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Zynga's Betting the Farm

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Is social gaming giant Zynga ignoring the ad market at its own peril?

Just as advertising demand for social games is poised to explode—eMarketer predicts spending will surge 33 percent in 2011, to $192 million—the company behind monster hit FarmVille seems not to care. That could allow an opening for more experienced media companies like Disney, Electronic Arts and WildTangent to swoop in and grab the lion’s share of business.

Some say that Zynga’s engineer-heavy culture just isn’t that interested in advertising. Others argue that the company, which should earn $500 million in revenue this year from the sale of virtual goods alone, simply doesn’t need the money.

“They’re probably not going to move as fast as the others,” said Matt Story, director of Publicis’ Denuo Group. “They have no cash flow issues.”

Still, many note that Zynga, which has worked with just a handful of big brands, will need to make advertising a priority sooner or later, since most social games are only able to sell virtual goods to 1 to 3 percent of their audience. Even if Zynga, whose games are played by 45 million people daily, slightly exceeds that average, “not monetizing 95 percent of your audience isn’t necessarily a great business,” as one gaming exec put it. Especially as Zynga’s growth is slowing.

Speaking last week at the Social Gaming Summit in New York, Zynga’s director of brand advertising Manny Anekal listed several of the company’s recent ad successes, including a campaign for General Mills that resulted in 5 million user engagements.

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