Facebook is running a promotion designed to entice game players to purchase Facebook Credits with a buy $1, get $4 free offer.
The promotion is aimed primarily at players that have never made in-game purchases with Credits. By offering 50 Credits for the price of 10, Facebook can lure users into inputting their credit card information and getting accustomed to using the social network’s virtual currency. Once users add billing information to their accounts and experience the in-game advantages that come from spending Credits, they are more likely to buy virtual and digital goods within applications. This helps developers monetize and increases revenue for Facebook.
Users who have not bought Credits before will be notified of the promotion through in-app offers and modules around the site, both of which are pictured here. If an app has implemented TrialPay’s Offerwall or DealSpot products, the $4 free value will be redeemed as the app’s native currency — for example, City Cash in CityVille. If a developer has not implemented in-app currency offers, the user will redeem the offer as Facebook Credits. If a user accesses the offer through a promotional unit elsewhere on the site, the purchase will again be in Credits. The company will pay developers their full revenue share, despite the 80 percent discount for users.
The social network earned $557 million from payments last year — 15 percent of its total revenue in 2011. About 50 percent of Facebook’s 845 million monthly active users play games, and between 2 and 6 percent of those players end up paying for virtual currency, according to sister blog Inside Social Games. Facebook takes a 30 percent cut of transactions using Credits. For now only games are required to use Credits, but the company could impose the system on other apps, as it noted in its filing for an initial public offering. By getting credit cards on file now, Facebook can make it easier for users to make more purchases in the future.
The company offered some users 80 percent discounts on Credits last year and at the start of 2012. In its blog post to developers, Facebook said it will continue to evolve promotions “to better grow our ecosystem.” At our Inside Social Apps conference in San Francisco last week, some top game developers said Credits were converting at a lower rate than they had hoped. Funzio Co-founder Anil Dharni said that after introducing Credits, his company saw an increased the conversion rate but a gradual decrease in average revenue per paying user. If Facebook cannot improve at converting more paying users, it risks losing developer talent to competing platforms like Apple’s iOS and Google’s Android and Google+.