Ifeelgoods, a company that lets businesses offer Facebook Credits as rewards for purchases and signups, today announced the closing of a $6.5 million Series A funding round led by Idinvest. As Facebook Credits become the sole payment option on the Facebook Platform this Friday, and more types of digital goods including video and music are sold for Credits, the demand for the virtual currency will increase, and more companies will seek to incentivize sales and actions through ifeelgoods.
For these reasons, ifeelgoods has good potential. The company will use the funding to launch new services and court more domestic and international clients.
We’ve been following ifeelgoods since the company’s launch in September 2010. This was back when it started helping clients offer users Facebook Credits in exchange for email signups, Facebook Likes, and sales, even though social game developers had just begun to accept the virtual currency.
However, with users still able to buy virtual goods directly from developers instead of using Credits, and nothing else to buy with them, demand for Facebook’s virtual currency was low. Still, ifeelgoods saw gamers perceiving the value of these Credits incentives higher than equal amounts of cash, similar to customers are enticed by free shipping. The company had a bright future if a wider audience was interested in earning Credits.
Microincentives Gaining Wider Appeal
Fast-forward nine months and Facebook Credits are about to be the only way to pay in Facebook games, meaning all of Facebook’s gamers (which could be as many as 290 million people) now have a use for Credits. Even though only a small percent of gamers are actively willing to pay money in social games, more might be willing to change their shopping habits or sign up for a newsletter for free Credits.
Meanwhile, developers are starting to offer video rentals and pay-per-view concerts for Credits. Facebook may also allow users to pay Credits for MP3 downloads or music streaming service subscriptions as part of its upcoming Music Dashboard. These developments could make Facebook Credits mainstream, massively expanding the range of customers ifeelgoods clients could attract by offering Credits incentives.
One client set in particular is Facebook Pages. The act of Liking a Page is perfect for incentivizing with Credits, as the action is fast and familiar, it generates a lot of value for brands, and users are just clicks away from spending their reward. Facebook ads for Like-gated Page tab apps offering Credits could become an highly cost and time efficient method of growing Pages.
Update: To be clear, it’s against Facebook’s policy for Pages to directly incentivize Likes. However, they can create a Like-gated Page tab app wherein users take another action that can be incentivized with Credits. Likes are currently often incentivized in this way, but with entry into a sweepstakes as the reward instead of Credits.
The new funding will help ifeelgoods capitalize on the increased client interest foreshadowed by these factors. The round was led by European venture capital firm Idinvest and joined by TugBoat Ventures which contributed to ifeelgoods’ $1.5 million seed round.
The company currently services 20 brands including Gap, Gamefly, 1-800-Flowers.com, and Shopping.com from verticals such as clothing and direct sales. It has helped ShopAtHome.com gain 1.3 million new Facebook fans and Shoebuy.com double the click through rate on its Facebook ads by offering Credits instead of cash discounts.
The microincentive model is still relatively unproven, so ifeelgoods will use the funding to build out a sales team to educated and sign clients in the US and abroad. Engineers will be hired to assist with scaling and expand the types of actions that can be incentivized.
Ifeelgoods is tied to the success of Credits, so with Facebook’s virtual currency poised more much greater adoption, Idinvest and TugBoat may have gotten in at just the right time.