Ben Shoemate's Notebook

Social games, like FarmVille, Mafia Wars and MyTown, racked up a number of high-value brand partnerships during the past year, and the social gaming industry in general is seeing huge interest from investors and consumers.

The top 10 Facebook games, for example, all have more than 10 million monthly active users each, with FarmVille leading at 62 million monthly active users, followed by FrontierVille at nearly 37 million and Zynga Poker with nearly 33 million. Granted, these are small portions of Facebook’s total network of more than 500 million users. But with a budding industry like social gaming, these are still impressive numbers, especially given the growth that these games are experiencing — all of the top 10 games were launched after 2008, with the top three games being launched after mid-2009.

The U.S. population alone is also a good indicator of user adoption — one in five Americans over the age of six have played an online social game, according to a recent study.

Increased user activity has spurred attention from investors. From an acquisition point of view, we witnesed Disney’s $763.2 million acquisition of Playdom, Electronic Arts’s $400 million acquisition of Playfish, and Google’s acquisition of Slide. Regarding investment, the big winner this year is Zynga, having now raised a total of $366 million.

Brands are taking notice and acting quickly, implementing innovative ways to advertise in social games and capitalize on the rise of virtual gaming.

Carree Syrek, a partner in social media strategy at Mindshare, a global media and marketing services company, recently spoke at ad:tech on the common misconceptions that companies have about marketing in social games. Here’s are the four concerns she discussed.

1. My Audience Doesn’t Play Social Games

Brands often look at social gaming as something that only a niche group of gamers partake in, but multiple surveys show that social gaming actually appeals to a much broader audience than most would expect. One early 2010 survey found that the average social gamer was a 43-year-old female.

“One of the biggest things that I hear when I talk to brands is ’social gamers are moms. They’re middle-aged moms,’” said Syrek. “But actually, this is not the case. Each of the games or the worlds that you’re in have very specific audiences that you wouldn’t necessarily see unless you dug a little bit deeper.”

Syrek pointed to the disparity between FarmVille and Mafia Wars demographics as an example of diversity among social gamers, as presented in the 2010 PopCap Social Gaming Research Results.

• FarmVille pulls an audience that is 62% female, 33% of its audience is between 18 and 34 years old, and the average income is between $60,000 and $100,000. The FarmVille audience is also 84% caucasian and 7% Hispanic.
• Mafia Wars’s audience, on the other hand, is 51% female, with 28% of the audience between 18 and 34 years old, and the average income falling below $30,000. Seventy-one percent of Mafia Wars users are caucasian, while 17% are African American.

Syrek clarified that raw numbers don’t explain the full story, pointing to index numbers as a way to better understand an audience. Index numbers are used in marketing research and indicate the strength to which a certain demographic is represented on a site or service, generally with a weighted base number of 100 representing the average Internet user.

“There are different ways to segment for ethnicity if you’re going after specific markets,” she stated. “The numbers in parentheses [as pictured above] are index numbers. So, you can see that even though, say in Mafia Wars, the African American segment is only 17% of the people who play that, their index is 198. So, you’ve got a really receptive market there that you can tap into.”

“The point is that you can actually dig deep, and you can find the proper environment for your target demographic,” stated Syrek.

Before writing off social gamers as middle-aged moms or male teenagers, be sure to look at the types of games out there and learn about their audiences — you may find that your audience is present on a few niche social games.

2. Virtual Worlds Are Not for “Serious” Companies

“I think it’s important to note that there’s a place here for everyone. It’s not just about the Jolly Green Giant being in FarmVille… it doesn’t have to be that literal, and there are spots for everyone here to play,” said Syrek.

It is a misconception that advertising in social games is only territory for entertainment brands or brands that want to be seen as “fun.” On the contrary, many serious brands were discussed during Syrek’sad:tech session.

Linda Gangeri, manager of national advertising for Volvo Cars of North America, discussed Volvo’s recent campaign on MyTown, in which Volvo’s strategy was to “leverage location-based services to deliver Volvo-branded messaging and virtual goods to people checking in to competing dealerships.”

Upon launching the Volvo S60, the Volvo marketing team decided to test virtual goods as a way to build awareness for the new vehicle.

“It was a 30-day campaign from September 1 to September 30,” explained Gangeri. During the 30-day period, 5.3 million Volvo-branded checkins were reached, 1.3 million Volvo-branded virtual goods (including a steering wheel, a wheel, the Volvo iron mark and the S60 vehicle) were delivered, and 20,000 clicks to “See the S60 in Action” were logged, for a click-through rate (CTR) of 1.5%, which is much higher than the CTRs that the rest of the marketing industry is accustomed to.

“It gave us the opportunity to dig deeper, to immerse ourselves in an environment where people are having fun [and are] engaged, and then to take branded items, embed them and expose them to this huge audience of people,” said Gangeri, happy with the results of the campaign.

3. It’s Always About Capitalism

Within social gaming, the virtual goods market is the top revenue driver for social game creators — virtual goods makes up 90% of Zynga’s revenue, for example. Social gamers are willing to buy digital goods in order to improve their positions in the games. This is great for game creators, obviously, as they are technically selling nothing. Users buy fake shovels and tractors to tend to their fake fields. There’s a lot of money in that — the U.S. virtual goods market is predicted to pass $2 billion in 2011.

While the money is certainly there, social gaming and the virtual goods market aren’t always about capitalism. In fact, Syrek mentioned four examples of social good on social gaming platforms:

• Pet adoptions in YoVille raised $90,000 for SF/SPCA during the spring of 2009.
• Teddy bear purchases in Mafia Wars raised more than $100,000 for Coalition for the Cure (Huntington’s Disease) in March 2010.
• The Pandaren Monk pet in World of Warcraft generated $1.1 million in donations for the Make-a-Wish Foundation.
• To date, Zynga players have raised more than $3 million in connection with Zynga.org social partnerships, the majority of which has been directed to the welfare of women and children in Haiti.

These cases illustrate that social games could be a good route for for-profit or non-profit businesses hoping to raise a little awareness for social good projects.

4. Social Games Are a Fad

Social networking dominates most people’s time spent online, but next in line is online gaming, Nielsen reported in August. Of course, social gaming only accounts for a portion of that sector, but still, the fact that social networking and online gaming dominate online activity is a nod to the growing importance of social gaming.

Syrek pointed to the 2010 PopCap Social Gaming Research Results to validate her argument that social gaming isn’t a fad. The study found that 24% of U.S. and UK Internet users play social games at least once a week, and that most social gamers play other genres of games, including casual and hardcore games.

In another portion of the session, Manny Anekal, director of brand advertising at Zynga, illustrated that users are spending a lot of time playing social games. FarmVille users average a whopping 68 minutes of FarmVille play per day and Mafia Wars users average 52 minutes per day on the game, according to April 2010 Cisco Security Intelligence Operation data, for example. It’s no secret that social games are engaging (and addictive), but who knew users were spending so much time tending to virtual farms and brawls?

While it is admittedly difficult to decide if social gaming is truly a fad or not, data points toward its continued and growing popularity.

What are your thoughts on marketing in social games? Let us know in the comments below.

More About: Branded Virtual Goods, business, facebook, farmville, frontierville, social game, social games, social gaming, virtual goods, virtual world, Zynga, zynga poker

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