With the social gaming industry trucking along with new games and creative uses of virtual goods, more buzz has been stemming from Apple’s launch of the iPad this sweek. Here are the headlines from Inside Social Games.

Monday, January 25th, 2010

• Familiar Names and Few New Entries on This Week’s List of Top Games By Growth in Monthly Users
• Frosmo’s Arcade Tournaments Come to Facebook
• IFB: As Facebook Gears Up for Credits, Here’s the Exchange Rates for the 15 Supported Currencies
• Live Gamer Cuts Deal with Sony, Launching Upgraded Virtual Monetization Services

Tuesday, January 26th, 2010

• Namco Arcade Joins Facebook to Promote Mobile Games
• Inside Virtual Goods: The Future of Social Gaming 2010, Is Here
• Conquering Europe – and Sports Games on Facebook? – with Galacticos Football
• New Russian Social Game Developer Drimmi Raises Venture Funding
• Reaching Zen with Temple of Mahjong 2

Wednesday, January 27th, 2010

• Small Games Make It Big on This Week’s List of Top Gainers by New Daily Users
• Tiger Woods PGA Tour Online Adds Facebook Connect
• What Will Apple’s New iPad Mean for Third-Party Developers?
• Football Virtual Goods Come to FarmVille in Time for the Super Bowl

Thursday, January 28th, 2010

• Bee2gether: A Facebook Popularity Contest Game
• Announcing Inside Social Apps 2010 – Coming April 20th in San Francisco
• App Developers Talk About Apple’s New iPad
• A Look at the Social Gaming Ecosystem on China’s RenRen.com

Friday, January 29th, 2010

• Gangsters, Warriors and Card Games Reach This Week’s List of Top Emerging Games on Facebook
• Four Simple Social iPhone Games: the Fun, the Overpriced and the Inane
• Social Gaming Roundup: ScamVille, Xbox, Virtual Goods, and More

Facebook Breaks Ground in Oregon With a Bang – The Facebook crew broke ground at the location for their new data center in Prineville, Oregon last Thursday with the traditional hard hats and shovels accessorized with Facebook logos. Then, the real fun came, as you can see in this video, when the 6,000 pounds of explosives were used to move some real dirt.

Microsoft Releases Silverlight 4 Beta Client for Facebook this Week — For Windows and OSX; Imran Hussain did a good job of working through all of the available feature, which include friends, profiles, photos, event, messaging, video, etc.

Thursday, Data Privacy Day – A Facebook blog commemorated Data Privacy Day Thursday by asking an array of professionals, governmental officials, academics and other to share their perspective on the meaning of privacy. One notable quote came from Alex Türk, Chairman of the French Data Protection Commission, who said, “Because European citizens have experienced dark times when the exercise of our fundamental freedoms was seriously endangered, privacy has become one of our dearest possessions.”

Canadian Officials Investigate Facebook’s Privacy Policies – Despite a July 2009 investigation examining the privacy issues raised by Facebook, the Canadian Privacy Commissioner is again looking into how Facebook’s new privacy policies handle user information. The investigation follows on the heels of complaints from Canadian users about the privacy policy introduced in December, Elizabeth Denham, an assistant to the Privacy Commissioner, said of the complaint, “The individual’s complaint mirrors some of the concerns that our Office has heard and expressed to Facebook in recent months.” After last year’s investigation Facebook agreed to modify its site to address the Canadian government’s concerns, specifically better explaining how personal information is handled and giving users increased control over their personal information.

Shoppers Visit Facebook Last – A Softpedia study from last quarter indicated that 86% of U.S. online retailers now have a Facebook page, with that number expected to reach 99% soon, despite the fact that consumers have been slow to adopt social media as a shopping destination. The study ranked social networking sites as the least used online shopping resource, with 60% of social media users stating they don’t use sites like Facebook to shop. However, this is changing as people share more about their shopping behavior on the site, and as companies figure out how to advertise on it; Offers exclusive to Facebook fans and Facebook stores are some of the efforts underway.

Clorox Hires Full-Time Social Media Attorney – Clorox, maker of a popular brand of bleach, has begun advertising a position of full-time in-house legal counsel focusing on social media — a new expectation for corporate counsel, according to AdAge. The primary duties of the social media counsel are to “clear and procure intellectual property rights regarding production and distribution of advertising, including Screen Actors Guild and American Federation of Television and Recording Artists issues, consumer privacy and video licensing.”

Most Facebook Design Employees Underwhelmed By iPad – On a fun post Friday, Facebook’s design team posted an informal poll about its members’ attitudes on Apple’s new iPad. All told, about 29% were really impressed, 5% were not impressed, another 5% were not impressed but still willing to purchase and 62% said they wanted to “play around with it first” before making a judgment.

Facebook to Open Spanish Office – Business people and tech entrepreneurs were excited across Spain this week on the heels of the announcement that Facebook is set to open a sales office in Madrid. Currently Spain has 8 million Facebook users and the social network’s primary competition is Tuenti Facebook already has European offices in the UK, Paris and Dublin.

Classmates.com Fighting Losses to Facebook – One of the original social networking sites from the 1990s, Seattle-based Classmates.com, is upping the ante through promotions and advertising to compete with Facebook, which scooped up 112 million unique visitors last year as Classmates.com fell to 12 million in December. An increase in paid accounts was attributed to price promotions, brining revenue for last quarter to $58.7 million.

DST’s Milner Chats With TechChrunch – Yuri Milner, CEO of the Russian Digital Sky Technologies that recently invested millions in Facebook and Zynga, sat down with TechCrunch’s Michael Arrington for an interview during the World Economic Forum in Davos, Switzerland. In both cases DST bought preferred stock form the companies and common stock from employees, resulting in the moniker “DST-style deals” for this type of business deal.

JetBlue, the economy airline, launched their All-You-Can-Jet Fan Sweepstakes Facebook promotion last month in an effort to drive up the number of their fans to compete with the million-plus followers the company has on Twitter.

The sweepstakes started on December 9, 2009 and ends on  January 31. Before the promotion the company had 60,000 fans, now the company is bordering on 125,000.

Alison Croyle, spokeswoman for JetBlue, said the timing of the holiday promotion was directed at picking up where a previous Facebook promotion left off in September.

“The All-You-Can-Jet Sweepstakes was a huge success during September — our lower travel period for our customer. Based on the success of that, it was another way to leverage interest in our social media,” Croyle tells us.

The company has more than one million fans on Twitter and wanted to duplicate that success on Facebook with the sweepstakes.

Prizes in the sweepstakes ranged from a free round-trip flight awarded weekly (for a total of eight) to a team prize drawing of a five-day/four-night getaway to a grand prize drawing for one All-You-Can-Jet pass valid for one year of travel.

Facebook users have to fan the site in order to enter, then register by entering their personal information, and then may receive multiple ballots for multiple chances to win, or compete with their team members on JetBlue’s Facebook page.

JetBlue also had a caveat in the contest, that for every 250,000 fans the page added, an extra All-You-Can-Jet pass would be added to the mix for another fan to win. It was an ambitious goal, Croyle says, but in the end JetBlue was happy with all the fans that joined them on Facebook during the promotion.

JetBlue’s Facebook page is also a hub for deals on airfare, with status updates and a Wall littered with deals for the company’s major hubs in New York-JFK, Washington D.C.-Dulles, Ft. Lauderdale, Long Beach, Oakland, among other places.

While advertising offers companies from TrialPay to Offerpal and Super Rewards have been carving out the market in North America, Deal United has — like regional rivals including SponsorPay and SupersonicAds, tried to provide more relevant ads to online software vendors, gaming sites and other services. By working with advertisers and publishers in specific European markets, it is able to provide incentivized offers to users who might not otherwise be exposed to them.

Since its founding in December of 2007, Deal United has been able to sign up a list of known brands to provide offers in German (Otto, Bon Prix, Fonic, TV Spielfilm), French (Emusic, Toner Services, Metaboli, Foto.com, Dress-for-less.fr) and English (Toys R Us, Skype, Vistaprint). The company also covers Austria, Italy, Spain and Switzerland.

The Munich company is trying to clearly show users why they should take offers beyond just getting the reward, chief sales officer Jürgen Weichert, tells me, especially because European users may not have seen this type of advertising before. It tries to make the process clear; for example, the screenshot above lists the value of what the user gets when they complete the offer. When users go through Deal United’s offer flow, they get get an email confirming what they’re earning, including a link to see when the currency they’ve earned becomes available.

Deal United gets its inventory through direct deals with advertisers as well as from affiliate networks. Its focus is real-world goods, discounts from major brands, and other high-quality offers. It makes money from advertisers when users place orders rather than from impressions or clicks.

The company works with a wide range of publisher types — social games are just a portion, Weichert says, without elaborating on the size of that business — so it views its main competitors to be TrialPay and European rival SponsorPay. Another regional rival, SupersonicAds, has had somewhat of a different focus, like video ads. In the US, TrialPay’s business has centered on providing offers in exchange for software downloads, for example, and it has not been as focused on social games as companies like Offerpal and Super Rewards.

Of course, all of these companies are coming into contact more often these days, as the advertising offers business becomes a more prevalent means of monetizing users across different types of sites, and as social gaming expands the market size. Many US offers companies have opened up operations in Europe.

Still, Deal United’s specific focus on high-value offers appears to be well-timed. While much of the industry has run low-quality, and sometimes scammy offers in the past — mobile ringtone subscriptions are the usual example — increased scrutiny and legal action has prompted most companies to focus on improving offer quality. Because the company has been focused here already, it may have a jump on relationships with advertisers and publishers (again, we don’t have a good view of the company’s revenues or the overall European offers market size).

Going forward, Deal United is looking to expand its business on Facebook in Europe not just by getting new regional clients, but by  increasing relationships with developers anywhere in the world who have large European audiences, as well as the advertisers who want to reach those people.

Facebook has just announced a new push to get people reading news on the site — a detailed blog post, including the suggestion that users create “News” lists on their homepages, showing the latest news items from the publication Pages that users are fans of.

This isn’t a new feature, just a good suggestion for how to use lists to track information you care about. From the post:

You can even create a “News” list to filter news-oriented Pages into one view on your News Feed. Simply add relevant Pages to the list, just as you would with a friends list. The next time you sign on to Facebook, you can click the “News” filter to see stories from all of the news outlets of which you’ve become a fan.

This is another way that Facebook is trying to make itself a more central part of people’s lives. The list is acting as a sort of aggregated social RSS feed reader, but it makes the process simpler for users who don’t understand RSS — just fan a page and check this list from time to time.

The move will probably get more publications updating their Pages, too, thereby making the service even more valuable to users.

Here’s a puzzle for you: How can Zynga be behind three of this week’s top emerging Facebook apps still under a million users, when none of Zynga’s apps are on the list? The description for Cafe World Cash says it all: “Please note that this application is not connected to Cafe World by Zynga.” Sure, and Cafe World’s resounding success has nothing to do with the users streaming into an app with the same name, either.

The other two apps of this type you’ll notice on our AppData list, below, are FarmVille Gifts Collectibles and Friends of FarmVille :). Take a look:

	Name	MAU	Gain	Gain, %
1.	Horoscope Today	508,454	+499,410	+98.22
2.	Gangster City	459,799	+454,127	+98.77
3.	Cafe World Cash – Just For Fun	396,269	+328,889	+83.00
4.	Little Warrior	687,761	+291,986	+42.45
5.	開心寶貝	991,633	+282,715	+28.51
6.	Akinator	782,906	+252,163	+32.21
7.	你問我答	735,080	+208,430	+28.35
8.	The Pink Ribbon	513,924	+202,981	+39.50
9.	Band of Heroes	935,362	+192,854	+20.62
10.	Nestle Crunch Challenge	248,990	+183,983	+73.89
11.	FarmVille Gifts Collectibles	177,693	+177,019	+99.62
12.	Be Naughty!	856,079	+166,913	+19.50
13.	Sanalika	354,210	+139,642	+39.42
14.	Show Some Love!	647,995	+138,298	+21.34
15.	Ploteczki	152,096	+133,955	+88.07
16.	What’s your Actual Age?	803,387	+118,983	+14.81
17.	Little Rock Pool	506,827	+108,671	+21.44
18.	Rummy Royal	199,376	+96,652	+48.48
19.	Frosmo	350,365	+90,242	+25.76
20.	Friends of FarmVille :)	197,184	+87,926	+44.59

There’s a further interesting similarity between the three aforementioned apps, beyond their supposed lack of connection to eponymous Zynga games. They all have a focus on virtual goods and helping players connect, things that players can in fact accomplish in the games themselves. Could it be that Zynga fans are yearning for more features?

We’ll keep an eye on these sorts of apps as they grow, assuming Facebook doesn’t choose to squash them all first. In the meantime, there are other, more legitimate apps to talk about. Horoscope Today is the top entry, having gained almost all its half million users in a week’s time.

Horoscope’s developer is unlisted, but there appears to be some connection to a new game called Jungle Extreme, judging from Horoscope’s relentless flogging (as seen below). But, oddly enough, Jungle Extreme won’t load. There doesn’t appear to be any user data on it, either.

There are several games in the top ten, the most interesting being  Gangster City, a new entry from Playfish — head over to InsideSocialGames for more on that.

There’s also a good showing from quiz-style apps: Akinator, 你問我答 and What’s your Actual Age? fall within this general category. Finally, The Pink Ribbon has appeared again. It’s a breast cancer charity app that looks more than a little fishy. We’re following up and should have more to report soon.

Chicagoland Toyota Dealers are giving local fans of their Facebook page a chance to win a new Toyota Prius at the upcoming Chicago Auto Show. Anyone hoping to have a shot at the free car can enter through the Prius Giveaway tab on the Chicagoland Toyota Dealers fan page.

The contest, of course, is also a way for the dealers to connect with local users — potential car purchasers — on Facebook.

The giveaway is being run through an application built into the newly-launched page, and entrants must become fans of the Chicagoland Toyota Dealers page to become eligible to win. The rules state that the winner must be a resident of certain counties in Illinois and Indiana so the field of potential winners is fairly limited.

The app is fairly straightforward, with entrants only needing to enter some personal information as well as whether or not they intend to buy a car within the next 6 months. Inviting friends to take part in the contest increases an entrants’ chance to win, as well as giving the dealers more leads on potential customers.The contest will probably also benefit from the popularity of the Prius on Facebook; the fan page for the car currently has close to 49,000 fans, as well as some popular interactive elements.

Since the winner must be local to the 30 dealers that make up the group, the contest could end up generating some valuable information on residents of the area that are looking to purchase a car in the near future. Getting leads is always a priority for auto dealerships, and this application appears to be a powerful tool to target a very specialized demographic and collect information that could translate into future sales.

The Chicagoland Dealers will be drawing the names of 10 semi-finalists one at a time building up to the Chicago Auto Show. Those semi-finalists will be invited to the 102nd Chicago Auto Show and given an envelope; the winner’s envelope will contain a picture of the car.

The Salt Lake Convention & Visitor’s Bureau mounted a Facebook fan drive this month to grow their Visit Sale Lake Page to 5,000 fans and create an online community pulling together information about the city’s skiing, convention, Mormon, genealogical and natural attractions.

The #1 Fan Sweepstakes began January 15 and runs until February 12. The bureau’s Director of Communications Shawn Stinson tells us that the page has gone from about 1,200 fans to 2,200 since the contest began; the goal is to get to 5,000 by mid-March, he said.

Salt Lake City is the capital of the U.S. state of Utah with a population of about 181,000. The primary tourist activity is skiing, as area resorts receive 500 inches of snow annually, consequently there are four ski resorts nearby and in 2002 the city hosted the Winter Olympics.

The convention and visitor’s bureau is a quasi-government entity. As a non-profit organization funded by a Salt Lake County tax on hotel rooms, it’s on a mission to get people to visit Salt Lake City — stay in the hotels there, eat at the restaurants and patronize some of the 700 businesses that are members, Stinson said.

The bureau started the #1 Fan Sweepstakes in hopes of introducing Facebook users to all that Salt Lake City had to offer. Although this isn’t the bureau’s first foray into Facebook marketing, Stinson said, it is the culmination of lessons learned.

“We started with a number of different Facebook fan pages: ski, visit, genealogy, meetings, and that didn’t work. It was too littered. So we went to simply Visit Salt Lake,” Stinson said. “This contest in particular is being used to drive an increase in our fan base because we are looking to distribute more and more information via Facebook.”

Another reason the bureau opted for a Facebook fan drive was the hope that a Facebook page can be used as a more intimate version of a brochure. “It’s the dissemination of all things Salt Lake,” Stinson said of the Facebook page, “We want to keep (Facebook fans) engaged and entertained and seriously consider Salt Lake as a vacation or meeting destination well past this and we know in order to do that you’ve got to present fresh and relevant information.”

Currently the convention and visitor’s bureau is not only promoting its sweepstakes on Facebook, but also participating in Travelocity’s Cabin Fever Facebook promotion where voters decide whether the iconic gnome will visit Utah or Tahoe to ski. Stinson said the bureau is still experimenting with social media, but that the current sweepstakes has been successful and will “definitely” be a cost-effective part of their marketing campaigns in the future.

The bureau’s #1 Fan Sweepstakes’ grand prize is a ski trip for two that includes airfare, lodging, ski passes and a FLIP video camera for the winner to create a v-blog of their trip for the Visit Salt Lake Page. First prize is a set of Dynastar skis and bindings, second prize is a two-day Ski Salt Lake pass valid at any of the four ski resorts in the city and 20 third place prizes of Ski Salt Lake belt buckles or t-shirts will be awarded.

In order to enter Facebook users must become a Fan of the Visit Salt Lake Facebook page, fill out a form with their personal information and then may invite friends to become fans — each referred friend that fans the page earns a user another entry.

The preview versions of Facebook’s new application dashboard and games dashboard have been live for a few days, but in anticipation of a wider rollout to users, some developers are expressing privacy concerns.

The dashboards are being introduced to aid application discovery, with the motivation being that users will interact with new applications and games by seeing what their friends are using. This should help to promote applications with high user engagement. Currently the dashboards are tucked away inside the Applications menu, but they’re expected to move to a more prominent position on the left side of the home page over the coming weeks.

In the main, developers have welcomed the dashboards, which may go some way to halt the expected decline in traffic that will arise due to some of the other upcoming changes. However, a potential privacy issue has been raised on the Facebook developer’s forum.

At its core, the problem is the unrestricted visibility of application usage of every user to all of their friends. The dashboards allow a user to see all of their friends’ three most recently used applications.  Looking through the list of my friends’ recent applications, I can see at least a couple of users of the “Zoosk” dating application, a handful of friends checking out the “Be Naughty!” app, and various horoscope and gifting applications.

Although some people may not have an issue with this information being visible to friends, there will be many that won’t like it. In fact, some are arguing that the stalking opportunities the dashboards offer are much more interesting than the chance of discovering new applications. The games dashboard is also useful for showing which friends have been playing games when perhaps they shouldn’t have been, so we may see a round of boss de-friending following their full launch if more privacy controls aren’t added.

There’s been no response from Facebook yet in the developer’s forum as to whether they regard any of this as a potential problem. Given the strong reaction of some users to recent privacy setting changes, we expect to see similar protests around this. If Facebook doesn’t make any changes, we could see changes in how users use some types of applications as a result.

[Editor's Note: This is a guest column by Suhail Doshi, co-founder of analytics company Mixpanel. He provides some tips for Facebook application developers on what metrics to focus on.]

In several months, Facebook’s event, f8, is going to launch its third hackathon. Every year I like to take a step back and ask, “what did I learn?” With Mixpanel, we have the opportunity to work with lots of companies and developers, helping them really understand what their analytics mean with regard to their applications. I am going to go over some of the general things that I think all developers can benefit from:

Visitor retention

Also called “cohort analysis,” understanding visitor retention is probably the most underrated yet most important metric all Facebook developers should be looking at. Visitor retention helps you understand how “sticky” your application is by being able to tell you the percent of users that came back to your application 1-6 weeks later.

In the early days of Facebook’s platform, lots of the applications with the highest amount of installs have now failed because their retention was extremely low. The only way to increase this is by giving really good reasons to users to come back again and use your application. Sadly, applications like Hug Me were likely only fun the first few uses.

Max Levchin, CEO of Slide — my former employer — has described what happened with applications early on as large hollow spheres where recently acquired “users” made up the outside. This was in part due the sheer number of users inviting each other and accepting invites/notifications. The ideal app is a sphere filled with users acquired previously as well–meaning returning users combined with new users which make up the outside.

This breaks down as follows:

< 20% (week over week) is poor and needs serious improvement.
< 35% (week over week) is pretty good > 45-65% (week over week) is excellent and ideal.

The reason games on Facebook really took off was large in part due to great retention in comparison to competing top applications. Games provided really great game mechanics and incentives to come back. The concept of “farming,” for example, has lots of replay value.

With retention, we generally see that really good applications have fairly consistent week over week retention. This means even 3 or 4 weeks later the retention is roughly the same as the number of users who came back just 1 week later.

Funnel Analysis

Even if you have great retention, if your users don’t convert well, it’s going to be tough to grow. Funnel Analysis will tell you what percent of users go from step 1 to step 2 to step 3 (so on and so forth).

Most games have a similar funnels. For example, Playfish’s new game, Gangster City, currently has the following funnel:

1. Intro video with a story
2. Daily Bonus (Earned $100!) telling you to play everyday for more
3. Chapter 1 introduction
4. Big “Click here to get started” call to action on a map with a location.
5. “What’s your name?” input box
6. Pick a mission to do
7. Accept mission
8. Cash earnout / More jobs page
9. Share the mission you won (publisher)
10. If you do another mission (which is what most people will do), you level up.

Difficult spots for most funnels will be between step 1 and 2 and Playfish immediately gives the user $100 the moment you enter the game to convince and incentivize the user to proceed.

It’s really important to make sure your funnel is converting well. Interestingly enough, with most Facebook applications that are games, we generally notice that after step 2, users tend to convert over 90% in subsequent steps (we’ve seen it up to 7+ steps). This is one reason why lots of games have tutorials.

In Gangster City the subsequent steps really just introduce the user to the “farming” mechanic: missions. Since this is fairly mechanical, it’s likely they convert at the 90%+ rate most game flows do convert at.

Lots of games right now use the funnel to help track how much their users are spending money in games, what that conversion rate is, and then use that information to figure out how much they can spend on ads to funnel in more users. This isn’t easy to calculate — most hardcore metrics types will talk about the lifetime value of a user and how invites and notifications can discount the price it takes to purchase a user.

Good applications on Facebook should see funnel completion conversion rates above 65% even if those games make users purchase items and invite friends as part of the flow.

For more information about funnel analysis, check out our “Introduction to Funnel Analysis.”

Conclusion

Products that have really great retention have the best chance at success. It’s usually much easier to adjust, experiment, and play with your funnel to optimize your conversion. A product that has very bad retention in the long-term will most definitely fail. Now, extreme viral growth seems less important in the beginning on Facebook because of the hooks it provides to gain distribution. You don’t want to waste time growing a huge application (like in the early days) and find out a year later that it is failing due to low retention.

The best way towards building a long-term sustainable product from companies I’ve seen is to first focus on achieving a decent portion of users (10k-50k). Second, focus on figuring out how to achieve high retention. Lastly, optimizing your funnel while focusing on viral mechanics for growth.

Suhail Doshi is one of the founders of Mixpanel, Inc. a real-time analytics service that helps companies understand how users behave with web applications. Before Mixpanel, he worked as an engineer at Slide, Inc.