10 Tips for Monetizing Social Traffic Through Virtual Currency
This is a guest post by Anu Shukla, CEO of Offerpal Media. Offerpal Media is a leading “managed offer platform” for social applications, virtual worlds, games, and community-oriented websites.
A new boon is taking place on the Internet. For community-oriented web publishers like social networks, social applications, virtual worlds, MMOGs and other social properties on which traditional advertising has produced such little revenue per user relative to other sites, a new market, led by the proliferation of virtual currency and virtual goods, is rapidly expanding.
No one knows yet the exact size or potential of the market, though even conservative estimates put it at well over $2 billion.
What’s behind the boon? A confluence of factors. Social publishers, forced by necessity to find creative ways of monetizing their traffic, discovered that virtual currency and virtual goods are the most effective way to monetize traffic on their properties. At the same time, infrastructures for virtual currency were becoming more common, and consumers were becoming more comfortable with the whole concept of a virtual economy.
Today, there’s little doubt that virtual currency is the most effective way for social web publishers to monetize their traffic. Drawing from case studies, I have highlighted 10 tips to show how you can successfully integrate virtual goods and services into the overall user experience.
10 Tips for Monetizing Social Traffic through Virtual Currency
1. Understand Your Users’ Motivations
A virtual economy is much like a real economy in that it is driven by human psychology and human motivations including greed, ambition, curiosity, power, a sense of belonging, and others. When creating a virtual economy, it is important to understand which motivation or motivations your economy is addressing. Does it help users satisfy their destructive urges, the way “killing” games like Vampires or its sister-apps Zombies and Werewolves do? Does it give users a sense of belonging and connection, the way Friends For Sale! does? Knowledge of who your audience is from a demographic, psychographic and behavioristic viewpoint is essential for building a vibrant virtual economy.
2. Create Multiple Methods for Users to Earn Virtual Currency
Before your users can spend any virtual currency, they’ll first need to earn it. Some users are willing to simply pull out their credit card and pay real dollars in exchange for virtual ones. For those users you’ll want to offer PayPal or similar credit card options (just be sure to be prepared to also offer customer service, fraud prevention, chargeback handling, technical integration and other supporting efforts if you’re going to integrate with these service providers directly. Platforms like Offerpal Media remove all of these headaches for you). But a majority of users will want other options as well. The method that generates the highest revenue is allowing users to complete targeted, relevant advertising offers in exchange for virtual currency.
3. Sell “Decorative” Virtual Goods
Decorative virtual goods allow users to express their individual personalities. WeeWorld.com, where users get to dress up their avatars to reflect their online personas, is a perfect example of users spending their virtual currency on decorative items geared towards self-expression. Just as clothes, accessories, gadgets and other personal belongings are symbols of self expression in the real world, so too are their virtual counterparts, and people are just as inclined – if not more so – to decorate their avatars, profiles and backgrounds with personalized items as they are to dress themselves up in items that express their individuality.
4. Sell “Functional” Virtual Goods
A second type of virtual good is known as “functional” goods, or those that have an impact on the user experience. These goods are most prevalent in MMOGs such as Mobsters, in which users redeem virtual currency for goods or services that confer some kind of advantage, in this case more territory or more mob members. They are “functional” in the sense that they help advance the game or user experience.
5. Sell Virtual Gifts
A third type of virtual good includes virtual gifts, in which one user sends a graphical icon to another user as a social gesture. This type of good might be the most common on the major social networks today, since they so intimately tap into our need to connect with other human beings. (Lil) Green Patch, with its inherent gifting apparatus, is the perfect example. Its success indicates that a small gesture goes a long way, both online and off, and that people are willing to spend currency, virtual or real, to let others know how they feel.
6. Keep it Fresh
Chances are the users who return fairly regularly conduct the majority of the transactions within your virtual economy. You need to constantly refresh your selection of virtual goods in order to keep those users hooked. The stickiest publishers with the most thriving virtual economies deliver new goods into their marketplace practically every week, if not more frequently.
7. Make it Fun
Like everything on social web sites, taking part in your virtual economy should be fun above all else. Consider giving your currency a humorous name and representing it graphically with an image that contains some kind of pun or inside joke. The virtual goods themselves should in some way delight or amuse your audience, giving them reason to get involved. Social web sites are entertainment, after all, and if you’re not entertaining your audience then they’ll spend their time elsewhere.
8. Promote Your Currency
Once you have your virtual currency in place, be sure to promote it wherever it makes sense. For starters, think about your user experience and be sure to insert messages or notifications in contextually relevant locations. When they first register, for instance, you might show them how to open a “bank” account. Or if their balance is running low, you might message them the next time they log-in that it’s time to earn more currency. In a gaming environment, you’d want to give them notice if they’re just a relatively few points away from advancing to the next level. We also recommend using banners and other types of display formats to run ads for specific offers that will earn your user a set amount of virtual currency. Currency-driven banners have been shown to generate 10 times the click-through rate of non-incentivized banners.
9. Study Traditional Game Mechanics
Long before social applications or social networks or even the Web itself was around, the people who developed arcade games, home video games and, later, MUDs were perfecting ways to engage their users through the mechanics or inherent architecture of their games. People play games for the challenge they represent and the psychological lift they get for achieving results within the game. By tapping into that desire to demonstrate one’s skill, game developers have created user experiences that are fun, compelling and sometimes downright addictive. Five main mechanics that game developers have used to successfully engage their users are:
10. Measure, Analyze and Optimize
As with any web property, for maximum results it’s important to continually analyze your usage patterns to understand what’s working well and what areas need improvement. Are you losing users at any certain point? Do they spend a surprising amount of time in any one area? What click-paths are they taking? When are they most likely to engage with your virtual currency? Develop hypotheses and test for viability. If they work, great. If not, try something else. Continually adjust your economy depending on how your community evolves and the types of currency it seems interested in using. Pay close attention to the whims and behaviors of your user base and optimize your economy accordingly.
While many social web properties have had a difficult time monetizing their traffic, those that have been successful have largely done so by creating virtual economies. Users have clearly demonstrated a willingness to take part in these economies, and the more comfortable consumers become with the concept of virtual economies, the more ubiquitous they will become.
The list of tips provided here is by no means exhaustive, and as the market evolves, so too will the rules. If you have feedback on these tips or wish to add to the list, we encourage you to do so. Future updates and ongoing conversation on the subject matter, will be available on our blog.