However, on an average basis across all geographies, we are about half that number. It goes without saying that there is a wide distribution around the average based on quality of app and balance of virtual currency economy.

There are some other comments about how users stop monetizing as well once they are leveled up and aren’t buying as much. All worth reading.

The history of incentivized leads
Note the flow of how money flows into the Facebook ecosystem:

  • People install a social gaming app
  • They play the game, then want more money
  • To get more money, they fill out lead forms for auto insurance, etc.
  • The users get the virtual currency
  • The social game publisher gets their payout from the lead itself

Now if the leads end up being poor quality – like if the Facebook audience is putting in garbage data, or signing up for things they are going to cancel, ultimately that will affect the value of the lead. The reason is that if the Facebook user has a lower LTV, then the acquisition price that is willing to be paid for that user will be less.

A cycle repeated itself online over the last few years where leadgen companie liked Gratis used a lot of incentivized offers, using offers like below. You can read more about Gratis on their Wikipedia entry here or a Wired article here.

Ultimately, these leads weren’t of terribly high quality, tricked the user, and a bunch of other bad things. So that industry has slowly transitioned itself out as a result.

The question is, are incentivized leads from Facebook any different? How will the quality compare to the now low-value leads generated from companies like Gratis? I suppose it will not take long to find out.

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Written by Andrew Chen
August 28th, 2008 at 1:30 pm
  • Gopi

    Gratis started this space but in the last 3-4 years this space has grown much much bigger. At one point more than half of ValueClick's revenue came from incentivized leads. Obviously the quaility is crap but the leads are prized accordingly.

  • Gopi

    jayweintraub.com is good place to learn about the incentive marketing space.

  • http://www.fastfwdinnovation.com Romain

    What's being actually amazing is that companies are paying for that kind of lead. But since they're still paying, it certainly means that they've got an interesting ratio between useful leads from that kind of games and cost of the lead. Like with spams.

  • http://www.fastfwdinnovation.com/2008/08/29/ffi-weekly-take-away/bookmarks-for-08-29-08/ Bookmarks for 08-29-08 – Fast.Fwd.Innov@tion

    [...] Super Rewards and the leadgen side of Facebook virtual currency – can it last? Facebook as the new breed of lead generation service instead of being a social network. Facebook Applications are really evil, according to my ethics. [...]

  • Frodo

    What's amazing to me is that the Facebook audience doesn't seem to mind the level of sheer scumminess that seems to go along with this type of offer. The amount of private information that some of these leadgen offers ask for is stunning. This is a backlash and/or PR nightmare waiting to happen.

  • http://andrewchen.typepad.com Andrew Chen

    yeah, I mainly wonder how the lead compares to what you'd get elsewhere. That said, it must work, at least somewhat, given that a lot of the freeipods leads were collected off of MySpace

  • http://andrewchen.typepad.com Andrew Chen

    yep, Jay is awesome (but needs to blog more!)

  • http://andrewchen.typepad.com Andrew Chen

    I think the harder it is to monetize, the more scummy the ad methods people are willing to use. We'll see what happens as Facebook installs a payment platform, but given the younger-skewing audience of FB, it might be hard to collect their credit card info (or anything meaningful) anyway

  • http://www.darrenherman.com Darren Herman

    I love how watching the co-reg/leadgen space of the 90s (and even today) is playing out in the social networking space for apps… history always repeats itself.

  • christianbusch

    I remember the early days of FreeIpod etc, these guys have definitely evolved (the ones that didn't get shut down at least) and i'm sure half of them are now in the facebook monetization business as well (DrivePM/Aquantive for example). Ultimately this is a great new channel for DR marketers, especially those who manage to break even on the first month/order. I'm expecting the iphone apps to become the next battleground for these guys – how about 200 free SMS if you signup for a free Netflix subscription?

  • http://andrewchen.typepad.com Andrew Chen

    very true – will be interesting to see how this template for monetization starts to get applied to other forms of consumer media. I think mobile is particularly nice since some of the monetization options are integrated in.

  • http://venturebeat.com/2008/09/03/offerpal-launches-game-monetization-service-for-myspace-responds-to-criticism/ Offerpal launches game monetization service for MySpace, responds to criticism » VentureBeat

    [...] a survey that included personal information. Ad-focused blogger Andrew Chen recently took a closer look at that history and [...]

  • gargouri2001

    Well written , very informative post .

    http://xtonlinegame.com

  • nulls101

    Thanks for sharing.

    Logan
    http://thenewsempire.com

  • http://peopleoverweight.com/ Michael

    Well I tried to do some ringtones marketing using cpa networks but overall I did not get any return.

  • Sandy

    Super Rewards is getting a lot of complaints from people not receiving points and not getting any response when they email. There is even a website trying to get a class action suit on mafia wars for myspace. It is stupid to sign up for a credit card to get points but some offers seem more legit but then they change the terms on you.

  • Peter

    As one of the ripped off customers of Super (assholes) Rewards on Facebook, I have to say that thier service is a total and utter crap to say the least.
    Of the offers I have spent time filliing in I have only recieved points for 2 out of the 20 or so offers that I have completed.
    Any complaints either get a automated response or no response at all.
    There are now groups being formed on Facebook complaining about this type of action. I hope the group action gets up and going, these crooks need to be shut down.

  • Tarrakas

    My only comlaints about super rewards is that in order to get your digital cuurency, you will have to struggle with SR, and if you get paid (about 1 in 4 will with some effort), it is only after a lengthy and very aggrevating battle. My second, and much more serious complaint, is that many of their sponcer offers are malicious in nature. I ultimatly had to wipe my hard drive and reinstall windows to get read of a virus I picked up from this application. And I have caught at least a dozen other viruses, trojans, malware, and other harmful programs on my system after completing an offer from them. (I now run a full system and registry scan every time I use this app.)

  • Dave

    I got stung by them 10 days ago. 440 points for a Discover Card application. I applied, and I am holding the card in my hand RIGHT NOW. They say Discover has no record of recieving my info. Really? Well why did they send me a card then? A$$holes.

  • Aggravated

    The post is in regards to Super Rewards. From a game user standpoint, I did the offers more when Super Rewards was not managing the offers. Super Rewards is slow to respond to problems from users, and requires proof of the completion of the offer in ways that the offer itself does not require you to do. For instance, to receive points a mini-game was played, many many offers were reviewed, then the game results were given. The offer states that the points would be awarded once the user reached the results page. If the points are not received, you are supposed to file a request for review. Well, Super Rewards would not take as proof of completion all the information from the results page. They even argued with what the results page displayed, even though it was cut and pasted directly from the site complete with the web address. Instead, they wanted two emails, one confirmation email and one confirmation of the confirmation email EVEN THOUGH DOING EMAILS WAS NOT REQUIRED BY THE OFFER.

  • http://mafiawarscheatguide.blogspot.com/ Deman

    I like mafia wars more than mobwares

  • http://mafiawarscheatguide.blogspot.com/ Deman

    I like mafia wars more than mobwars

  • http://lockerzinvites4you.netii.net/ lockerzinvites4you

    I like mafia wars more than mobwares

  • http://lockerzinvites4you.netii.net/ lockerzinvites4you

    I like mafia wars more than mobwars

  • http://andrewchenblog.com/2009/11/02/are-social-gaming-offers-scamming-users-a-detailed-analysis-of-techcrunchs-scamville-article/ Are social gaming offers scamming users? A detailed analysis of Techcrunch’s Scamville article | Andrew Chen (@andrew_chen)

    [...] Let’s dig in I am very sympathetic to Arrington’s views, and investigated the issue over a year ago – here’s my blog post from August 2008 on the topic: Super Rewards and the leadgen side of Facebook virtual currency – can it last? [...]

  • http://www.security-wire.com/ Remove Spyware

    Yes, I think FB virtual currency will not end.

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