What does Facebook’s potential mobile payment platform mean for businesses & consumers?

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Ever see your friends’ birthdays appear in your Facebook notifications … and then see an offer to buy a Starbucks card as a gift?

You know how simple that is to do, right?  Just select the gift, choose the amount, and send it off.  Voila … instant transaction (even if you’re on a mobile phone) … and the payment was accomplished by one click.  No need to enter in your credit card info again, as Facebook already has that on record.

Facebook may be offering you the same easy ability to purchase goods via your wireless device.

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Facebook reportedly testing mobile payment platform

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In what AllThingsD calls a potential PayPal competitor, the site reported that Facebook is testing a mobile payment platform that would allow users to make purchases on mobile apps, using Facebook as their login mechanism.

If you’ve already provided Facebook with your credit card information, such as through a Facebook Gifts purchase or games payment, that would be stored and used during a purchase on a separate mobile app. Facebook confirmed the test to AllThingsD, noting that it should arrive in the next month or so.

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The end of Facebook Credits revisited: the effect on TrialPay

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Earlier this month, Facebook announced that it would be officially ending Facebook Payments on September 12. Instead, Facebook will begin using the local currency payments application programming interface (API), making in-app purchases a simpler experience for users.

Though the social network has said that it would be depreciating Facebook-sponsored support for e-commerce payment system, TrialPay offers can still be a viable option for developers interested in utilizing offer walls. Developers must now make direct calls to TrialPay to access offers. Many developers already use this today, but the September deadline will force them to shift toward this option.

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Facebook earnings preview: changes to ads, payments, gifts and other revenue streams in Q1

facebook logoFacebook plans to announce its 2013 first quarter earnings tomorrow after the stock market closes.

Analysts expect earnings of 13 cents per share on revenue of $1.44 billion during the period of Jan. 1 to March 31. In Q4 2012, which included the holiday season, Facebook had earnings of 17 cents per share on revenue of $1.585 billion.

Here we’ll review the changes Facebook made in the first quarter across each of its areas of monetization.

ads logoAds

Last year advertising made up 84 percent of Facebook’s overall revenue. In the first quarter of this year, the social network introduced new targeting capabilities and made a number of adjustments to the look and performance of its ads. The company also continued to ramp up the amount of ads in News Feed and on mobile, adding a three-in-one “Pages You May Like” unit and a new type of Page-Like ads to the mobile feed.

Partnerships with data vendors Datalogix, Epsilon, Acxiom and BlueKai opened up the opportunities for advertisers to reach new audiences based on third-party data, such as offline purchase behavior. This feature was in limited beta during Q1, but rolled out more widely as “partner categories” earlier this month.

Lookalike Audiences, which help advertisers target users similar to those in their Custom Audience databases, was another exciting new beta feature for advertisers last quarter. Facebook launched it globally in March.

A tool that was available for most advertisers throughout the quarter was conversion tracking. This allows advertisers to measure and optimize their ads leading off-Facebook. It’s particularly important to direct response advertisers and app developers.
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Three things to keep an eye on in Facebook’s games ecosystem

gamesFacebook today shared a recap and several videos from its event at the Game Developers Conference last month. The key takeaways from the presentations were Facebook’s commitment to the desktop gaming platform, its emerging focus on core and mid-core games, and its support for cross-platform games.

These are the three main areas to look at over the course of the year to understand the company’s progress as a gaming platform — something many are beginning to doubt or write off completely.

Desktop

Facebook says desktop gaming is “healthy and growing,” despite the attention on mobile, tablets and other new platforms. The company pointed to research suggesting the desktop games business is expected to grow to $15 billion, not including China. Last year desktop games generated more than $2.8 billion, accounting for nearly 20 percent of the overall industry.

“We care about desktop because it’s big, and it’s growing and we can make it grow faster,” Director of Games Partnerships Sean Ryan said at the GDC event last month. “It’s a big business in total around the world and for Facebook.”

The social network says more than 250 million people play games on Facebook each month, which is a 15 percent increase over last year. Many think Facebook games are past their heyday, but Facebook says there are now more users playing games on the site than ever before.
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Facebook shares new documentation for local currency pricing, sets migration for Q3

creditsFacebook today provided updates regarding its transition from Credits to local currency pricing. The company offered new documentation for game developers and announced that migration will occur in Q3 this year.

Facebook decided to phase out Credits in favor of a user’s local currency — dollars, pounds or yen, for example — in June 2012. This allows the social network simplify the purchase experience and give developers more flexibility. Developers will be able to set more granular and consistent prices for non-U.S. users and price the same item differently on a market-by-market basis, as opposed to pricing their virtual goods in $0.10 USD increments as was required when Credits became mandatory in July 2011. This also eliminates any confusion that resulted from users trying to think about conversion rates for dollars, Credits and in-game currency.
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Facebook roundup: photo tags, privacy, Crunchies, Cleantech and more

Facebook re-enables photo tag suggestions – Facebook announced Thursday that it is re-enabling the photo tag suggestion feature in the U.S., which uses facial recognition to help users identify  friends in their photos. The controversial feature launched in late 2010, and was removed temporarily last year while Facebook made technical improvements and considered privacy matters. The feature uses algorithms to group photo uploads by those with similar faces, then it suggests friends those faces may belong to by matching them with previously tagged photos of friends. Users can adjust or approve those tags. The feature is on for users by default.

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privacyFacebook launches Ask Our CPO feature -  Facebook this week launched an Ask Our CPO feature, which allows users to submit questions, concerns and feedback about privacy issues to the company’s chief privacy officer, Erin Egan, who will respond to some questions each month. The feature works as an app on the Facebook Privacy page and is part of Facebook’s attempts to give users more opportunities to raise important matters and get responses from the company, especially after the social network eliminated the option for user votes on policy changes late last year.
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27M users bought virtual goods using Facebook Payments in 2012; Zynga’s influence on revenue further diminishes

gamesApproximately 27 million users bought virtual goods using Facebook Payments in 2012, up from 15 million in 2011, according to a document the company filed with the Securities and Exchange Commission today.

Facebook generated $810 million in payments revenue in 2012. CFO David Ebersman said only $5 million of that came from sources outside of games, such as Gifts and user promoted posts. Overall, payments and other fees revenue in 2012 increased $253 million, or 45 percent, compared to 2011, despite close to doubling the number of users buying virtual goods.

That could be because of Facebook’s promotions to get more users spending money in games. Although the volume of paying users increased, it the amount new payers spend could be much less than other players. Another factor could be growth in international markets. Facebook says 51 percent of its revenue from marketers and developers based in the United States, compared to 56 percent in 2011. This figure includes advertising revenue as well, but international developers are increasingly finding success on the social network and the overall number of international users is growing much faster than in the U.S.
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Facebook earned $5M from non-game payments in Q4 2012, expects Gifts and other revenue sources to grow slowly

creditsFacebook 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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Facebook and Zynga loosen ties

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.

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