Payment Industry Perspectives: Q&A with Super Rewards CEO Jason Bailey

As we continue our in depth look at leaders the Facebook Platform payments ecosystem, today we turn our attention to Super Rewards, a virtual currency monetization platform for social apps and games. We did one of the first public profiles of the company last summer, when word was first getting out about Mob Wars revenues. Most recently, the company announced the hiring of Julie Craft as VP of Marketing, who joins CEO Jason Bailey and President Adam Caplan on the Super Rewards exectuive team. Craft has recently worked as Vice President of Advertising and Publisher Sales at Simply Hired, followed by a business development role at rival monetization firm Offerpal Media. We recently spoke with Bailey about the current state of the market and trends the company is seeing heading into the second half of 2009: Inside Facebook: Jason, thanks for your time. Can you briefly describe the Super Rewards solution? Jason Bailey: Super Rewards has been around since December 2007 and is a virtual currency monetization platform. We’re a simple cut-and-paste solution that allows game services to monetize their virtual currencies through a series of payment options via PayPal, credit card, cash, direct deposit, prepaid gamer cards, etc. At our core is an ad-based solution. We work with 3,000 different advertisers that give us money, for example, when users sign up for a service. This money then gets passed on to game publishers. What’s the most important interaction in your value chain? The interaction between end users and advertisers: If users want to sign up for Netflix, it’s important for them to find value in offers, so we work with advertisers to push high quality ads out. This increases the likelihood that users will return in the future. Advertisers want more users. A user who signs up for Netflix and unsubscribes doesn’t generate a lot of value to advertisers. In the middle are Super Rewards and game publishers. We facilitate the interaction between advertisers and developers. We make life easier for developers. What are trends are you seeing so far this year, and what do you see ahead for the space over the next year or two? Mobile payments are becoming more popular and commonly accepted. As carriers are providing services and costs are coming down, there will be more competition in the space. PayPal and credit card payments make up the largest portion of direct payments. In international markets, most people don’t have credit cards, so there are direct deposit options that take funds directly out of bank accounts. This hasn’t caught on in North America yet. Overall, the space will continue to grow, and we’ll see a couple of major things happen: First, the bar will rise. The quality of games and applications has been getting higher and will continue to do so. The days of small developers who create apps in dorm rooms are kind of gone, but not completely. Second, we’ll see an aggregation in the space as far as who the key players are. As we've all seen, Facebook's payment service is now live in a few applications. What are your thoughts on Facebook's payment system? I really think it’s just another payment solution. I’m not too concerned about it and don’t think it’s Facebook’s gift to the world in terms of microtransactions. Facebook is late to game and not necessarily providing anything of additional value that can’t be gotten anywhere else. Social Gold and Spare Change have been offering the same solution for a long time. That said, there’s definitely the trust factor with Facebook. It remains to see what margins Facebook will take. I’d say Facebook will capture a relatively small amount of third-party app revenue for 2009 unless it runs margins so slim that there’s no value for other companies or makes it so that everyone has to use Facebook’s payment method like Apple’s platform. With the former, the company would be at fraud risk; with the latter, there would literally be a riot. Moving on to stats - how are your revenues currently breaking down across platform and geographies? 80% of our revenue comes from the four major English speaking countries. US, UK, Canada, and Australia. Facebook and MySpace are fairly even in terms of total revenue. But MySpace does it on fewer users. This is because it is more heavily skewed to US users, whereas Facebook is more more international, but has more people playing more apps. How do your ARPUs break down across countries? ARPUs vary greatly. The top four being the best. However, often heavily overlooked are Norway, Spain, Greece, Denmark, Switzerland, Saudi Arabia, and Italy. Turkey, Indonesia, Mexico, Malaysia, and Brazil should be avoided as their revenue is low on a per user basis. There are plenty of users, but the ARPU is low. What are common mistakes developers make when it comes to setting conversion rates? They are either giving away too many points or too little. In the first case, say the conversion rate is $10 dollars for 10 million coins: users have so many points that there’s no need to buy again. In the second case, say the conversion rate is too low - $10 dollars for five points: users would much rather go to other places in the game where they can click and earn. How’s the acquisition of Frozen Bear going for Super Rewards? Back in December we acquired Frozen Bear, a small company with only a few people mainly for its talent. The team at Frozen Bear has done a tremendous amount of work to bring Super Rewards to the next level with a robust, scalable product. Thanks Jason. Finally, what unique value does Super Rewards bring to the monetization space? The smaller players in the payment industry try to have you believe that offer inventory is the same, but I assure you there are offers in our platform that you absolutely will not find elsewhere. We work with a whole lot more networks than most of our competitors because of preexisting relationships with performance marketing companies. And it’s not just about the offers or volume, but which offers you present to users and which times. We serve 100 million unique eyeballs a month, and this breadth of demographic data allows us to see a new user, make an assumption, and present the right offer at the right time. As a result, we are the largest revenue generator for many advertisers and get slightly higher rates on most offers.

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Payment Industry Perspectives: Q&A with Super Rewards CEO Jason Bailey

Jessica Lee

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Jessica Lee