New Zynga S-1 Docs: Traffic Guarantees From Facebook, but No Canvas Ad Revenue

A recent set of updates to Zynga’s S-1 document sheds new light about the company’s business position, as it prepares for an initial public offering. For starters, Google has indeed invested, although the terms were not disclosed.

More interesting is the special relationship that Facebook and Zynga have formalized over revenue and traffic, in two developer addendums. (You can find the full set of docs here, although sadly some of the most interesting bits have been removed).

At first glance, the terms read as if Zynga had a special deal with Facebook, where it gets a portion of the ad revenue from Facebook ad units that run alongside its games in canvas apps. However, the terms specified that it is not canvas app ad revenue — instead, it’s referring to Zynga web sites like FarmVille.com, or even Facebook ads that might run within games.

We asked Facebook about the matter and got this response: “We don’t have agreements with any developers, including Zynga, to share revenue from ads next to their Facebook canvas apps. We did agree with Zynga to work together in the future on providing ads on their properties beyond Facebook, but we have no current timeline for when we might start working on that.”

Facebook also appears to have guaranteed Zynga certain growth targets in exchange for continuing to invest in games on the platform, whether web or mobile. Facebook has, since the launch of the platform, rewarded and punished individual developers through increasing or decreasing the number of invites, notifications and other communications allowed per user, or by providing some games with special access to features or in-house advertising.

However, Facebook has not to our knowledge previously guaranteed traffic levels in writing. Other developers are no doubt wondering if they can get the same sorts of guarantees, and why they haven’t gotten them in the past. Unless they have their own undisclosed agreements, of course.

As part of the addendum terms, Facebook appears to have gotten Zynga to agree to make Facebook the exclusive “Social Platform” that it uses, for the unspecified time-frame of the agreement. This helps explain Zynga’s closure of its games on Tagged, MySpace and other social networks, although we’re not sure how that might conflict with anything Google might want to launch with Zynga’s participation. Facebook also appears to have required Zynga to include itself as an option for mobile apps, for the agreement’s duration. However, Zynga can also use mobile platforms as well.

Another interesting point here is that Facebook has given Zynga permission to create some sort of “Zynga Platform,” although we don’t know what that is. It also has given the developer access to new features, including a proposed “Game Friends Protocol” API, apparently offering a new way for social gamers to find and play together.

Finally, with Credits, the virtual currency exclusivity kicked in for most of Zynga’s major games over the third quarter of 2010. As we examined when the filing first came out this month, the company has continued to grow revenues after the Credits implementations kicked in; some growth rate decreases are visible, but other factors, like communication channel reductions, appear to have affected it as well.

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23 Responses to “New Zynga S-1 Docs: Traffic Guarantees From Facebook, but No Canvas Ad Revenue”

  1. New Zynga S-1 Docs: Traffic Guarantees From Facebook, but No Canvas Ad Revenue says:

    [...] > Continue reading on Inside Social Games. [...]

  2. Quora says:

    Does Zynga get special treatment with its request bucket allocations?…

    Well, whaddya know, the S1 Filling by Zynga tells a different story then Siqi Chen http://www.insidesocialgames.com/2011/07/19/zynga-s-1-update-traffic-revenue/

  3. Bart says:

    Hmm its time we woke up and faced the reality that Facebook is just about dead when it comes to a gaming platform. It had a good thing, then it got squeezed. Now with Google+ coming out soon, and their in-game payment options coming into beta.. best start looking there if you want to get in early.

  4. Google+ and Social Games: What We Know So Far says:

    [...] developer in the form of Superpoke Pets! developer Slide. It was also recently revealed that Google did indeed invest in Zynga. Even if the FarmVille developer gets some kind of edge from the funding, social game [...]

  5. What Do Facebook’s Developer Traffic Targets Really Mean for Zynga (and Everyone Else)? says:

    [...] with Facebook as part of its S-1 filing to go public, because it seemed to show that Facebook was promising traffic for Zynga’s games on web and mobile [...]

  6. Zynga Readies Adventure World Ahead of IPO says:

    [...] first moved toward IPO with an S-1 filling early this summer that has since been amended to include or exclude details on valuation, traffic target agreements with Facebook, and the exact [...]

  7. Zynga Announces Mafia Wars 2 as Traffic Declines on Classic Original says:

    [...] a result of declining platform performance or perhaps due to an exclusivity agreement with Facebook revealed in Zynga’s IPO filings. On Facebook, the game has been in decline over the last year, showing only a brief spike in [...]

  8. Facebook Files Amended S-1 To Exhibit Zynga Agreement | TechCrunch says:

    [...] year, TechCrunch writer Eric Eldon reported on these same documents when Zynga filed them. He explained how the documents show that: Facebook also appears to have [...]

  9. Facebook Files Amended S-1 To Exhibit Zynga Agreement | Kantier says:

    [...] to have the same redactions as when Zynga filed them. Last year, TechCrunch writer Eric Eldon reported on these docs explaining how they show that: Facebook also appears to have guaranteed Zynga certain growth [...]

  10. Facebook’s Amended S-1 Exhibits Zynga Agreement Filed Last Year - SocialEnterprise.com Beta says:

    [...] to have the same redactions as when Zynga filed them. Last year, TechCrunch writer Eric Eldon reported on these docs explaining how they show that: Facebook also appears to have guaranteed Zynga certain growth [...]

  11. Facebook、修正S-1を提出。Zyngaとの契約書も says:

    [...] Eldonが これらの文書についてその内容を説明している。 [...]

  12. Investors Push Zynga Stock Up 10%, Because Now It Can Make Money On Ads And Publishing | TechCrunch says:

    [...] else, too. They allowed Zynga to run its own canvas ads on its properties, as I detailed on Inside Social Games last July. You don’t see ads right now, but Zynga could plug all of its advertisers — [...]

  13. INFOGRAPHIC: Zynga Games Are Cross-Addictive - AllFacebook says:

    [...] Zynga’s updated stock filings are causing much ado, we’re seeing dollar signs all over the fact that people [...]

  14. First hints of a Facebook ad network: Sponsored Stories appear on Zynga.com says:

    [...] year, Facebook told us it had agreed to work with Zynga to provide ads on their properties beyond Facebook, though at the [...]

  15. Adsense101 » Blog Archive » Are We Seeing The Beginning Of Facebook’s Answer To AdSense? says:

    [...] notes that the social networking company said last year that it would provide ads on Zynga.com — and share revenue with Zynga — in the [...]

  16. Are We Seeing The Beginning Of Facebook’s Answer To AdSense? | How To Make Money Online Paost says:

    [...] records that a amicable networking association said final year that it would yield ads on Zynga.com — and share income with Zynga — in a [...]

  17. About Facebook advertising|business and social media|Social network advertising | imarketingvids.com says:

    [...] notes that the social networking company said last year that it would provide ads on Zynga.com — and share revenue with Zynga — in the [...]

  18. First hints of a Facebook ad network: Sponsored Stories appear on Zynga.com - iHackAlbania says:

    [...] year, Facebook told us it had agreed to work with Zynga to provide ads on their properties beyond Facebook, though at the [...]

  19. Updated: Facebook Q2-2012 Concall: On Advertising, Sponsored Stories, ARPU & Mobile First Priority - MediaNama says:

    [...] personalized ads and sponsored stories on Zynga.com as per the developer addendums announced last [...]

  20. Facebook Q3-2012 Concall: On Revenue, New Launches, ARPU & Mobile Monetization - MediaNama says:

    [...] personalized ads and sponsored stories on Zynga.com as per the developer addendums announced last year, but it does not currently generate meaningful revenue from these [...]

  21. Agreeing to see other people — Zynga.com ending Facebook payments, ads in March says:

    [...] deep integration with the Facebook platform that appeared to be born of the developer’s privileged relationship with Facebook. Zynga.com previously supported Facebook ads and Facebook payments in a deal unlike [...]

  22. Facebook and Zynga loosen ties says:

    [...] deep integration with the Facebook platform that appeared to be born of the developer’s privileged relationship with Facebook. Zynga.com previously supported Facebook ads and Facebook payments in a deal unlike [...]

  23. Facebook India Active Users Up 59% To 71M In Q4-2012 - MediaNama says:

    [...] personalized ads and sponsored stories on Zynga.com from June 2012, as per the developer addendums announced in [...]

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