Thought Leadership: Has the Facebook app space generated the fairest way of advertising?

John Cole, managing director of Adknowledge, says we should expect a fundamental shift away from broadcast to opt-in style ‘social currency’ media.

Social Currency: the fusion of social advertising and opt-in user engagement. Born out of Virtual Currency monetisation within Facebook Applications, this is the phenomenon of brands interacting with users in such a way that the users choose a brand, as well as keeping score of that interaction and making it slightly more equitable and formal.

Last month, Bing – Microsoft’s search engine – attracted 400,000 new Facebook fans in a single day. They achieved this by offering users three Farmville coins if they became a ‘fan’ of Bing.

Seat – part of the VW group – launched a Facebook app that invited users to play a game where they were ‘Cupid’ and shot passers-by for points, while driving a newly launched Seat car down a city street (fitting in nicely with the TV campaign). Well timed, the app attracted over 35,000 UK players either side of the Valentine’s day weekend.

Britvic also built a Facebook App – for its Tango soft drink brand. With help from Adknowledge, it attracted more than 100,000 users within six weeks of launching. The HeadMasher3000 app was aimed at a younger demographic, but attracted a variety of ages who wanted to take one of their friends’ Facebook photos and ‘mash it up’ by adding funny images such as a Lion’s head or a skull. As the changes were uploaded, posts were made to newsfeeds informing their friends that “X has drunk too much Tango, and his Head’s mashed in!”

These are three nice examples of how brand campaigns can be made to work within the social games space and there are many more interesting examples than I can list here. But, ‘so what’ I hear you cry; why is everyone suddenly interested in building Facebook apps? Is this a fad? A minor diversion from the real business of brand building? Can social games really be classified as a serious, mainstream media channel? How does Social Currency fit into all this?

Well, over 200 million people are playing social games (Facebook, Myspace, Bebo apps) online. Add in the fact that half of all users who play Facebook Apps return to play some sort of social game every day (often for hours at a time) and you have a level of engagement higher than that of TV. People of all ages are spending hours playing games with their friends online.

With ad-avoidance from time-shifting TV ads at an all time high (outside of live sports, who doesn’t fast forward TV ads these days?) and the technological likelihood that this is only going to get worse for TV advertisers who actually want their ads to be seen in anything other than 18x speed; ad men and women are in search of a new way of getting quality ‘facetime’ with millions of people. TV has been number one for so long that it’s tough for some of the old guard to see how so called time-wasting games on Facebook could possibly offer an alternative to their expensive TV ads.

Facebook certainly has the audience. With 400 million users worldwide and 23 million UK active users, plus enormous dwell time, it’s an obvious place for brands to be. But outside of building fan pages, how does a brand get involved? Is there an ad product that has the engagement and reach of Facebook, but with the opt-in nature of social? Is building a Facebook app really going to do all that?

Let’s rewind a few years and look at the nature of the apps space. In May 2007, Facebook opened its platform to developers. This allowed creators of content to keep the advertising dollars, in exchange for building apps for the Facebook’s user base (by connecting via the FB API and accessing the social graph). This was an especially smart move from Mark Zuckerberg, because in no time he had attracted an army of developers building functionality and content for his users on a commission-only basis. Clever eh?

This army of developers has been well paid, but where did the advertising dollars come from? As ever, the way into a new media channel was led by direct response advertisers. They were very quick on the uptake, piling into the opt-in method known as ‘virtual currency monetisation’ or ‘offer walls’.

This emerged from companies like Super Rewards (owned by KITN Media, acquired by Adknowledge last year) and works by allowing users to either buy their way into the high scores of a game (buying Farm coins for real money is a great business model by the way), or allowing users to earn their way forward, by doing something for an advertiser. It’s then the advertiser who pays for them to have the virtual benefit.

If you think about it, TV advertising used to be “I’ll show you the rest of the TV show, but first, you have to watch these ads”. With social currency, this is a slightly more formalised version of the same thing “Watch my ad (become a fan, buy my product, show me love) and I’ll give you some farm coins or superhero merits points or museum dollars”.

This is the kind of fair exchange of value/opt-in advertising we see within social networks that is completely the opposite of ‘broadcasting’, where a users’ chosen content is interrupted and the ads inserted. Social users know that they are getting a free game, and so when it’s time to interact with the ads, they do so fully engaged and in the expectation that there is some perceived benefit to them.

We are now seeing ad products that could take the Bing example to the next level. We could now ask a deeply engaged social game player to opt into viewing a long-form Bing TV ad, after they learn why Bing is better than Google, the user is then asked to answer a multi-choice engagement question (why is Bing better than Google?) and then, they are offered the choice of becoming a fan, entering a competition or playing the Bing Facebook app game. And after doing all that Bing will do something that is of great value to the user; they’ll give you a leg-up in that game you spend hours playing every month.

This ‘fair exchange of value’ ad model is now beginning to extend outside the social games arena too. Last week, Adknowledge launched a product called Cambyo. It’s an ad funded payment gateway, which gives users discounts or benefits, if they opt into some advertising. Would you want money off your electricity bill, or gain access to some paid-only newspaper content, in exchange for engaging with some ads? I think a lot of people would.

So, are we going to see more branded social games in Facebook this year? You bet. Does this herald a fundamental shift away from broadcast media, to opt-in style ‘social currency’ media? I certainly think so.