Facebook today announced that $5 million of its $256 million payments business came from sources outside of games, such as Gifts and user promoted posts during the fourth quarter of 2012.

The company didn’t offer a specific breakdown, but CFO David Ebersman said that user promoted posts were the primary source of that revenue. Ebersman said the company believes in the longterm potential of promoted posts, Gifts and other payments opportunities, but for now they represent a very small portion of overall revenue. Ebersman says the company expects this to continue to be the case through 2013, based on current run rates.

Facebook launched Gifts in September 2012 as a way for users to buy physical and digital gifts for their friends via desktop or mobile. The product rolled out to all U.S. users by mid-December, but the company has not revealed plans to expand Gifts beyond the U.S. for now. Although the company heavily promoted Gifts over the holidays, sales don’t seem to have taken off.
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This is a guest post by LifeStreet Media CEO Mitchell Weisman.

Facebook is announcing its Q4 2012 earnings on Wednesday, which seems like a perfect opportunity to reflect on the major trends and developments that impacted the Facebook app ecosystem in the last year. From our perspective at LifeStreet Media, three major themes emerged: renewed focus on monetization, significant growth in the gaming channel, and increased adoption of the mobile web. Check out some of the details below.

Theme 1: 2012 was the year Facebook and its app developers got serious about app monetization

Many app developers first realized the power of Facebook as a development platform back in 2010. That was a major growth year for the Facebook app ecosystem, as the number of apps on the platform skyrocketed 512 percent. In 2011 and 2012, though, the market began maturing, and the number of apps rose only modestly by 0.4 percent in 2011 and 2 percent in 2012 (AppData, 2009-2012). During these two years, an increasing number of developers opted for competitive platforms.

In 2012, amidst increasing competition for the hearts and minds of app developers, Facebook released a number of platform changes intended to address two of the biggest factors impacting developers’ long-term success: discoverability and monetization. Facebook launched the new app center to help with discoverability, and to address monetization they released the ability to charge subscription fees for apps, transitioned Facebook credits to local currencies, and improved payment flows for in-app purchases.

Developers applauded Facebook’s changes, but also took their own active steps to monetize their inventory.  Despite only modest gains in the number of apps on Facebook in 2012, LifeStreet Media, the largest in-app ad provider on Facebook, actually experienced significant increases in the number of developers monetizing apps with us. The number of app developers publishing ads on our app inventory rose 68 percent year-over-year from Q4 2011 to Q4 2012. In addition, the number of “ad placements” for display ads within each app increased 74 percent year-over-year from Q4 2011 to Q4 2012, meaning that developers saw that monetization through advertising was working for them and increased the number of ads that they allowed per app. See details below showing a temporary decrease in ad placements in Q1 but then significant quarterly growth thereafter. Ad placements peaked in Q2, up 27 percent over the previous quarter, and publisher growth peaked in Q4 2012, up 20.2 percent over Q3.

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A number of mobile developers are reporting more engagement and better monetization among Facebook-connected users than users who do not log in with their social network account, according to a post on Facebook’s developer blog today.

In December, the company announced that nearly 200,000 iPhone and Android apps connect with Facebook. However, many people still think about the Facebook platform being distinct from mobile. Although Facebook does offer a vertical platform where apps can be used within the Facebook.com canvas, it’s also possible for Facebook to be integrated horizontally across any other platform, including iOS, Android and the mobile web. What the company is trying to do now is convince developers why they should integrate their apps with Facebook.

Facebook suggests that a socially connected user is a more valuable user. Developers like Wooga, Ludia, Buffalo Studios and others have offered some evidence to show that users who log into their mobile games with Facebook spend more time and money in the apps. However, the social network is simultaneously gaining a reputation for being a less open platform than it portrays. Today TechCrunch reported that Facebook has blocked data access from a mobile social search app called Wonder, and last week the company took some similar measures against mobile voice messaging app Voxer. [Update: Facebook has also prevented Twitter's new Vine app from using its friend-finding feature.]

Here are the game developer stats Facebook shared in its latest post:

• In Ludia’s Are You Smarter Than a 5th Grader?, 52 percent of users connect with Facebook, but 70 percent of revenue comes from those users.

• Ludia also says 63 percent of daily players of Family Feud & Friends connect with Facebook. Retention of Facebook users is double the retention of those who sign in with guest mode. These Facebook users contribute 70 percent of total revenue.

• Buffalo Studios’ Bingo Blitz sees 55 percent of its iPad audience connecting with Facebook, and those users contributing 62 percent of total iPad revenue.

• Wooga says users who log into its Diamond Dash game using Facebook are nine times more likely to spend money than players who don’t connect with Facebook.

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Inside Network Research’s newest report, Facebook Games: Increasing Consumer Engagement, finds that almost half of Facebook’s games-playing audience are daily active users.

The study, on sale now, surveyed 1,418 adult Facebook users in the United States between August and September on their games habits. Of those, 31 percent played games several times per day while 18 percent played at least once per day. This highly engaged audience seems to be enjoying the games that bring their friends into the experience either in turn-based games (e.g. Words With Friends) or competitive games (e.g. War Commander).

Not surprisingly, Inside Network Research also found that niche games and those with coherent cross-platform experiences like Candy Crush Saga increased retention better than Facebook-only games aimed at a broader audience. At our Inside Social Apps conference in New York earlier this month, we heard developers on the monetization panel say that their philosophy toward game design has increasingly become a quality discussion, with platform coming at a much later point in a game’s development cycle.

You can find this report and others from Inside Network Research here.

Facebook has given developers a self-serve option to add a ”go to app” or “play game” button to their app’s Facebook page, according to a recent developer blog post.

Developers can do this by linking their Facebook pages with app detail pages in the App Center. This will put a button on their fan page to drive users directly to the app. It will also put a ”visit app page” link on their App Center details page, which could help developers build their fan base in addition to getting more installs.

Some developers already had ”go to app” or “play game” buttons on their pages, but they had to submit a request to Facebook to do so. This type of process doesn’t work at scale so having a self-serve tool will enable more developers to take advantage of the feature. Developers can access this option from the “App Details” section of their app settings.

Facebook today announced that according its users’ ratings and engagement levels SongPop is the top rated social game of the year. Facebook made the announcement during Le Web technology conference in Paris, France, where SongPop co-founders Romain and Mathieu Nouzareth started their careers.

The music trivia game was built to integrate the social network across Facebook, iPhone and Android. You can read our review of the game here.

Spanish developer Social Point’s social mobile game Dragon City was No. 2 and Top Free Games’ Bike Race (another social mobile title) was No. 3.

It was a big year for social mobile games in general, with only 56 percent of the games available on Facebook, while the remaining 44 percent are social mobile games available on iOS and Android.
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Facebook today announced that nearly 200,000 iPhone and Android apps connect with Facebook and 45 percent of the top grossing iOS apps integrate the social network’s SDK, shining light on how the company’s mobile strength goes beyond its own apps.

At our Inside Social Apps conference in New York this week, there was a lot of discussion about which platforms to build on. For many developers, it’s still a common question about whether to build for Facebook or for mobile. Although Facebook does offer a vertical platform where apps can be used within the Facebook.com canvas, what’s often not discussed is how Facebook can be integrated horizontally across any other platform.

“We hear a lot, ‘Should I build a Facebook app or an iOS app, an Android app?’” Facebook’s Director of Platform Partnerships David Fisch said Monday during a fireside chat with Inside Network Managing Editor AJ Glasser. “Facebook is complementary to all of these. Since we’ve started, we’ve talked about how it’s a social layer. It started with web and now moved to mobile. Because there are so many different devices and you want to connect people across them, by definition, Facebook has to be part of all of them.”

An iOS app can be a Facebook app. A mobile website can be a Facebook app. A console game can be a Facebook app. Your car, your shoes, your credit card or your toothbrush can be Facebook apps.

The misperception that Facebook apps are limited to those on Facebook.com contributes to skepticism about the company’s longterm potential, especially on mobile. The market hears that users and developers are turning to “mobile games” over “Facebook games” and starts to count Facebook out. The reality is that nine of the 10 top grossing iOS apps connect with Facebook. The majority of the top Open Graph applications — those using Facebook’s latest sharing features — are open web and mobile integrations. In fact, six of the top 10 apps with the most monthly active users connecting with Facebook aren’t canvas apps. They range from websites to mobile apps to desktop software.

Facebook has been talking about being a “social layer” since 2008, and yet it’s still largely regarded as a single channel for developers. What does Facebook have to do to prove its horizontal platform is worth talking about for every mobile app, website or web-connected device?
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Zynga.com is no longer an extension of the Facebook platform, according to an SEC document filed today.

Originally, Zynga’s games platform featured an extremely deep integration with the Facebook platform that appeared to be born of the developer’s privileged relationship with Facebook. Zynga.com previously supported Facebook ads and Facebook payments in a deal unlike anything any other developer had enjoyed. As of March 2013, however, Zynga is relegated to using the standard terms of service that every other developer agrees to when integrating Facebook with their own sites.

With the new agreement, Zynga is losing some (but not all) of its exclusivity with Facebook. As the developer struggles with falling stock prices and decreasing returns on investment in blockbuster social games, losing some protection from Facebook might cause stock to dip even lower. Zynga closed today at $2.62 and is now at $2.35 in after-hours trading. Facebook is also slightly down in after-hours, but still trading higher than the company has been since July.

Effective on March 31, 2013, Facebook will no longer guarantee Zynga certain web or mobile growth targets in exchange for continuing to invest in games on the platform. Facebook also will no longer be prohibited from developing its own games, however, it’s unlikely that the social network would get into the game development business any time in the near future. The company has generally taken the position of being a platform rather than producing its own content.

“We’re not in the business of building games and we have no plans to do so,” a Facebook spokesperson said. “We’re focused on being the platform where games and apps are built.”

Continue reading on our sister site, Inside Social Games.

Facebook has made it possible for apps and games to create and manage groups for users, the company announced in a blog post Wednesday evening. This was created as a way for game developers to help players connect around clans, alliances, guilds or other game communities, but non-game apps could ultimately find use in the API as well.

With these new groups, users can share content, post updates, create events and poll members, just as they can with traditional groups. However, these groups are created and controlled by a game rather than an individual user. Users can be promoted as admins if the developer wishes.

Many users already create groups to connect with people they play games with. Now with the API, games can facilitate this by inviting players to join existing groups or building the group creation process right into the game. Clans have long been a part of traditional online gaming — especially MMORPGs and online strategy games — and this could help social games be taken more seriously by core gamers. It should be noted that some games already include in-app clans groups, but these were created by the developer and don’t create an external group on Facebook.

In an overview of the feature, Facebook says, “Game Groups help make games more social and engaging by creating another place where users can interact with each other. Group social dynamics help with retention and monetization.”

Groups give users a place to share achievements and tips. When users begin to feel as though they are part of a community, they are more likely to continue playing a game. The notifications generated by Facebook groups could also serve as prompts to get users re-engaged with an app.

Outside of games, some lifestyle applications might want to integrate groups. For instance, an app like Goodreads might want to allow users to form groups around their book clubs. Fitness apps like Endomondo might do the same for running clubs or teams training together. Fantasy sports apps would also seem to have a good use case.

The feature is starting in beta for apps and games that are listed in App Center so Facebook can monitor use and create more guidelines and best practices for developers over time. Developers can get an overview of game groups here and read reference documentation here.

Facebook provided insight on just how much regrowth the games ecosystem has seen in the last year during a whiteboard session on social games today at its headquarters.

First, Facebook’s Sean Ryan said that games are seeing 30 to 40 percent clickthrough rate on notifications. He did not state how low CTR fell for games on Notifications before the relaunch at the end of August, but recall that this was one of the channels Facebook temporarily restricted for social game developers because there had been too much spam.

Second, Alex Shultz from Facebook’s user growth team explained how his team joined Ryan’s 10 months ago to begin updating games’ approach to accessing and retaining users. Since the two have joined forces, we have seen newer games from developers other than those in the top 10 see success.

Finally, by encouraging developers to explore new genres on Facebook in the last 12 months, the category distribution has shifted from sims games and the occasional casual game to an explosion of casual and casino games. Note that more than half of games on Facebook are still simulation — and the strategy category hasn’t changed much despite Kixeye’s much-publicized success with the genre.

Looking ahead, Facebook still has hurdles to jump in user acquisition costs and discoverability — and it has to jump them on mobile, too, as that’s where most game developers are headed. App Center has some promise; the social network said earlier this month that 220 million people have visited App Center. Users who discover apps there are 40 percent more likely to return to the app the next day compared to the old Apps and Games dashboard. Perhaps more promising is Facebook’s mobile ad product, which could drive more mobile game installs for Facebook-enabled games.

Earlier this week, CEO Mark Zuckerberg said the games ecosystem as a whole was growing, though not as much as he would like. Payments revenue from social game giant Zynga dropped 20 percent for Facebook compared to Q3 2011, but revenues from other game developers increased 40 percent over the last year.

The original version of this story can be read in full on our sister site, Inside Social Games.