Yesterday for GigaOM, I reported on $15 million venture funding news for Offerpal, a Silicon Valley start-up that has become tremendously successful by packaging real world marketing offers with virtual currency giveaways. If you've played any of the larger Facebook games with a virtual currency system, you're probably familiar with how they work. Sign up for a Netflix account, for example, and get millions of virtual Friends For Sale "coins" as a signing bonus. Friends For Sale players get more game money to spend, Netflix gets new customers, pays Offerpal for each successful acquisition, and Offerpal sends a cut of the revenue back to Friends For Sale developers. One of their offers, the CEO tells me, grosses over $3 million a month alone. (The company itself was profitable just a few months after launch.)
As I was talking with her, it occured to me why Offerpal's business model seemed so familiar-- it was a much larger version of businesses operating on Second Life's many "Free Linden Dollar" islands. (Like the one pictured above, where you get L$ for filling out real world marketing surveys.) To my knowledge, these SL services are primarily confined to free money noob areas, and the L$ cash payouts are relatively small. But after reporting on Offerpal's success, I think there's room for a similar operation aimed more broadly at the established Second Life community, targeting their unique demographics, and offering bigger L$ payouts per CPA. (I.E., cost per acquisition.) It would be a great opportunity for a savvy entrepeneur, a cash-infusing stimulus to the SL economy... and for cash poor Residents, it has to beat sitting in a free money camping chair.
You should work in marketing, Hamlet.
Oh wait, that's already what you are doing.
Posted by: christophe hugo | Wednesday, February 18, 2009 at 06:05 PM
Lets see.
Total Facebook account number 150 million REAL people with REAL info providing demographics
Total SL active account number 50,000 --liberally - most anonymous alts and no true ID info.
drk
Posted by: derrick | Wednesday, February 18, 2009 at 07:25 PM
We'll see how Offerpal does. I'm not optimistic.
HippiePay, Welfare Island, and The Pharm closed in recent months--they apparently lost money on camping payouts and did not recoup enough commissions from marketing surveys that residents completed.
Maybe Offerpal will have a better model and better security. HippiePay and the other islands tried linking camping rates to the surveys--the more you did, the higher your camping rate.
Worked great for a while, then rumors flew that the survey database at HippiePay had been hacked. I asked one of the owners and never got confirmation. He was a nice guy in SL and RL. It was a shame to see his business fold. His employees were loyal and would not confirm any rumors I'd heard.
I gave one of these survey systems a whirl some time ago--made a hundred Lindens after an hour or so of tedious surveys, in return for tons of spam e-mails from marketers that got dumped into a gmail account I'd set up for that purpose.
But in my experience, it was easy to game the surveys. A common trick, some residents told me, is to provide real addresses of defunct businesses, to avoid junk mail.
I used my favorite locally owned doughnut shop, torn down for a darned McDonald's. I hope that blight on the land enjoys the offers for breast enlargement, pet supplies, and chewing tobacco sent to my avatar.
Posted by: Iggy O | Wednesday, February 18, 2009 at 11:02 PM
Very interesting, Iggy, someone should blog that. :)
Not sure where you're getting your user figures from, Derrick, 500K active is generally the accepted number. Also, Comscore estimates Facebook usage time averages out to 170 minutes a month, whereas with active SL users, it averages out to... 50 *hours* a month. What's more, most Facebook games with virtual currency have an active user base smaller than SL's. So there's some distinct advantages marketing offers-for-L$ to SL users.
Posted by: Hamlet Au | Wednesday, February 18, 2009 at 11:40 PM
Problem is, L$ are convertable to cash, and cost cash to acquire, so giving out real amounts of L$ costs real money.
Posted by: anna gulaev | Saturday, February 21, 2009 at 01:08 PM