Multi-Channel Ad Marketplace AdKnowledge Acquires Bootstrapped Facebook Ads API Vendor AdParlor

AdKnowledge, a marketplace that connects advertisers with inventory in the display, casual games, mobile, email and affiliate channels has acquired Facebook Ads API tool and managed spend service provider AdParlor. The acquisition will see AdParlor’s entire 20-person team, managed spend service, and licensable tool integrated into AdKnowledge, which will now be able to offer placement in the Facebook ads sidebar to its clients.

AdParlor had grown to become possibly the largest Ads API vendor, handling 1 billion impressions a day despite being completely bootstrapped. Though the acquisition price is not being disclosed, AdParlor’s founders and early employees have likely received a massive payday. AdKnowledge’s move continues the trend of consolidation in the Facebook Ads API space as Page management companies and pre-social ad platforms position themselves to absorb the increasing ad spend on Facebook.

AdKnowledge addresses advertising needs outside of search and the 500 biggest websites. It makes it easy for clients to bid on inventory aggregated from across the longtail of internet properties that would be inefficient to forge deals with individually. However, until now, Facebook’s ads sidebar was a major missing component of its offering to advertisers, considering that the social network is projected to take in $3 to $4 billion in ad revenue this year.

Back in 2008, AdParlor formed as a Facebook game banner and offer wall network. In March 2010 it gained access to the Ads API and refocused on providing a managed spend cost per acquisition Facebook sidebar advertising solution.

Facebook game developers set a CPA price and AdParlor seeks to earn a margin by attaining an acquisition at a lower cost per click or cost per one thousand impressions. When I profiled its service in November 2010, I was impressed with the sophistication of its dynamic bid optimization system. It lets developers install tracking pixels in their games and leave it up to AdParlor to analyze downstream conversion of ad clickers, design creative, and exploit low CPC and CPM pockets to deliver a high return on investment.

AdParlor has since expanded its business. It became Groupon’s exclusive Facebook advertising solution for its tens of millions of dollars in spend in March 2011, and released a licensable tool for agencies called Pulse in May. Brands running cost per fan campaigns for their Facebook Pages have grown to make up roughly 10% to 20% of its sales.

AdParlor’s team will remain in Toronto, but will get the benefit of AdKnowledge’s global sales offices. Soon, AdKnowledge plans to integrated AdParlor’s Pulse into its own self-service Bid System tool. AdKnowledge will also now be able to help its massively multiplayer online role play game clients monetize by drawing in new gamers through Facebook ads.

Buy Rather Than Build

Hussein Faisal, co-founder and CEO of AdParlor believes that the acquisition is a wise move for AdKnowledge and that consolidation in the industry will continue as older ad platforms move into social, “Facebook is going to be more and more relevant – a lot of these guys are going to want it in their portfolio. We’re even going to see the large agencies pick up Ads API companies to have that expertise in house.”

AdKnowledge CEO Scott Lynn tells me his company started looking for potential Ads API acquisition targets a few months ago and found that “AdParlor is the leader in the space.” It could have taken AdKnowledge many months or more to build technology inferior to AdParlor’s. By acquiring the Ads API vendor instead, it can immediately begin earning CPA margins on Facebook ad revenue that is projected to grow to $22 billion by 2016 according to Evercore Partners projections listed in the acquisition’s press release. Marketing services giant Experian made a similar decision, acquiring Ads API tool developer Techlightenment rather than building a tool internally.

Facebook has been pushing its marketing products in a social direction, offering Sponsored Stories ad unites that turn user interactions with Pages from news feed stories into highly effective ads. This has created synergies between the Facebook brand publishing and Ads API industries that has led to partnerships and acquisitions such as ad platform Efficient Frontier buying Page management company Context Optional.

Lynn tells me publishing is “Clearly an interesting space for us, though I’m not sure we would acquire a Page management company.” This suggests AdKnowledge may build a basic tool for synchronizing ads and Page posts to take advantage of Sponsored Stories, but Lynn says “we don’t have plans at present to do that.” With a powerful, proven Ads API tool and service now in its possession, AdKnowledge can tie its business to the growth of Facebook and the increasing importance of social context to drawing ad clicks.

This article originally appeared on our sister site, Inside Facebook.

Facebook Testing “Facebook Credits for Websites” That Helps Third-Party Sites Sell Virtual Goods

Facebook has just announced a closed, limited test in which for the first time it will allow websites to process payments for virtual goods using Facebook Credits. Facebook’s virtual currency is currently the mandatory payment method for all Facebook games on the web, a payment option for Facebook apps, and became available as a payment option to mobile app developers last week. The only initial launch partner for “Facebook Credits for Websites” will be online and downloadable games site GameHouse that until now only accepted payments through credit card and PayPal.

During the test, Facebook will closely monitor the demand for Credits as a payment method and the user experience of those that pay though its virtual currency. If a high enough percentage of users make purchases through Credits and feedback is positive, Facebook may expend additional resources to let more websites add Credits as a payment option.

Eventually, Facebook might open the option to all web developers selling virtual goods or digital media, allowing the social network to earn a 30% cut on transactions across the web. In exchange, sites will be able to provide an easier way to buy their goods and media than punching in credit card or PayPal details. Facebook has provided a signup page for developers that want to try Facebook Credits for Websites if the test is expanded.

GameHouse users that sign in to the site with their Facebook login and play Collapse Blast or UNO Boost will only see Credits as a payment option, not credit cards or PayPal. If they choose to buy virtual goods or proprietary in-game currencies, Facebook Credits will be deducted from the same account that Facebook canvas and mobile games pull from. Similar to how it works within Facebook, users without an existing balance of Credits will be able to purchase a bundle within the payment flow.

Unlike on Facebook where Credits are the exclusive payment method for games, GameHouse may still offer other payment options. However, Ian Fliflet who handles corporate strategy for GameHouse tells me that those signed in through Facebook won’t see the option to pay with a credit card or PayPal account. This could anger some long-time GameHouse users that try signing in through Facebook for the first time only to find their preferred payment options missing in the two test games. That in turn could negatively skew feedback on Credits for Websites.

If the test does indicate a demand for Credits as a payment option outside of Facebook.com, its unclear whether Facebook would require developers to use its virtual currency exclusively. It could simply make them an additional payment option, the way Credits currently work for Facebook.com apps as well as mobile apps and games. However, it might extend this test model so that sites that want to use Facebook as an identity and login provider will also need to use its taxed virtual currency.

The impact of Facebook Credits for Websites could be significant. It could assist independent game developers and digital media merchants with monetization, as customers might be able to quick make purchases rather than having time to reconsider while enduring the friction of entering their credit card information or logging in to PayPal.

Currently, many independent game developers have to distribute through portals like GameHouse that have built a base of users that have already provided their credit card details. Facebook Credits for Websites could give them the opportunity to distribute directly to fans in way that gives them more control over branding. The tax that third-party game portals take on credit card or PayPal transactions may vary widely, so Facebook’s 30% cut could be less or more than developers are used to paying.

Facebook has much to gain from Credits for Websites, though. The more places they’re accepted, the more users that are likely to buy and maintain a balance of Credits, and the more transactions Facebook will get a cut of. A user might buy a bundle of Credits to spend them on a gaming portal or to buy a band’s album, but then spend then become a paying customer of a freemium game on Facebook.com.

More users maintaining a balance of Credits also makes Facebook a more lucrative platform for developers. Typically only a few percent of gamers ever pay to play, but if they already have a balance they may be more likely to spend. Facebook may need to initially reduce its tax or not demand any exclusivity as a payment method to get websites hooked on Credits. With time, though, Facebook Credits for Websites could become a significant revenue source and powerful way to attract developers.

Facebook Finally Releases Official iPad App with Multi-Conversation Chat, Photo Browser and More

Facebook has just released its official iPad app. The tablet device was unveiled in January 2010, but development and negotiations with Apple stalled the release of Facebook’s app until now. It should become available in the App Store soon.

A slide-out navigation bar will allow users to briskly move between the app’s many features. Persistent access to notifications, messages, and requests means users can check for new alerts without having to losing their place as they do with Facebook for iPhone’s dedicated navigation grid screen. Other features include multi-conversation Chat and a full-screen photo browser.

With the iPad app available, Facebook today also announced the launch of its mobile application platform, which you can read more about here. Users will be able to access third-party apps and games from the official Facebook for iPad app, with bookmarks opening previously installed native apps or leading to the App Store where users can download them.

> Read the rest on Inside Facebook.

Facebook Adds Game Stories to the News Feed, Privacy Settings to Limit Them

Facebook yesterday announced several changes to how games work on the Platform, including that stories about game may be published to the news feeds of a user’s friends, including non-gamers, when the play a game for more than 15 minutes or complete an in-game objective. Depending on their prevalence in the news feed, game usage and achievement stories could help developers gain new users for free, but could also clutter the news feeds of people who don’t care about games.

To help users avoid annoying their friends, Facebook will add a new privacy setting that allows them to define on an app-by-app basis who an app can share with. The setting will default to “friends” but users can select to prevent the publishing of game discovery, usage, and achievement stories to news feed and the new Games Ticker.

A Year of Limited Virality

Prior to last September, Facebook apps and games could publish stories to the news feed about users taking in-app actions. While relevant to other gamers and key source of new users for developers, non-gamers often found these stories irrelevant and considered them spam amongst their social content. With this spam threatening to overrun the news feed and drive users away from Facebook, the site closed this viral channel.

Only the occasional story about a friend starting to play a game would appear in the news feed to those that had not already installed that game, significantly cleaning up the feed but also severely limiting organic growth for apps and games. Facebook also tested a randomly occurring Discover New Games sidebar module, but this wasn’t frequently seen and its placement in the sidebar made it much less noticeable than the old game stories that appeared in the news feed.

Without the free growth channel of prominent placement in the news feed, developers were forced to spend more on ads to gain traction for their apps. Combined with Facebook’s 30% tax on Facebook Credits that in July it made the mandatory payment method for virtual goods within games, the Facebook Platform had become much expensive to develop on then a year ago. This led developers to look for alternatives, making Facebook more potentially vulnerable to competing platforms.

> Read more on Inside Facebook.

Facebook’s Gamer Status API Lets Developers Track High Monetizing Users

Around the time of the deadline for mandatory migration to Facebook Credits, Facebook quietly added a new “Gamer Status” API that allows developers to identify which of their users monetize the best. Facebook automatically offers these users a 20% discount on Credits purchases, but developers who’ve been whitelisted can use the Gamer Status API to track those users internally or, potentially, offer them targeted experiences.

Prior to the mandatory migration of all Facebook Games to Facebook Credits as their sole payment method, several incentives were offered to encourage developers to switch early and use Credits as their premium in-game currency. These incentives can be accessed by developers whitelisted though Facebook’s Credits Special Incentives program.

Those with access can call $ret = $facebook->api_client->users_getStandardInfo($user_id, array('gamer_status')); to determine a user’s Gamer Status. Those tagged with a Gamer Status > 1 are users that monetize above average, including lucrative whales. The API respects user privacy by not sharing any details about their actual purchase history, just the fact that the make many purchases.

However, Facebook forbids developers from using the Gamer Status API to increase prices above their normal level for high monetizing users. Facebook also explicitly says, “You may not use gamer_status for any purpose other than internal and administrative purposes related to the operation of your game. For example, you may not use this information for marketing purposes.”

Developers could potentially target these high monetizing users with optimized offers or discounts on virtual goods. Because these users also receive discounts on buying Facebook Credits, they’re more likely to have a balance to spend. Developers can test to see whether offering discounts to these users leads to enough sales to offset the reduced prices. If so, Gamer Status can be used to increase revenues.

Gamer Status could also be used to drive retention. If paired with reengagement messages such as emails, developers may be able to lure previous users to start playing their game again with a signficant discount. Once these gamers have begun investing time in a game again, developers can return prices for them to normal. However, it’s currently unclear whether Facebook would allow these types of tactics given their policy statements above.

Facebook Expands Credits Offers to Europe Via SupersonicAds and Deal United

Facebook users in Europe will soon have the opportunity to earn Facebook Credits by completing hard offers through the offer walls of social games. Facebook today announced partnerships with SupersonicAds from the United Kingdom and Deal United from Germany to let European users buy magazine subscriptions, online movie rentals, and more to earn Facebook’s virtual currency.

Facebook will only allow Credits to be distributed through offers by approved providers once the July 1st deadline passes and all games to switch to Credits as their payment method. Therefore, attaining approved offers coverage in Europe through these deals is important so developers can still monetize users in the region who won’t pay for Credits directly.

Currently, game developers often work with offer providers like SupersonicAds and Deal United to give users their proprietary premium in-game currency in exchange for making purchases — sometimes known as completing hard offers. Direct response advertisers aggregated by the offer providers earn money from the purchases, and pay out to the game developers for bringing them customers and to cover the cost of the currency.

> Continue reading on Inside Facebook.

Facebook Deepens Partnership with TrialPay DealSpot to Offer Credits for Watching Videos

Facebook has just announced an expansion of its partnership with social game offer provider TrialPay on its DealSpot product that gives users Facebook Credits in exchange for watching branded videos. We covered in detail Facebook and TrialPay’s initial partnered around DealSpot earlier this year, but now Facebook will be presenting the option to earn Credits for video views around the site in its sidebar modules. Video providers Sharethrough, EpicSocial, SocialVibe, and SupersonicAds will be the first companies to have their videos shown in Facebook’s sidebars as well as games via DealSpot.

Facebook says the goal of the expanded partnership is to help game developers monetize a higher percentage of their users by educating users about how to earn and spend Credits and getting more of them to carry a balance of the virtual currency.

> Continue reading on Inside Facebook.

Facebook Launches New Feature Asking Users How Often They Want to Discover New Games

Facebook is testing a new version of the Discover New Games sidebar module introduced last month. Along with showing friends who play a certain game, this version asks users if they want to hear about games more or less often.

How much game content to serve to non-gamers and how to determine who is a gamer have been two long standing questions for Facebook. Now the site looks to be asking users directly, rather than deduce the answer from their behavior.

At a press event in September 2010, CEO Mark Zuckerberg explained the issue presented by the rift between gamers and non-gamers. “One of the biggest drivers of negative experiences has been games. There’s all these people who want to play games, and all these people who don’t want to play, who view it as spam. Two hundred million people or more are playing games on the site. When you poll users, one of the top 5 things they like is games, and one of the top 5 things they don’t like is games.”

Up until then stories generated by the in-game actions of friends had clogged the news feeds of people who didn’t play games. Facebook then altered the feed such that users would only see App Discovery stories about friends installing games, and stories from friends about in-game actions of games they’ve already installed. This significantly reduced the virality of many games to the dismay of developers.

Some developers complained that there was no way to acquire new users without paying for advertisements, so Facebook introduced the Discover New Games module. However, those who’ve never or only occasionally installed a game might find the module useless.

This tested interface asks “How often would you like to see ‘Discover New Games’?” with buttons to respond “More Often” or “Less Often”. This allows users to inform Facebook of their preference so it can show them different modules such as “Friends’ Photo Albums” or “Unread Messages“.

> Continue reading on Inside Facebook.

MXP4′s Bopler Games Opens Revenue Stream for Musicians by Letting Users Pay Facebook Credits to Play With Songs

Social music app developer MXP4 is launching Bopler Games, a standalone Facebook canvas application in which users play a suite of games that revolve around licensed music. Bopler Games creates a new revenue stream for musicians by paying them royalties when users spend $1 in Facebook Credits to play with the full version of a song instead of a 60-second preview.

If MXP4 can demonstrate that social games can be a significant money maker for musicians, it could convince major record labels to loosen their grip and become more willing to license their songs. Social game micropayments might then help save musicians and record labels that have been struggling to earn money off of recorded music since the widespread adoption of the MP3.

Previously, MXp4 only offered games that musicians could brand and install on their Pages as tab applications, but there were no in-game purchases. This meant that while useful for familiarizing fans with music and drawing users to a musician’s Page, MXP4′s games didn’t monetize directly, making musicians and labels weary to pay the developer or license their most popular songs to it.

Licensed music has been available for listening in some games such as NightClub City, and developers such as CrowdStar have allowed musicians to sell digital downloads through their games. However, this appears to be the first time a prominent developer has allowed users to pay for music that can only be listened to in a game. This is important because these purchases are less likely to cannibalize download sales, and instead create a parallel revenue stream or even encourage download sales.

Along with its existing game Pump It!, which focused on triggering sounds in a style of reminiscent of Guitar Hero and recently reach 1.3 million monthly active users, Mxp4 has added several new game types. Space It! is a Space Invaders-variant where enemies move in sync with the music, Match It! is like Tetris but with certain blocks that can only be removed by dropping others in time with the beat, and Snake it! is a less structured Pac-Man where users can destroy enemies by clicking in time with the music.

The games are fun and intuitive, and virtual good power-ups and song purchases are naturally laced into the experience, so Bopler could attain a high average session length and average revenue per user. Mxp4 says it also has six more games in production.

Bopler Games sells traditional virtual goods in the form of power-ups, from which it takes all the revenue, and splits revenue from sales of music with musicians. The game uses its own proprietary premium in-game currency which users buy with Facebook Credits. Users can pay 10 Credits or $1 for a “music pass” for one song, though bulk packs of $100 in currency and 10 songs at a time can bring the price as low as $0.625 per song. All goods and songs can be purchased with earned currency as well.

Bopler Games still has many things to refine, including its payment flow. It’s not obvious how to buy songs with pre-purchased music passes. User can’t pay to play the rest of a song when a free 60-second preview concludes. A button to “Buy song and keep playing” might entice users to make an impulse purchase in order to immediately hear the next chorus or go for a high score. Viral sharing could be more focused around the licensed content. Finally, Bopler lacks a way for users to Like the Facebook Pages of musicians, which if added could improve the game’s value proposition to artists and labels.

The song selection is quite limited at the time, with the biggest hits coming from emo rockers Fall Out Boy, British pop singer Lily Allen, and 80′s band Culture Club. MXP4 needs to license some songs that are currently popular or early engagement rates may be low. If it can’t secure some radio hits, fix its payment flow, and help artists with fan retention, record labels may write off the micropayment model before it has shown its potential. The music industry needs social games, but MXP4 has to prove it.

 

Facebook to Hold Webinar Discussing How Developers Can Migrate to Facebook Credits

Tomorrow, April 12th at 11am PST, Facebook will stream a webinar explaining why developers should migrate to Facebook Credits as their payment method, and featuring a technical demo of how to handle the migration. For those few developer who are not familiar, Facebook is requiring all apps using paid currency to make Credits the exclusive option by July 1st, 2011. As the event tomorrow shows, the company is trying to get as many developers as possible to migrate early to ensure a smooth transition this summer.

Migrating to Facebook Credits for Developers will air on the Facebook Live Page, and then be archived on the Page for future viewing. Developers can submit questions to the webinar’s Facebook Event ahead of time, or use the Livestream-powered app’s question interface to pose questions during the session.

Facebook announced in January that developers would have to migrate to Credits as their exclusive payment platform by July. 22 of the top 25 game developers have already migrated, including Zynga, Disney/Playdom, and EA/Playfish. To encourage hold-outs concerned with the 30% cost, Facebook launched a page of statistics and testimonials recently that touts increased revenue and decreased costs as reasons why the migration will be good for developers. Facebook also announced a new set of rules surrounding in-game offers and rewards that will go into effect alongside the migration.

Developers who use use Facebook Credits as their premium in-game currency rather than requiring users to buy proprietary premium in-game currency with Credits can access a number of special incentives including Frictionless Payments, Buy With Friends, and the getBalance API. These allow developers to earn more money through quick, small transactions and group deals for virtual goods, as well as learn how many Credits a user currently has in the account.

Navigating these rules and incentives can be tricky, so rather than wait until the deadline when delays can cost developers money, Facebook is seeking to address questions now. By signing major developers early and assisting attentive developers with this “Migrating to Facebook Credits for Developers” webinar, Facebook should receive fewer frantic support emails or claims of negligence come late June.

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