facebook application development

If you had told developers during the time of the earliest generation of social games on the Facebook Platform – games like Vampires and Zombies, circa mid 2007 – that The Walt Disney Company would be acquiring an app developer for somewhere between $550 – $750 million three years later, most would have been very skeptical, if not incredulous.

But Disney’s acquisition of large social game developer and publisher Playdom yesterday marks another symbolic moment in the evolution of social gaming on Facebook (and MySpace, where Playdom invested early and has had success). Following EA’s acquisition of Playfish last November, Disney is the first media giant to pull the social gaming acquisition trigger in a big way.

It wasn’t that long ago that social games and apps were thought of as just another vast repository of low quality advertising inventory – if not worse. But Disney’s acquisition of Playdom, even more so than EA’s acquisition of Playfish (given Disney’s breadth of brands and media interests, and how careful they are with protecting their IP portfolio from potentially scarring issues), will now validate the virtual goods model to many media executives and investors who were hesitant to believe that something as trivial as inviting your friend to mop your restaurant might be a promising way to build a business on the internet.

As social gaming has become increasingly mass-market throughout the west and – this year – increasingly popular in the east as well, media companies like Disney are betting on the idea that new brands and IP can only take you so far; existing IP will become increasingly important in separating from the pack of developers vying for consumer attention, especially as customer acquisition costs increase.

We continue to hear of many social game developers and media companies interested in talking more with one another. If anything, we’ve been seeing that developers are getting more eager to have conversations than was the case six to nine months ago, but the number of potential acquirers sniffing around has also been increasing throughout the year as well.

Overall, we continue to expect to see more M&A activity in the space over the coming months. There are a lot of companies who are now confident enough that virtual goods inside games on social networks will be sustainable and are trying to figure out what exactly their move will be.

To dig deeper into the social gaming market, check out our recent Inside Virtual Goods reports:

• Inside Virtual Goods: The Future of Social Gaming 2010,
• Inside Virtual Goods: Spending and Usage Patterns of the Social Gaming Audience, and
• Inside Virtual Goods: The US Virtual Goods Market 2009-2010.

When Dave Kerpen and his wife Carrie founded TheKBuzz in New York back in 2007, the idea was to build a company around word of mouth marketing, he tells us. Then Facebook came into the picture. Since, the company has expanded to Boston and Chicago without any outside funding, changed its name to Likeable earlier this year and set its sights on providing brands with customer service solutions on Facebook.

We spoke to Kerpen as part of our ongoing series of Page mangement profiles. Earlier this year the company changed its name to Likeable. The name change came partly as a result of Facebook’s new Like button, but mostly because Kerpen tells us he wanted the name to reflect global brands.

The Like button goes beyond Facebook, he says, “The way Google organized the web around links, Facebook is reorganizing the entire web around Like. So, to me, Likeable is not just literal, it’s also figurative: Companies need to be more likeable to win.”

Inside Facebook: What products and services does your company provide to clients using Facebook? What types of clients are you aiming to reach?

Dave Kerpen: We are a truly a full service social media company – part consulting firm, part marketing agency, and part tech startup – providing Facebook strategy, consulting, training and execution. (This includes) fan Page, tab, and application design and execution, and Facebook ad creative, buying, and reporting. I believe that the best way to communicate with our fans is to update the stream, we are making sure our clients are communicating with their fans at least once a day. The service I’m most excited about is our Facebook Stream Management for which we develop and distribute engaging content for our clients and respond to comments and questions from fans. We work with a very wide variety of clients, from big brands such as 1-800-Flowers.com, Verizon FiOS and Neutrogena to categories such as consumer products, retailers, credit unions, travel bureaus, hospitals, nonprofits, government agencies and authors.

IFB: Can you share some highlights of how your company has helped clients meet their goals using Facebook?

DK: Last year we drove over 100,000 fans to a 50% increase in sales on “Free Chill Zone Day,” an event created entirely on Facebook. 1-800-Flowers.com has over 10 times as many fans as their competitors and was the first company to sell products directly on the Facebook platform. We’ve helped many thousands of New Yorkers quit smoking (5,300 Likes and 1,300 e-patches sent) and have safer sex using Facebook (12,800 Likes). And The Pampered Chef launched on July 14; it’s organic, no advertisements and the virtual gift app already has about 2,000 users and the Page has 49,000.

IFB: Overall, can you share metrics on the scope of your business?

DK: We were the first marcom agency in the world to have 10,000 fans on Facebook, a goal we accomplished recently. Since our founding in 2007, we have had solid triple-digit growth for three straight years. I believe that the [ed. third-party Facebook] brand business can grow over time to a $50 million business and the local business can grow to a $500 million business.

IFB: What metrics do you use to determine the success of a given campaign?

DK: Every client has different objectives, so it’s really important to define the metrics of success at the outset of work in conjunction with their objectives. Some clients care most about fans, others web traffic, others sales data, and others awareness and buzz.

IFB: What have been your biggest challenges building on Facebook platform? What mistakes have you made and learned from there?

DK: The biggest challenges are definitely how quickly Facebook changes and grows – because this affects planning significantly. For instance, when we saw that tab widths were due to change, we began designing narrower tabs for clients, and when those widths didn’t actually change for many months, a few clients were disappointed. We’ve learned to be very flexible and fast-moving, to keep up with Facebook – a worthy challenge for sure. We haven’t focused as much on tech as other players and, because of that, it’s not easy to fail.

IFB: Beyond your own efforts, what Facebook changes have noticeably helped your company?

DK: The number one change that helped was when Facebook introduced its current Page product in 2008 – which is a million times better than the original Page product for business they had, which didn’t even feed into streams. Before the Page product the way to promote a brand on Facebook was really just apps. The Page allowed brands, and those helping brands like Likeable, to really focus on building the fan base and communicating with customers. Their self-serve advertising platform has also gotten better and better, and we’ve been able to leverage its keyword targeting for clients of all sizes.

IFB: On the other hand, has Facebook made any recent changes that have noticeably hurt your company?

DK: The addition of Community Pages. It’s definitely made my clients very concerned, without a way yet for brands to manage or respond. You can imagine that if a client of mine spends big money on their Facebook presence, one thing we do is respond to every complaint on behalf of our clients on their fan Pages, so to then know that the Community Pages are potentially an aggregation of customer complains, the brand has no power to respond. It’s a frustrating situation but I’m sure Facebook will have a solution to this in the near future.

IFB: If you could ask Facebook to make a single change, what would it be?

DK: I’d like Pages and the people who represent them to be able to respond to posts on Community Pages. I’d also like to see the homepage ad buying process and value derived from homepage ads more closely resemble that of the self-serve ad platform. I’m confident that a Facebook team that includes Sheryl Sandberg, the woman behind Google’s genius AdWords product, will make that happen.

IFB: How does your work on Facebook relate to your work on other platforms?

DK: We are a full-service social media agency. So while Facebook, now with over 500 million users, is the obvious first part of any solution, we often work with Twitter, Foursquare, YouTube, LinkedIn, niche social networks and blogs to meet our clients’ goals. We will work on whatever platform the client needs and usually integrate our clients’ Facebook presence with whatever other social networks we’re using. It has to be all about each individual client’s objectives , so sometimes, smaller niche social networks will come into play, too. Twitter is currently the best tool for customer service, for example; if Facebook changes their own Community Pages, who knows, but for now customer service is best handled on Twitter. I am trying to build a company that meets its clients’ needs in terms of using social media to create more likeable organizations. I don’t want to just rely on Facebook, but the truth is Facebook is not going anywhere, so it’s a large part of what we do.

IFB: Do you have any specific plans that you can share?

DK: We’re currently building Likeable Index, a measurement of how socially active, responsive and likeable brands are online, and also the Likeable Local Platform, a scalable education, training and execution solution for small businesses to leverage Facebook and other social networks. Those are the biggies – but in the meantime, we want to continue providing our clients on Facebook with the best service in the business each day.

Wildfire is launching a Groupon or LivingSocial Deals-style application on Facebook this week, called Group Deals. It’s designed to allow brand Page administrators to set up group promotions on a Facebook Page within a matter of minutes, then get their discount offers shared among friends.

Group Deals works for Facebook Pages and via Facebook Connect like the others — group discounts require a minimum number of participants in order to be profitable for the business, and Facebook provides distribution to make that happen.

Wildfire’s product costs at least 99 cents a day to run, and provides a variety of pricing and customization capabilities. Setting up a Group Deal on Facebook via the Wildfire social application wizard is designed to be fast and simple, requiring three parameters: the value of the deal, the critical mass of takers needed for the deal to activate and the time period during which the deal will be valid.

Brands may also link a Group Deal to an e-commerce service  on their web site.

PayPal will administer the transactions on Facebook. Part of this integration allows buyers to receive reminders to recruit friends to the deal, be notified if the deal activated and also provide buyers with instructions on how to redeem a deal.

Wildfire raised $4.04 million earlier this year, right after it had rolled out a sweepstakes service on Facebook after partnering with Publisher’s Clearing House. For more information about social promotions on Facebook check out the Inside Facebook Marketing Bible.

Over the past few months, Facebook has been testing more ways of “seeding” users with Credits, its universal virtual currency, to spend on virtual goods inside social games on Facebook. Just last month, it started testing a Credits giveaway promoting CrowdStar’s Hello City. Now, Facebook is testing more generic Credits giveaways inside social games running on the Facebook Platform.

Over the last couple of days, users have reported seeing the following notice above many Facebook games. Facebook is testing a variety of Credits seeding amounts – we’ve seen from 10 to as many as 25 for some users. (We’ve even seen some users complaining that their friends got more Credits than they did in this giveaway.)

Facebook’s goal with the Credits giveaway is to accelerate the adoption of Credits as a common virtual currency across apps and games. As Facebook CEO Mark Zuckerberg told us a few weeks ago, “It makes sense that there should be one currency. If I go play a CrowdStar game right now and get Credits there, I can’t go use those Credits in a Zynga game, so that kind of sucks. One of the biggest inefficiencies in buying virtual goods is all the friction of having to take your credit card out, so having one store of [virtual currency] that you can use everywhere is both good for users and good for all the apps.”

We expect Facebook to continue doing promotions like these over the rest of the year to build up the number of Credits in circulation. For more background on the Credits rollout process, see our recent in-depth story here.

To dig deeper into the social gaming market, check out our in-depth market research report: Inside Virtual Goods: The Future of Social Gaming 2010.

Facebook has been busy meeting with large developers on its platform, trying to get them to sign deals to exclusively use its virtual currency, Credits, in their applications. So far, it has CrowdStar and LOLapps using Credits exclusively as the direct payment method, with rivals like Zynga participating but also using alternatives.

Now, there’s another big developer joining the exclusive list: RockYou. The company said say in a post about using virtual currency in its big social game, Zoo World. Here’s the key part: “RockYou is NOT doing away with Wildlife Point items to be replaced by Facebook Credits ($0.10 each). But all CASH purchases will require facebook credits within a year (Facebook requirement).”

> Read the full story on Inside Social Games.