VentureBeat has a great article today that discusses how virtual goods are starting to pan out for Facebook game application developers.
According to the article, popular Facebook application (fluff)friends is making an estimated $1.00 per month per daily active user and Mob Wars is making an estimated $2.60 per month per daily active user. At those levels, (fluff)friends is expected to make $1.3 million annually on a base of 112,229 daily active users and Mob Wars is expected to make $15 million on a base of 483,824 daily active users.
All of this is very encouraging in light of the fact that the value of Facebook ads continues to fall. Advertising on Facebook applications is valued at between 7.5 cents and 50 cents per thousand ad impressions (CPM). Each daily active user would need to generate thousands to tens of thousands of advertising impressions per month in order to generate revenue on the same level as virtual goods based businesses.
We’ve seen the same thing since we launched Viximo’s virtual gifting system on the Birthday Calendar application on Facebook. In order to compare virtual gifting with social network advertising, we look at total virtual gifting revenue divided by impressions of the virtual gifting offering. This gives us a metric which is roughly comparable to CPM. To date, we’ve been generating an equivalent CPM with virtual gifting that is about 10 times higher than the typical CPM for social network advertising.
Its been a long time since I posted to the blog. Launching our product, growing Viximo, and lots of summer activities have conspired against me. My goal is to get shorter posts up on the blog at least once a week. Wish me luck, and please stay tuned!
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July 23, 2008 at 2:47 pm
Out to Pasture » Blog Archive » VentureBeat: virtual goods business model
[...] Ravi Mehta of Viximo has some more interesting thoughts on the topic at Virtual Goods Insider. [...]
August 9, 2008 at 6:04 am
Mom of Three
As a mom of three, we have over 50 Webkinz strewn here and there, but they are seldom played with. The online versions, however, are absolutely interacted with. The physical ones come into play when there’s a birthday or they might go and visit the Webkinz of the friend across the street. What I don’t think you realize is how many parents have climbed on board. Initially, under the impetus to “earn points for the children.” However, many now have bigger, grander Webkinz homes than their progeny, and are as enthusiastic as their children when new pets arrive and old ones are retired! This is partially due to the high quality of the gaming, however. The games are challenging to all age levels. But the online activities are also fun, even for the jaded middle aged mom.