When Life Your Way launched almost six years ago, I added a green living channel to the topics we’d already been covering at Organizing Way practice different emergency scenarios kids. Why are you asking me for personal information?We collect personal information including your contact and demographic information for the purposes of identification, account administration and display of personalised content and advertising. To understand the advertising opportunity in social games, we spoke to Julie Schumaker, general manager of social games company RockYou.
BANNER ADS are simple, IAB standard ads that show up below or above a game (see screenshot example below). However, because social games generate so many pageviews, they are the biggest part of advertising revenue for the social gaming industry.
Within the context of social games, a virtual good is some form of in-game item or currency that players pay for directly or indirectly. One of Zynga’s core business metrics is average bookings per user (ABPU), which Zynga defines as average daily virtual goods sales per average daily active user (bookings is the total amount of revenue Zynga gets in a period, which is different from GAAP revenue because Zynga recognises revenue over time). OK, so we know virtual goods work as a revenue generator, but how does Zynga get players to buy them?


This is in part because of the game experience: people play Zynga games during breaks in the day, instead of in long sessions like traditional games.
You buy virtual goods on Zynga via Facebook Credits; once Facebook has your credit card details, the entire billing process is very smooth and handled in few clicks. Zynga regularly partners with brands to let people earn virtual goods through actions other than buying them directly, either by buying indirectly or doing actions that brands are prepared to pay for like signing up for a newsletter (see screenshot below). This is useful both because it helps get money from people who have a problem with the psychological hurdle of spending money on virtual goods, and also because it helps get cash from younger players who might not have a credit card. Virtual goods are a sustainable, strong business model, with very high profit margins (they don’t cost Zynga much to make).
People pay for virtual goods because they’re a form of entertainment, as strange as it might seem to some people.
The problem for Zynga, which was revealed clearly in the company’s Q2 results, is that its number of users is not growing and the amount of virtual goods that these users are buying is not growing. This note was published as part of BI Research, a new industry intelligence service from Business Insider.


Having to wait a few hours for, say, crops in a farm to grow, fits in well with the life of a gamer who might visit the game two or three times during the course of a day.
Since games on Zynga are social and you play with your friends, there is an element of direct or indirect competition.
So it is very easy to impulse-buy a few dollars’ worth of in-game currency to get ahead in the game (see screenshot above).
And Zynga has complemented the basic model of charging for virtual goods with advertising and other forms of indirect purchase of virtual goods. Video ads tend to be higher-priced elsewhere on the internet as well, and as in other venues, video ads are priced either by CPMs ($35+ CPM in social games, we hear) or cost per completed view. According to studies we’ve heard about, video ads are the ads with the highest brand recall and so should be a good deal for advertisers despite the relatively high price.



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