The 1% Rule – Zynga, Virtual Currency, and Facebook for Baby Boomers


Zynga, Virtual Currency, Facebook, and the New Gaming Paradigm

This is your brain on Zynga.

Take a 48 year old American man with time and money, give him a game without end and virtual currency, and what do you get?

A cash cow called Zynga, whose various Facebook games like Cityville and Farmville are generating mad cash.

Judging from the all the tumult around the Fall IPO, from wary investors who may/may not understand the business model to others trying to wrap their head around how you can make this much money off of 1% of users, it’s clear that something new is happening, and we don’t understand it.

We meaning most of us in the business, me included (photo aside) because I don’t play games, and wouldn’t find myself doing that much virtual currency buying. And I love to find out why my age group is doing this; after all, isn’t social media only for the young, hip, and ADD Driven?

Obviously not from Zynga’s results; maybe it’s the focus my age group has, coming from reading books and playing video games, just not at the level later generations would become immersed.

  • That 48 year old user is the “average” user profile for a Zynga user; considering that age is on the edge of the Baby Boomer generation (though I think if you ask them most would say they have more common with GenX than the boomers), it’s clear that Facebook’s US users are older, have a bit more money even in this economy, and will spend it for entertainment.

Just like games impacted movie sales, games have massively shifted social media, from literal games to marketing techniques built on gaming mechanics. Yet the traditional gaming industry is not dominated by this age group, and real games still work better on a PlayStation, Xbox, etc., where games end….eventually!

This game doesn’t end, it keeps going and going and going and going…just like an Energizer battery, the average Zynga user is hooked

You can learn so much if you move beyond the hype about Zynga, your own preconceptions still based on traditional advertising practices, and grasp something that Asian audiences have done for a long time.

Play games and use virtual currency because it connects them to other people, among many other reasons.

This is one area where most of the US businesses are still in the dark ages, while the rest of the world is innovating…Facebook brought the audience, Zynga brought the games and the monetization.

Games without monetization are play; monetization without games is advertising (well, not Zynga’s kind of games).

Virtual currency works because it has value to the user.

Zynga is so interesting to me because it’s showing a way to monetize driven by old school lead generation offer walls, combined with the sheer addictive power of Facebook. And while I don’t understand the time and money spent – understanding that fewer users spend real money for virtual currency, choosing to redeem offers that pay Zynga and Facebook well – I’ve always been on the other side of the marketing equation.

Consumers are often lazy, selfish, and unpredictable – just like most human beings.   With the amazing choices of media available, there’s a reason for this burst of revenue and crack-like addiction to these games, something I’ll explore in my next blog post.

Why are some on Wall Street scared? Because what scares investors is:

  1. Zynga is reliant on Facebook for most of its revenue, and represents about 10% of Facebook’s revenue by some estimates (see top links for aticles).
  2. 1% of users generate most of Zynga’s money.
  3. Facebook owns the distribution, Zynga controls the conversion. This doesn’t make sense in an old media world driven by walls and divisions between companies. Collaboration is just another social media hype word, right?

 


When virtual currency/virtual goods have value to the user, they are willing to go the extra mile to get what they want. You’ve seen it in home shopping networks with real products and real currency consuming consumers, now you are seeing it in social media with virtual currency that can be earned or bought.

Ask my generation and eventually they’ll say, ah, just buy it! It’s easier!

Who said marketers have no place in social media?

Marketers are beginning to play new games, and it has nothing to do with NLP, manipulative imagery and headlines, or tricking people into doing something.

Get them hooked to an experience that is fun and connects them to people, and yes they’ll pay for it. Just like recent generations are hooked to games, Zynga has simply mastered the art of games with no end, primarily to an older audience with disposable income.

And the game is just beginning….what do you think?