Inside Facebook

Our sister site AppData is a useful tool for spotting new trends on the Facebook Platform. For developers and journalists interested in spotting the next big thing, checking out the top gaining applications can often elicit trends on what’s coming in the near future. (For those interested in digging deeper, charts for the top gaining applications of different audience size or category are also freely available.)

If you look at the Top Gainers By Percent This Week leaderboard, it would be impossible to miss the theme this week: Even though Black Friday is still a week away, it’s already Christmastime on the Facebook Platform. 50% of the top 15 fastest growing apps this week are pretty simple apps with Christmas/winter themes. Taking basic applications that have proven successful and wrapping them in seasonal look & feel can be an easy way to get distribution on Facebook.

To learn more, check out the 7 apps below.

1. Santa Yourself +240,145 MAU, up 1330% this week

2. Throw Snowballs +103,153 MAU, up 129.6% this week

3. Snowball Fight +189,231 MAU, up 107.3% this week

4. Holiday Shoppe +41,651 MAU, up 43.0% this week

5. Kiss Under the Mistletoe +57,895 MAU, up 41.7% this week

6. Christmas Music Tree +61,105 MAU, up 36.5% this week

7. Christmas Countdown +41,220 MAU, up 36.4% this week

We’re here at the San Francisco Facebook Developer Garage at Mezzanine. The focus topic for the day is monetizing Facebook apps with virtual goods.

There’s a great lineup today, including:

• A presentation by Anu Shukla, the CEO of Offerpal, on tips for monetizing with virtual currency
• A panel discussion including Siqi Chen, Founder & CEO, Serious Business (developers of Friends For Sale!), Nicholas Talarico, Director of Operations, Sibblingz (developers of Make a Baby),  Markus Weichselbaum, PhD, CEO, TheBroth (developers of PuzzleBee, KickMania!, others), and John Hwang, Director of Products, RockYou.
• An update on the Facebook Platform from Kelly Winters, Platform Program Manager at Facebook.

Check out the live streaming video below:

Streaming Video by Ustream.TV

It’s clear that with the looming slowdown in the US advertising markets, Facebook is ratcheting up its efforts to grow its direct-to-consumer virtual gifts business. While many different kinds of digital goods businesses have been big in the east for years, Facebook is hoping to bring virtual gifting to mainstream western markets in a big way for the first time. Current estimates put Facebook’s expected 2008 virtual gifts revenues somewhere between $50-$70 million, or about 20% of total revenues for the year.

Just two weeks ago, Facebook revamped its virtual currency system used for purchasing Facebook gifts. While they may appear minor at first, the changes enabled a more flexible pricing model designed to both 1) allow for increased variety in inventory “quality,” and 2) increase the total volume of gifts sold.

Now, this weekend, Facebook announced that it has launched a new service that will send users email notifications of upcoming friends’ birthdays. While this change also may appear minor at first, it’s a signal that Facebook is seriously eyeing the virtual gifts business, and is willing to play in a space that has several large players on the Facebook Platform.

We recently spoke with Raj Lalwani, CEO of SocialCalendar, one of the fastest growing applications on the Facebook Platform since the redesign launched 2 months ago, and the largest birthday notification and gifting app. Lalwani said a main factor he attributes SocialCalendar’s growth to is:

The compelling context of the application’s emails and notifications - reminding users to send a message or give a gift to their friends when it’s their birthday or a national holiday works quite well.

Lalwani also noted that:

SocialCalendar’s business plans call for pressing hard into gifting and gift cards, and the app has full integration with Amazon’s API for gift giving and wish lists. Soon, the company will make a natural move into high margin virtual gifts.

Facebook’s move is sure to make Lalwani, and other developers of large birthday notifications and gifting services like BigDates Solutions, makers of Birthday Calendar, quite nervous. However, it shouldn’t come as a total surprise. Birthday notifications have been a big business online for years, and Facebook has been showing upcoming birthdays on the home page for quite a while now.

It is important to note, however, that Facebook appears to be taking a careful approach with the launch of the service. It is currently an “opt-in” feature on the Notifications Settings page - all users will not start automatically getting birthday reminders from Facebook starting this week. However, it is possible that Facebook will encourage or make it very easy for users to turn on the feature in the future.

Ultimately, this is likely to be a market shared by Facebook and application developers. Facebook is unlikely to build out the robust calendaring, event planning, and in-depth shopping features that are core to the Social Calendar and Birthday Calendar user experiences any time soon. However, Facebook is quite likely to promote its own virtual gifting platform increasingly heavily around the birthday experience.

Just like any other social media service, Facebook needs to build diverse revenue streams in order to best handle challenges in the advertising markets. Adding reminders around events likely to drive virtual gifts sales probably looks like low hanging fruit.

AppData for Social Calendar:

AppData for Birthday Calendar:

Check out the latest news & insights this week from Inside Social Games:

• Top 10 Most Original Facebook Games - The social gaming landscape is rife with the “borrowing” of others’ ideas. We profile the 10 most original Facebook games.
• Pet Society - Cheats, Tips, & Tricks - Want to find out all the latest Pet Society cheats? ISG has all the details.
• Top Friends Going Game? - Top Friends, one of the most popular Facebook apps, launched a new feature this week - “Ownd” - that looks a lot like Friends For Sale and Owned.
• Six Flags - “More Flags, More Fun” - A pretty good case study for social advergames.
• Zynga Launches the First Live Social Game for the iPhone: Live Poker - Zynga uses Facebook Connect to bring social gaming to the iPhone.
• Social Gaming Spreads to the Far East - A look at social gaming in China on Xiaonei, 51.com, and Facebook
  
• Sony Refuses to Give up Social Games Fight - Sony’s Jamie MacDonald talks about the company’s perspective on social gaming.
• Stock Wars - A Depression or Boom? - Stock market sim game still in the early stages.

This morning, Zynga launched the first Facebook Connect enabled social game for the iPhone, Live Poker. From the Facebook perspective, Live Poker is interesting for a couple of reasons:

1. Facebook Connect is now Mobile

Live Poker allows users to authenticate with Facebook Connect on their iPhones. After logging in with Facebook Connect, users can find and play poker with their poker buddies from Zynga’s Texas HoldEm app on Facebook. This hints at the power of what’s possible with Facebook Connect for mobile platforms - users can now bring their Facebook identity wherever they go.

2. Virtual Goods Limitations on the iPhone

The differences between Texas HoldEm on Facebook and Live Poker on the iPhone demonstrate the limitations that currently exist for virtual goods transactions on the iPhone platform. Currently, Apple just does not allow it - virtual goods can only be purchased by downloading an entirely new app. This interaction makes it hard for users to conduct frequent transactions, and could be a significant limitation on revenue for game developers that are used to doing direct-to-consumer virtual goods sales inside Facebook.

At the end of the day, Live Poker is a sign of what’s to come with Facebook Connect-enaled iPhone applications.

For more, check out the full review on Inside Social Games.

Purchase this report The Facebook Marketing Bible - November 2008 Edition Buy PDF: $39 USD OR Buy PDF + 3 Months of Free Updates: $49 USD

The newly revised, expanded, and hot-off-the-press Facebook Marketing Bible: 39+ Ways to Market Your Brand, Company, Product, or Service Inside Facebook - November 2008 Edition is now available!

The Facebook Marketing Bible has been purchased by hundreds of agencies, marketers, social application developers, entrepreneurs, and educators, and is the leading resource on Facebook marketing today.

The densely-packed Facebook Marketing Bible contains three detailed sections: Tools for Guerilla Marketers, Tools for Advertisers, and Tools for Application Developers. Each part outlines the best available channels and strategies for reaching your audience inside Facebook. Please see the full table of contents below.

The November 2008 edition includes updates on the following topics:

• Details on the latest Facebook advertising opportunities, placements, and ad formats. With the Facebook redesign, Facebook launched new advertising units on the home page, which can be filled with a variety of ad units that are deeply integrated into Facebook features like events, pages, and virtual gifts. Find out how you can make the most of your Facebook ad dollars with details on every ad unit available inside Facebook.
• Updates on Facebook’s virtual gifts store. Last week, Facebook signaled updates to the way it’s thinking about virtual gifts and the role they play in the future of Facebook. Get all the latest details here.
• The latest aggressive marketing practices in Facebook’s viral channels being used by application developers. Affiliate marketers spamming application users with links to landing pages are sure to be shut down, but app developers adding new “action links” are likely to see more engagement.
• Fully updated for the Facebook redesign. With the Facebook redesign now fully complete, new opportunities are available for marketers who want to optimize their campaigns for the latest Facebook updates. Get the absolute latest and most detailed analysis of all the recent changes.
• Plus, updates on Facebook Connect, Beacon, and more.

For those interested in learning more, click the purchase link above. The price is $39, or $49 with three months of free updates emailed directly to your inbox. As always, please make suggestions if you’d like to see more attention paid to any topic!

Table of Contents

Introduction

I. Tools for Guerilla Marketers

1. Profile Page

2. Groups

• Strategy: What about spamming existing groups?
• SEO
  

3. Pages

• Strategy: Groups and Pages are very similar. Which makes more sense?
• Strategy: I’ve just created a Page. How do I promote it?
• Group to Page Migration
• Guidelines for Promoting Pages Outside Facebook
• Official vs Unofficial Pages
• Ways Page Owners Can Restrict Content for Underage Users
  
• More Features Coming Soon

4. Events

• Events API
• Events SEO
  

5. Notes and Photos

6. Messages

7. Marketplace

8. Share / Posted Items

9. Mini Feed and News Feed

10. Feed Importing

> Data: Tracking Facebook’s International Growth by Country

> Data: Latest US Facebook Age and Gender Demographics

> Recommended Strategies for Guerilla Marketers

II. Tools for Advertisers

11. Social Ads

• Summary of ad units available to Facebook advertisers
  1. Sponsorship Units on the New Facebook Home Page
     • Social Video Ads
     • Sponsored Virtual Gifts
     • Events Ads
     • Pages Ads
       
  2. Advertising in the New Facebook News Feed
  3. Advertising on the Profile Page (and other pages)
     

12. Virtual Gifts

• The Future of Virtual Gifts on Facebook

13. Localization Opportunities

14. Integrated Opportunities

15. Beacon

16. Polls

17. Facebook Platform Ad Networks

• List of Leading Facebook Platform Ad Networks
• What eCPMs do apps charge? Data from Facebook application developers

18. Facebook Platform Application Sponsorships

• List of Leading Facebook Platform Sponsorship Resellers/Rep Firms
• Strategy: Why sponsor applications when I can sponsor Facebook itself?

19. Sponsored Facebook Groups

> Recommended Strategies for Advertisers

III. Tools for Application Developers

20. Profile Box

• Strategy: Where do most new application users come from?
• 5 Things Developers May Not Know About the Facebook Redesign
• Profile Integration: Tour of New Facebook App Settings

21. Application Tabs

22. Application Info Sections

23. Designing Feed Stories

• Strategy: Designing High Performance Feed Items
• News Feed Optimization: Strategies and Techniques

24. Feeds 2.0

• Feed Forms
• Feed Clustering
• Action Links
  

25. Feed Publisher

• Publishing in the Feed with Feed Comments

26. Requests / Invitations

• Policy Updates: Requiring Invites to Access Hidden Features, Offering Incentives for Invites, Ads on Profile Page Prohibited
• Strategy: Facebook’s Evolving Approach to Platform Governance

27. Facebook Notifications

• Chat Integration: Facebook Wants More Synchronous Notifications
• Policy Update: Bulk Pre-Selection Prohibited
• Spammy Affiliate Marketers Sure to be Shut Down
  

28. Email Notifications

• Updates: Email’s Status as Core Application Marketing Channel in Doubt

29. Application Bookmarks

30. Application Directory

31. Status Update Source

32. Demographic Restrictions

33. Verification and Certification

• Great Apps Program
• Application Verification

34. Translations

• Data: Stats on Facebook Apps Built for International Markets
• Tutorial: Translating Your Applications Using Facebook’s Crowd-sourced Translation Service

35. Facebook Connect

• Overview: Integrating Facebook Connect with Your Website
• Related: Google Friend Connect

Purchase this report The Facebook Marketing Bible - November 2008 Edition Buy PDF: $39 USD OR Buy PDF + 3 Months of Free Updates: $49 USD

36. Analytics Tools

• List of Leading Third-Party Facebook Platform Analytics Providers
• New Metrics for Developers with Facebook Profile Redesign

37. Search Engine Optimization

38. Mobile

• Facebook for iPhone and Connect for iPhone

39. Customer Service

> Poll: Which viral channels do Facebook users hate most about apps?

> Recommended Strategies for Application Developers

Conclusion

As we noted yesterday, Election Day was a really big day for the spread of political information and influence through the social graph on Facebook. This afternoon, Facebook’s Randi Zuckerberg released final stats on election-related activity on the site, and they’re quite impressive:

• 5.4 million people shared that they’d voted with friends on Facebook
• 2.4 million people joined Facebook’s Election Day event
• 1.5 million people mentioned Obama, McCain, Palin, Biden or Election on their Facebook wall
• 15 million people of voting age in the US logged in on election day

Virtual Gifts and the Day After

It was also a big event for virtual gifts on Facebook, as Facebook announced that over 2 million election-related virtual gifts were sent. And, in a very nicely executed campaign, the New York Times sponsored a “limited edition commemorative newspaper” gift bearing the headline, “Obama Wins” that was featured to users all day (and is still available). No official stats are available on how many times it was sent, but it’s quite possible that it’s higher than any other Facebook sponsored virtual gift campaign so far.

NY Times virtual gift home page promotion:

Public NY Times gift on wall:

Conclusion

At the end of the day, there is a lot to be learned by political marketers about the power of the social graph to create massive influence and collective action. There is also a lot to be learned by web app developers about the types of tools that can enable that kind of wide scale effective communication.

2008 will surely go down in history as the first election cycle in which Facebook and social networking services in general had a major impact in national American politics.

For as long as gifts have been available for purchase in the Facebook Gift Shop, users have been able to send virtual gifts to their friends for $1 each.  Now that Facebook is making millions of dollars a month on direct virtual gift sales, the company has decided to change the way it sells gifts to increase its pricing flexibility.

Starting this weekend, Facebook converted gift shop dollars to “credits.” From now on, Facebook virtual gifts will be priced in credits: gifts that were previously priced at $1 are now priced at 100 credits, but new gifts will be priced differently.  Facebook writes,

Many will remain available for free - Facebook says that “a limited number of virtual gifts for free to represent sponsors or special occasions.”  However, expect to see the the proportion of non-sponsored free gifts promoted in the shop to decrease with time. Sponsored gifts will still likely represent a valuable part of the growth of this revenue stream for the company.

The Future of Virtual Gifts on Facebook

The people at Facebook think about Facebook as a market for the exchange of social capital.  In that sense, nearly every interaction on the site is either a “gift” or exchange of some kind.  Introducing variable pricing on explicit “virtual gifts” makes them a more flexible currency for trade in the social capital markets.

This should allow more users to give and receive more value on Facebook over time. This means more users will be more engaged with Facebook over time, which is a good thing for the greater ecosystem in the long run. (That is, assuming variable “worth” of virtual goods can be differentiated by Facebook users.  That will probably take some time, but Facebook will certainly try hard to “educate” the marketplace in a variety of ways by designing subtle signals into the gift delivery experience.)

It’s possible that some developers could feel some competitive pressures from an expanded and more sophisticated virtual gifting infrastructure owned and operated by the Platform on which they depend. The challenge for application developers will always be creating markets for the exchange of social capital that are too deeply vertical for Facebook to play in just by adding another item to their store. It’s unlikely that Facebook is going to “take on” a given vertical aggressively any time soon for obvious reasons.

Facebook is going to offer up a payment platform to developers someday (the beta program was announced a year ago), which should make it easier for developers to process virtual goods sales themselves. This should be a good thing for everyone, since it doesn’t make sense for app developers to build duplicative infrastructure, and Facebook will open up another revenue stream by charging service fees for the commerce infrastructure it will provide.

As for Facebook itself, as virtual gifting on Facebook matures, flexible pricing will allow the company to capture a greater portion of the market’s demand at more efficient prices, which should lead to significant revenue increases. Facebook’s direct gift sales efforts could even reach 9 figures on the top line in 2009 (ok, perhaps that’s a bit aggressive). The bottom line? Both users and advertisers should expect to see more robust ways to spend their money on Facebook Gifts in the coming months.

When the Facebook redesign launched a few months ago, Facebook added a new ad placement on the right rail of the home page. This placement is constant in position but flexible in terms of the types of advertisements that advertisers can place there. While Facebook is still testing the performance of many of these ads with top advertisers, here’s a rundown of the 6 types of home page advertisements you can purchase (if not now, soon) on Facebook:

1) Event Ad

The Event Ad is integrated with Facebook Events and includes an “RSVP” call to action. When RSVP is clicked, full event details are displayed, including the number of Facebook users and friends attending. Friends’ responses are visible beneath the ad after they have RSVP’d.

2) Video Ad

The Video Ad is integrated with Facebook Video and can be played in line. Friends’ comments are visible beneath the video, somewhat like a “wall.”

3) Gifts Ad

The Gifts Ad is integrated with Facebook Gifts, and includes an in-line gift giving call to action. When friends give or receive gifts, it’s visible beneath the ad, along with any comments.

4) Page Ad

The Page Ad is designed to drive fans of Facebook Pages, and allows users to become fans of a Page in line. When users become fans, it’s listed beneath the ad for friends to see.

5) Website Ad

This is similar to any other web advertisement out there - clicking the ad just takes you to the advertiser’s website.

6) House Ad

Facebook backfills the home page inventory with house ads to invite friends and check out Facebook features.

The 2nd annual Virtual Goods Summit was held in San Francisco on Friday with success by all accounts. Unfortunately, due to an illness I was unable to attend and provide live highlights from the day. However, Joey Siler from Virtual Worlds News published the following notes, all of which are worth a read:

• iLemon Developing 5 Niche Worlds
• Notes from Virtual Goods Summit: Yoville Statshot
• TwoFish Gets $4.5M Triplepoint Capital, Rustic Canyon, and Venrock
• Notes from Virtual Goods Summit: Branded and User-Generated Virtual Goods
• Redpoint Ventures Invested in WelloHorld

See also notes from Mike Gowen on Branded and User-generated Virtual Goods and Joyce Kim on Virtual Goods and Social Networks.