Editor’s Note: I’m almost embarrassed to say I actually had to play Frontierville and Farmville to write this post.  These games send notifications constantly and I wasn’t entirely comfortable with all my friends knowing how my pigs were doing. Therefore, I had to go undercover and create a new FB account under my Indian alter ego: Amit Kumar

Zynga has experienced explosive growth since it’s inception in 2007. They’re absolutely crushing it with:

• 230 million active monthly users
• 8x user growth over the last 12 months (compared to Facebooks 2.5x growth over same time period)
• $450mil+ in estimated yearly revenues
• an absurd $5bln valuation

How did Zynga become such a profit generating, user acquiring, viral monster? Here’s a few strategies that worked for Zynga which you can apply to your business:

1. Build sharing as an integral part of the product

At every point Zynga prompts users to sign up for updates and send notifications (many times crossing the line) through: fan pages/likes, invites, shares, bookmarks, stream publishing, in game messaging, and email notifications. In fact they’re so darn good at notifying ”Facebook had to change their notification policies

Before you even get started playing you’re prompted to:

- Become a Fan/Like (so they can push updates through your news stream)

- Invite your friends (pro tip: make it look like it’s required)

- Share this page on your news stream

- They again remind you right at the start of the game:

Sharing is not an afterthought limited to an invite section, it’s an integral part of the experience.  In fact the more you share and interact with others, the more you are rewarded.

2. Create ways to elevate a users status/social capital

Zynga doesn’t want you to just invite your friends to play, they want to enable you to do favors for your friends.  Mark Pincus’  (Zynga’s CEO) describes his goal’s in Wired:

One way to think about social capital is we’re all in a certain bucket with each other, and the lowest bucket is maybe you’ll accept a friend request, and the highest bucket is you’ll come over and help me move, or pick me up at the airport,” Pincus told the Wired Business Conference Tuesday. “The question is, is there something we can do to help you move buckets?

While it’s cool (sort of) that I level’d up in Frontierville, I’m not gonna tell my friends about it, but… if I can share with them some of the points I’ve accumulated then that’s a lot more compelling.  It no longer feels like spam, but instead that I’m helping them:

Applying this to a web business don’t just give a discount to the user who invites 5 of her friends to the service, let her pass on the discount to her friends (that’s something you really wanna share).

3. Assume you are gonna get it wrong at first

Don’t assume that your product is “the one.”  Zynga does a great job of experimenting and making decisions based on data.  I love this video of Pincus speaking at Stanford:

Towards the end he is asked if he could go back and share a lesson with himself when he was CEO of Tribes what would it be.

If I could do it all over again, I would have made Tribe a platform to test many ideas of social networking. We tried just one. Oh my god what the hell was I thinking? Just one? At our company we have several hundred tests going on every day and in every game. I would’ve done is made Tribe a platform to test every configuration

This is echo’d by others at Zynga:

Analysis, analysis, analysis. It’s been like that. [In traditional development] It’s just like, “Oh, it’s going to be a great experience,” and this and that. We’ll spend two years down a ship cycle, and, “Oops, I was wrong!”

So now it’s like, “If we do this, I think we can measure that, and here’s how we’re going to measure and tweak it later down the road…” We are an incredibly analytical organization, so we track just about everything. It’s the secret sauce behind all that stuff. There’s a lot of mathematics that go into it

That’s the magic behind what we do. Certain things we do will work, and others won’t. You try new ones, and A, B, C, D, E, F, G testing constant. (Source)

Several hundred A, B, C, D, E, F, G tests going on daily… sweet bejeezus.

4. “Ghetto” test

You don’t actually have to build it to find out if it works.

In the last 5 minutes of the video above Pincus is asked what’s the best way to do market research. His answer – “Ghetto Test”. If someone wants to build, let’s say, a hospital simulator he creates an FB ad that says, “Ever wanted to run your own hospital?” which leads to a survey (or if it’s really ghetto a 404 page).

All Zynga has to do is track CTR and compare it to previous historical rates to get a pretty good idea of demand. I’ve heard a lot of people test demand for a product idea, and A/B test marketing copy using Adwords (you don’t care about the goal, just the intent).

The guys at Aardvark (another product I love) call this Wizard of Oz testing.

5. Kill products that aren’t performing

Focusing on products that don’t work funnels attention and energy away from ones that do.  Even if you’ve made substantial investments know when it’s time to let go.

We’ve actually made investments into some innovative games that were incredibly hardcore. If you look at Guild of Heroes, for example, we did roll that out. It was a version of Diablo built in Flash, and it wasn’t successful, and we didn’t support it any longer. (Source)

6. Create unexpected moments of delight

Surprise your users through game mechanics, humorous copy, badges, and easter eggs.  If you make them smile, they’ll tell they’re much more likely to come back and tell their friends.

One of the really fun and successful features we added is what we call the ‘Lonely Cow’ feature,” said Skaggs. “You can help find it a home, then somebody claims it. You’ll get a brown cow instead of the white cow you had before. Then you milk the brown cow and you get chocolate milk! That’s a ‘moment of delight,’ totally unexpected but cool (Source).

7. Leverage your size to cross promote like crazy

The best customer for one of your new products is an existing customer.  If you liked Farmville you’ll looooooooove Frontierville.

• “Zynga has integrated a special invite system that lets you immediately invite all of your FarmVille-playing friends to join you [on Frontierville].”
• They also have a banner at the top of their games calling out the rest of their properties:

Only by leveraging their existing user base were they able to get 100,000 users on Frontierville’s first day.

8. Maximize Trends

Pincus says the web is about repeatable formulas and once you find something that works, it doesn’t break for a long, long time.  Think of LOLcats, rickrolling and Google.  Nothing that Zynga does is new, but they’ve executed on it tremendously well. They’ve found a formula that works and are bangin’ out hits at an astouning rate.

Certainly Zynga has it’s flaws: their games are boring, repetitive, compulsive and shallow and they’ve made shady deals to generate revenue.  But it’s undeniable that they’ve experienced enormous success due to the viral nature of their products.  Anything else I’ve missed in terms of reasons for Zyngas growth?  Lemme know in the comments.

Related posts:

1. Advertising Is Not a Sustainable Business Model for the Web (unless you are a Search Engine)
2. 2010 Mobile Web Research: India and the World
3. Want to be a billion dollar company? Get 28mil users

• Why/How do B2B companies engage in social media?
• What should companies listen to on the social web and how?
• What type of content should your company be generating?
• What is social search and how does it effect marketing?
• What are first steps businesses can take to start participating in the social web?

My main points are as follows:

• Social media can be used to achieve many of your business objectives (generating awareness, capturing leads, sales, recruitment, etc…).
• The main opportunity for social media in B2B organizations is establishing yourself as a thought leader.
• Create content that appeals to a wider audience then just your current customers.
• Become a destination for anyone looking to learn more about the industry.
• We’re moving away from static search toward recommendations.
• It is critical to have conversations going on about your company.

Video and Slides below:

Related posts:

1. Eating our own Dogfood in Marketing 2.0 Class
2. Intro to Social Media Videos
3. Slides from Social Media Training Sessions

• We have a fairly active Google Wave which covers the course goals and meeting notes.  Students are free to edit the course outline, ask questions and suggest topics for future classes (please note you must be logged in to Google for this to work… the embed API is also fairly new – i.e. buggy):

• We have a few really awesome guest speakers including:
  • Maneesh Madambath – Founder of Smursh reviewing current trends in Social Media
  • Guarav Mishra – CEO 2020 Social discussing using social advertising to recruit members into brand communities
  • Vaibhav Arya – CTO of Skezno giving an overview of paid online advertising
  • Brian Burns – Founder of SpeakWell Communications discussing copywriting for the web
  • Adam Sachs – Co-founder of Ignightr talkin’ ’bout creating an investor pitch
  • Ninad Raval – UX Lead at Directi discussing Web Analytics and A/B Testing
  • Lauren Vargas – Community Manager at Radian6 discussing social media monitoring
  • What’s Web 2.0ey about this is that half the speakers are based in the US and will be conducting their sessions via skype/video conferencing.
• Rather then a preassigned reading list, the students are being asked to share a few links weekly with each other via Twitter and Wave.
• Students can ask questions/make suggestions/provide their own examples (via twitter and wave) during the class.
• The students will be partnering with a local NGO to raise awareness or solicit donations for a social cause using social media and an SEM campaign (hopefully Yahoo! and Google will come through and donate some ad credits).  These projects will be posted publicly.

Other things I could be/should be doing:

• Posting the course outline (as a wave) and inviting everyone whose registered for the ISB course to make their edits/suggestions (for topics or speakers)/questions/modifications prior to the start of the course.
• Reaching out to students in these universities ahead of time (via Twitter) to build some hype and make sure the class is filled up.

Anyone else have any ideas on how to make the course better?  Let me know…

Related posts:

1. B2B Social Media Marketing
2. Slides from Social Media Training Sessions
3. The Transition to Real-Time, Social Search

Video:

The videos from the actual lecture didn’t come out to well (you can see them here and here).  Below is the same session I gave to our team internally:

Slides:

Course Outline:

Prior Reading:

• Put Ad on Web. Count Clicks. Revise.
• India Digital Outlook Report 2009
• Ads Follow Web Users, and Get More Personal
• Introduction to Google Adwords (video – 15min)

Introduction
iTunes Case Study – You are the marketing manager responsible for launching the iTunes Store in India
- What are your objectives?
- How do you go about achieving those objectives?
Goals:
- Discuss branding vs. performance objectives
- Discuss differences between online and offline marketing (targeting, measurement, reach)
- Discuss the marketing funnel (Awareness, Consideration, Conversion, Loyalty, Advocacy)
- Review options for online advertising in relationship to the funnel
Review terminology:
- Impression, CPM, CPC, CPA/L/S, Goal, Conversion, CTR

Methods of Online Advertising
Search Engine Marketing (SEM) – Google Adwords Example
- How does Google determine which ads to display to users? Keyword, bid, location, quality score / relevance (clickthrough)
- Why are the bulk of most ad budgets allocated to SEM http://mashable.com/2009/07/08/social-media-marketing-growth/#mb – intent
Ads on Social Networks – Facebook Ads
- Targeting based on demographics
Ad networks – Right Media Exchange
- What is the advantage of purchasing an ad on an network rather then directly on a site itself – Non-premium, performance based, auction, reach
Affiliate Sales – Amazon
- Description of the affiliate model
Email Marketing – Email Brain
- Review analytics for email marketing
- Discuss limitations on reach

Revisit iTunes Case Study
How can you determine effectiveness of online marketing campaigns?
- Demonstrate eCPM / eCPA calcualtions
- Link online marketing metrics to sales

Ask students to come up with a marketing plan
- Split class into branding vs. performance
- Determine goals and budget allocation based on historical results

Measurement and Course Correction
Demonstrate Google Analytics
- Show ecommerce analytics
- Glean insights, create hypothesis based on analytics data (i.e. per visit value of certain states are high, let’s see if additional marketing – online or offline – will help us generate more sale with less spend)
Course Correction
- 3 slides for creative, source and keyword performance
- Discuss actively managing campaigns and getting rid of underperforming ads, sources, keywords

Related posts:

1. Why Would Anyone Advertise Online Without Google/Facebook?
2. Advertising Is Not a Sustainable Business Model for the Web (unless you are a Search Engine)
3. Slides from Social Media Training Sessions

• The number of sources indexed – Twitter, Technorati, Youtube, etc…
• The number of results
• The quality of results – How many are actually about my search term vs. spam
• Sentiment Analysis – Are the mentions positive?  Do people hate me?  I wanna know…
• Trend Analysis – Can I see spikes and ebbs in mentions?  What about by locations?
• RSS – Can I get an RSS feed of this (this is critical for real use)
• Email Alerts – Can I get a weekly report emailed?  Can I get an email of mentions a day increase above a certain threshold (or dip)?
• Widgets – Can I display all public mentions on my site?

Below is a brief comparison and analysis on my findings of the free services (a post on paid services will be coming soon)

Yahoo! Pipes

My initial plan was to use Yahoo! Pipes to create an RSS feed of mentions across the major sites (Twitter, Google Alerts, Google Blogsearch, Technorati and Youtube). I was pleasantly surprised to find many people had the same idea and extended it far beyond the major sites to include: Backtype, Techmeme, Boardtracker, WordPress and many others. Sweet! I ran the seemingly most popular version for the term “codechef” (one of the projects I work on) and was quite disappointed with the results. Only 33 results? Where are the tweets? Aright, time to investigate. I fired up the Yahoo! Pipes editor and was immediately regretting it:

Er… Ok.  While in theory Yahoo! Pipes looked like the perfect tool for this, trying to extend or modify a pipe isn’t very easy. Also you are passing query parameters dynamically in the URL, if they underlying site makes a change, you won’t get results and might never know.  Rather then trying to develop and maintain this myself, I realized there must be a lot of other people who want to do this.

SocialMention

SocialMeniton is the best tool I came across.  It indexed all the sources I expected (plus some I didn’t), gave the best results (in terms of both quality and quantity), provided tools for aggregation and analysis and had a really cool widget:

You can filter based on source (blogs, photos, videos, forums, etc…), sentiment (view only negative mentions), keywords, users, etc…  Super cool.  Also the analytics, number of retweets, authors, last mention, average time between mentions is awesome.  It’d be nice if the photos were shown as thumbnails in the full list of results (they are when you click on photos), but that’s a small thing.

Here’s a embed of their real-time widget for everyone’s favorite rapper (mesmerizing):

Collecta

Collecta was better then most but still lacking critical features to be considered seriously. It displays search results in a Twitter style stream (and also shows thumbnails of images). Also gives a nice preview of blog posts and articles:

Though without an RSS feed of results or tools for aggregation and analysis, this isn’t likely to be useful.

WhosTalkin

The last app I came across worth mentioning is WhosTalkin. Although this tool is also lacking RSS feeds and analysis, the site is fast and friendly. It’s easy to filter across results and is nice for a one-time search:

Conclusion

Currently it seems like SocialMention is far ahead of it’s competitors though this field is rapidly evolving and new players come in daily. Here is a summary of the tools described above:

	Yahoo! Pipes	SocialMention	Collecta	Whostalkin
Sources Indexed	As many as you want to configure (most popular “firehouse” has 40)	80+	Not mentioned, though I saw all the big guns	50+
Number of Results	33	124	45	130
Quality of Results	No spam	No spam	No spam	10% Spam
Sentiment Analysis	No	Yes	No	No
Trend Anlysis	No	Not really	No	No
RSS Feeds	Yes	Yes	No	Coming Soon
Email Alerts	Real-time and daily	Daily	Nope	Nope
Widgets	No	Yes	No	No

Next week I have demo’s of a few of the paid tools, to see what they can do, that we can’t do on our own. Know of any tools I missed? Have a different opinion? Let me know…

Related posts:

1. Measuring the Success of Social Media Campaigns
2. Slides from Social Media Training Sessions
3. B2B Social Media Marketing

• Reach – create buzz, get new customers, create awareness
• Reputation and influence – become an authority/thought leader, improve sentiment
• Engagement – improve customer and brand loyalty

But how do you determine if your campaign is successful? First you need to determine your objective. If you have a new product launch, you probably want to build some buzz and create awareness (Reach). If you have added new features to your product, you will want to measure it’s effect on user engagement/loyalty. If your goal is to increase your influence and reputation, you can start aggregating content or create your own (via a corporate blog for instance).

This is a rapidly evolving field and the tools and metrics used to determine success are changing quickly. Don’t be afraid to throw away metrics, the most important thing is that you start tracking. Below I list some methods for objectively measuring your success.

Measuring Reach

• Visitors – The number of people visiting your site and the source of that traffic. This can be measured using standard web analytics tools like Google Analytics. If you want to benchmark against peers/competitors use tools like Compete/Alexa.
• Number of Friends/Followers/Fans (applies to Facebook, SlideShare, etc…) – I don’t believe Twitter followers is a good metric to measure since there is a lot of spam. Much more important is quality of visitors (i.e. one Oprah or Michael Arrington is much more valuable then 1000 followers). Measuring 2nd degree relationships (number of friends of friends), is much more valuable (albeit more difficult to measure).
• RSS Subscriptions – Feedburner
• Links – When sharing links, you can use tools like bit.ly to determine how many people have clicked on it. Just add a + to the end of any bit.ly link (check out my self-referential example: http://bit.ly/16GZ6x+).

Measuring Reputation and Influence

• Number of public mentions (Blogs, Twitter, Facebook) – To measure public mentions on blogs you can subscribe to an RSS feed for your company/product/brand/name on Google Blog Search. For public mentions on Twitter subscribe to an RSS feed from Twitter Search. For Facebook, use Lexicon (this is more interesting as a tool to compare against your competitors, though they are undoubtedly improving this tool and I’m sure will add a y-axis soon).
• Incoming links (SEO) – This is the primary way Google measures the authority of pages when ranking search results. Use tools like Google Webmaster Tools, Xinu Returns and Technorati to track these.
• Comments about you on other sites – Since Google doesn’t index comments on blogs (most often), you can find out using tools like BackType.
• Retweets – Twitter Search
• Unsolicited positive mentions – I love this metric, there’s not much you can do to actively improve this, but if you are tracking it and are open, transparent and engaging your users properly, people will speak positively about you.

Measuring Engagement
You can use standard web analytics tools (Google Analytics) to measure:

• Visitor Loyalty – The number of return visitors over 1 month
• Recency – The number of return visitors over 1 week
• Duration – The length of time spent on the site
• Actions – The number of actions taken on the site: downloading, posting, commenting, playing, etc…

The absolute numbers are not important. Track these numbers month over month and look for an upwards trends.

Off-site engagement metrics include:

• Facebook – You can use FB insights to measure the number of actions on your fan page: comments, likes, wall posts, etc…
• YouTube – Youtube has it’s own analytics for measuring video plays.
• Trendrr – Trendrr is an awesome tool which let’s you measure public mentions and music/video plays across a variety of sites.

In short there is no easy way to measure your success across social media. Sure there are short cuts like Twitalyzer, which is nice for at a glance metrics, but if you have the time coming up with your own set of metrics is far more valuable. This all assumes that your brand is small enough that you don’t get thousands of public mentions a day. If you do, you’ll have to call in one of the big boys like Visible Technologies or Sentiment Metrics.

Anything I missed? Anything else you track? Let me know on Twitter or in the comments…

Related posts:

1. Slides from Social Media Training Sessions
2. Comparison of Free Social Media Monitoring Tools
3. B2B Social Media Marketing

Facebook Connect

Simply put, Facebook Connect allows you to build a Facebook application outside of Facebook. You can integrate with Facebook’s authentication, retrieve profile information about your users, allow your users to find their friends who have “connected” with your site, as well as selectively publish actions to a user’s activity stream.   Developing a Facebook Connect application requires software development chops but gives you access to Facebook’s 200m users.  Digg and CNN both demonstrate different approaches to integration.

CNN
CNN offered a live video stream during Obama’s inaugration.  It included a Facebook Connect application which allowed users to sign in with their Facebook credentials and participate in a live global chat.

Chattin' bout Barry

The participation numbers are staggering.  According to Mashable:

1. 600,000 status updates posted through the CNN.com Live Facebook feed
2. Facebook averaged 4,000 status updates per minute during the broadcast
3. 8,500 status updates were posted during the first minute of Obama’s speech
4. “Millions” of people logged into Facebook during the broadcast

These numbers would’ve never been achievable if users had to register with CNN to participate.  Recently, the Whitehouse has taken a cue and announced a similar application for it’s live video events.

Digg
Digg’s Facebook Connect implementation allows you to link your Digg and Facebook accounts.  Each story you digg, shows up on your activity stream (for all your friends to see).  For Digg, the beneifts are immediate, more people will see that I am digging stories and click back to the site.

Signing Into Facebook Connect

Digg story on my Facebook activity feed

Facebook Connect is now also available for the iPhone.  This is huge and will create a whole new world of mobile social applications.

OpenSocial

OpenSocial is similar to Facebook Connect but allows you to build applications that run in orkut, MySpace, Hi5, Friendster, Ning and Yahoo! and other 3rd party sites.

Virgin Global Row
The Virgin Global Row is a one crazy dude’s story about circling Antarctica in a boat by himself (and raising some money for charity).  OpenSocial integration allows you to login, connect with other people who have joined the site, and push your actions on the site to your various social networks.

Open social options

Google Friend Connect
Google has also release a set of plug n play widgets based on OpenSocial called Google Friend Connect.  Currently there are about 10 widgets available including sign-in, comments, polls, reviews, events and recommendations.  This is cool because it allows anyone to quickly and easily incorporate social elements to their site (no coding required).

Sign in with Twitter

Yep, you guessed it, sign in with Twitter allows 3rd party sites to publish activity to your Twitter stream.  One example of this is Spymaster (the Twitter game which equally amazed and pissed people off).

Spymaster
Spymaster is a game which allows you to go on missions, raise money, buy weapons and attack other spies (Twitter users).  Success is based on how many of your followers play the game and how often you send out updates through your twitter stream.   IMO the game is pretty boring although it is undeniably attracting a huge following and a really nice example of a successful viral campaign.

Bribing you to tweet about your activities

Real time spymaster activity

Conclusion

There’s a big battle over who will become the defacto social OS of the web.  In the future sites/widgets/apps will be social (and location aware), the question is where your data will be sourced from.  At this point Facebook is clearly in the lead, but Google has deep pockets and Twiter is making huge strides.  As Facebook and Twitter launch payment platforms, the opportunity to monitize through social ads and microtransactions presents a huge opportunity.  Got friends?

Related posts:

1. Slides from Social Media Training Sessions
2. Intro to Social Media Videos
3. The Transition to Real-Time, Social Search

Over the last few months I’ve seen a growing number of companies offering alternative strategies to generating revenue.

Subscription Services / Premium Content (Blizzard, New York Times, GigaOM, Forrester)

The most straightforward revenue source is paid subscriptions. Blizzard, makers of World of Warcraft, absolutely crush it.

“if [their] 10 million subscribers were to pay the regular $14.99 month-to-month fee, then Blizzard would fill its pockets with almost $150 million every single month… that means a revenue-target of more than $1.7 billion for FY 2008.”

While many media companies have experimented with paid subscription models, very few have been able to do it successfully.  The exception is research focused companies like Forrester which banks on corporates with deep pockets shelling out $700 for a 12 page report.  GigaOM and TechCrunch have also recently launched similar premium research and analysis services.

The New York Times recently released it’s TimesReader 2.0 Adobe Air client. While the client offers an improved user experience, I can’t ever imagine shelling out $3.45 a week for content I can get for free.  Though I would pay for their $3 iPhone app.

It’s possible that with the success of the Kindle, these paid content services will flourish in the future.

Freemium (Wetpaint, Pandora, Google Apps)

A variation on premium content services is the freemium model. Give away 80% of your service for free, and charge for heavy users who want more functionality or a better experience. Pandora, a music discovery product, recently launched a premium services which, for $36 a year, removes ads, provides higher quality streaming music and offers a desktop app.  A compelling offering for their top tier of users.

Wetpaint is another company that has found success through the freemium model:

“When Ben Elowitz formed Wetpaint in 2005, it was intended to let anyone create a Web site free… Wetpaint typically offers advertisers space on a few Web sites with a few hundred thousand visitors. But last fall, many of their advertisers raised their sights to publishers with more than five million readers, Mr. Elowitz said. Rates for leftover ad space fell to 25 cents per thousand views from $1… Now, Wetpaint charges its big company customers, like HBO and Fox, a fee in exchange for providing extra services like site promotion and moderating reader forums… Smaller customers can pay to keep their sites free of ads. Wetpaint plans to add more paid services, including additional storage for big files and personalized domain names. It is also considering selling virtual goods on its sites. “

Finally Google Apps is another nice example of successfully upselling premium services. The communication and collaboration platform is free for up to 50 users, but for $50 per user per year you get access to a whole range of services including: additional storage space, email security and archiving, video sharing, phone support and access to API’s.

App Stores (Apple, Nokia, Blackberry, Google Android)

It’s tough to argue against the game-changing success of the Apple App Store.  Rival companies like Google, Nokia and Blackberry have launched their own stores (the Android Market, Ovi store and Blackberry App World respectively).  A cursory glance on the Blackberry store only showed about 20 apps, and none of them were paid.  While they won’t be competitive with Apple (at least for some time), it’s at least showing that this model is profitable and worth pursuing.  I’m sure this is now central to how mobile handset makers and software developers plan on monetizing phones.

Interestingly this model is now being extended beyond just phones (and why not!).  According to the Sun CEO, Jonathan Schwartz:

“Vector is a network service to connect companies of all sizes and types to the roughly one billion Java users all over the world. Vector (which we’ll likely rename the Java Store), has the potential to deliver the world’s largest audience to developers and businesses leveraging Java and JavaFX.

Our runtimes reach more consumers than just about any other company on earth. That ubiquity has obvious value to search companies, but it’s also quite valuable to banks looking to sign up new accounts, sports franchises looking for new viewers, media companies and news organizations looking for new subscribers – basically, any Java developer looking to escape the browser to reach a billion or so consumers.

How will it work? Candidate applications will be submitted via a simple web site, evaluated by Sun for safety and content, then presented under free or fee terms to the broad Java audience via our update mechanism. Over time, developers will bid for position on our storefront, and the relationships won’t be exclusive (as they have been for search). As with other app stores, Sun will charge for distribution – but unlike other app stores, whose audiences are tiny, measured in the millions or tens of millions, ours will have what we estimate to be approximately a billion users. That’s clearly a lot of traffic, and will position the Java App Store as having just about the world’s largest audience. “

I believe that a paid app store is also a viable business model for social sites like Facebook, LinkedIn and Twitter.

Microtransaction (Tencent, Zygna, Facebook)

Tencent, the largest Chinese social network, focuses on microtransactions as their primary revenue source.  Users pay for subscriptions, virtual clothes for your avatar, new weapons, cute pets, etc… From their ’09 first quarter results:

Internet services (digital goods, game subscriptions, micro-transactions) – $279.9 mil (76% of total revenues)
Mobile Subscriptions – $64.5 (17.6% of total revenue)
Online Advertising – $21 mil (5.9% of total revenues)

Online advertising only 5.9% of their total $350mil revenues?  Impressive.

Another company successfully generating revenues from social gaming microtransactions is Zygna.  According to TechCrunch:

“Zynga, the online gaming publisher, is making a ton of money… [close] to $100 million. And clearly, it’s accelerating… There looks to be a bright future in the online gaming sphere and specifically around micro-transactions. That’s how Zynga makes most of its money. With some of its leading games on MySpace and Facebook, it charges users for playing time or for things like chips in poker. These small purchases which usually amount to only a few dollars at a time, start to add up quick. And that’s only with a small percentage of overall players opting to buy them.”

Facebook finally launched it’s much anticipated payment platform for testing.  Facebook hopes to be the OS for the social web.  They are banking on companies like Zygna figuring out what it the masses want and developing social applications on top of their platform.  App developers will be able to charge for subscriptions and create opportunities for in-app transactions. Facebook will get a cut of each transaction.  Cha-ching!

Another interesting company in this space is Tipjoy, which facilitates small payments on Twitter. I haven’t seen this used effectively yet, but I imagine a micropayment based Craigslist Twitter app could be successful.

Trend Analysis (Twitter, Zensify)

It’s undeniable that Twitter has achieved massive popularity, but that doesn’t always translate to profits (see YouTube). I believe Twitter’s most effective strategy for monetization will be mining and performing trend analysis on the millions of thought bubbles created by users daily. Both companies and individuals would pay big money to answer the following questions:

• What are people saying about me/my product right now?
• How has the perception of my brand changed recently and in what direction is it trending?
• Geographically where is my biggest, rapidly emerging and diminishing audiences?
• Who are my biggest evangelists, in what demographic do they fall in, where are they located?
• Who are my biggest naysayers, how can I change their perception?
• What is the perception of my product vs. my competitors?
• What are the trending (in both directions) topics in my industry?

On a smaller scale the new iPhone app Zensify:

“Shows the user trends within your social graph in the form of a tag cloud of key words. In other words it brings a lot more intelligence to your social graph. Suddenly, you can see a big trending topic amongst people you follow… “Wouldn’t it be cool if “trending topics” were localized to the people who are followed by the people you follow.” Well Zensify does this… And it doesn’t just do it across Twitter. It does it also does it across updates from Facebook, YouTube, Flickr, Digg, Delicious, Photobucket and 12seconds.”

I believe that providing a set of tools to monitor trends amongst your social graph (and public timelines), will be a huge revenue opportunity for companies looking to monetize on social and real-time.

Conclusion

When the internet was originally created the “page metaphor” mimicked the existing print industry. It followed that the way to monetize was through advertisements. As we move from pages to activity streams we’re starting to see entirely new, innovative ways to profit. We are still in the infancy of this new stream based revolution and while companies like Twitter and Facebook have achieved huge valuations no one (especially the Newspaper and Music industries) has yet figured out Monetization 2.0. Put on your thinking hats…

Related posts:

1. Google’s Biggest Competitor isn’t another Search Engine
2. The Transition to Real-Time, Social Search
3. Billion Dollar Business Idea

Key takeaways:

• “The biggest challenge — and necessity — facing interactive agencies is to cultivate the needed skills and gravitas to serve as the strategic marketing advisor to their clients.” This includes providing measurement and analysis of analytics, audience research with personas and ethnographic studies, and effectively using emerging media like blogs, video and rss.
• “The interactive agencies included in this evaluation are all perfectly capable of helping clients achieve their interactive marketing goals today. But they have yet to demonstrate an ability to lead broader marketing and brand strategy. As a result, clients will continue to relegate them to implementing the brand strategies of larger agencies — at least until interactive takes a much higher percentage of overall marketing spending.”

There are then specific articles on each agency and compares them in terms of analytics capabilities, research techniques, emerging media channels, strategy, cost, vision, strength of management teams and more.

Ave A / Razorfish:

• “We are quickly approaching an era when companies will look to their agencies — including interactive ones — for more cohesive, cross-channel marketing strategies. Avenue A | Razorfish’s road map doesn’t take it in this direction, which could mean that it will miss out on opportunities to lead strategy and thus deepen its client relationships.”
• Avenue A | Razorfish … believes that ”the future of digital marketing is tapping into the immersive and social power of the Web. It’s invested into R&D like the Living Labs and Smartpox (exploring new uses of mobile phones for marketing purposes), both of which study how consumers interact with emerging media. It believes that interactive video is the most important to its (and its clients’) future. Its work increasingly employs interactive video. For example, it created interactive video advertisements for Levi’s iPod-ready blue jeans and the marketing microsite www.mercedes-amg.com.” (this Mercedes site would be much cooler if it was faster, but gives an idea of where they are going).

Digitas:

• Has more than 170 analytics staff members with deep quantitative skills. Its expertise includes campaign analysis, experimental test design, etc..

OgilvyInteractive:

“OgilvyInteractive is engaged in four primary initiatives:

• A full-service mobile marketing offering, including mobile media planning, campaign/messaging, WAP, and application development.
• A digital influence and social media practice, including brand reputation management, advocacy, microcasting, viral marketing, digital PR, and content syndication.
• Branded content and multiplatform digital communications, including original content production and distribution across the Web, digital TV, IPTV, and mobile channel.
• Emerging channels such as video gaming, digital displays/signage, location-based targeting, and RSS.”

Some things to think about….

Related posts:

1. Measuring the Success of Social Media Campaigns
2. Advertising Is Not a Sustainable Business Model for the Web (unless you are a Search Engine)
3. Eating our own Dogfood in Marketing 2.0 Class