Tag: Monetization

Pinterest Picks Up Facebook’s Monetization Man

Forbes Magazine revealed yesterday that the man who was once head of monetization efforts for Facebook is now doing the same thing for Pinterest. Tim Kendall was with Facebook from 2006-2010 as director of monetization.

Facebook’s David Fischer, VP of advertising and global operations, once said of Kendall:

“Over more than four years at Facebook, Tim has had an incredible impact on the company, and in particular on the development of the ads business. Starting back in 2006, Tim wrote the blueprint for our monetization strategy.

Tim recognized early on not only that advertising could be social, but that it should be social on Facebook. What began as “sponsored stories,” social advertising has transformed the marketing business.”

That kind of “paradigm shift” thinking has served Facebook well. Now, after turning down offers from Zynga and Twitter, Kendall is joining up with Pinterest.

Here is a clip of Kendall in 2009, talking about Facebook’s prospects for the then-future of Facebook. Listen for when he says, “We obviously think that we’re a major player within the social media world.”

You think?

March 23, 2012
Facebook Wants Players To Become Payers

It’s already been proven that people spend a lot of money on Facebook games. Heck, 12 percent of Facebook’s revenue comes from players buying stuff in Zynga’s games. There are still quite a few people who don’t want to pay for anything in their games. Facebook has offered developers an answer in new player promotions

While new player promotions have been around for a while, they are now going to show up in games as part of the experience. Facebook is offering developers, starting today, the opportunity to add an in-game icon to their games that offers a sweet deal to get people to spend money. Facebook has found that users who jump on this first-time bonus are more inclined to spend more money on Facebook games.

The promotion targets people who have never purchased Facebook credits with a credit card or PayPal. This will create an in-game icon on the side of the game’s page that will entice the player with a free bonus in exchange for their money. It doesn’t mention whether or not this promotion will target players who exclusively buy Facebook credits through pre-paid cards.

The deal seems to be the same across all games, but it’s still a good deal nonetheless. For $1, players will receive $1 worth of Facebook credits and $4 of the in-app currency. That’s like going to Chuck E. Cheeses and spending $1 to get four tokens and 50 tickets.

Facebook suggests that developers add an in-game currency to their products if they have not already done so. If not, the promotion will give players $5 worth of Facebook credits to use anywhere on the site. That’s more akin to spending $1 and getting 20 tokens. Awesome deal for the player, but not so awesome for the platform holder.

At least the transaction is relatively painless. The payment flow opens up in a new tab allowing users to make the payment without breaking the flow of their game.

If you have already have DealSpot running in your game, the promotion will appear automatically for users. If you are not yet using DealSpot, check out the Facebook Developers page on how to implement the feature into your code.

March 23, 2012
Interview: Skimlinks CEO on Pinterest Relationship and Affiliate Marketing
Just in case you haven’t heard, Pinterest is currently one of the hottest startups. In fact, based on data from ratings firm comScore, it is the third fastest growing site in the U.S. So, apparently if you haven’t jumped on board with it, you should.

However, as with so many startups, Pinterest‘s blissful beginning was slightly interrupted earlier this month after Josh Davis of LL Social revealed that it was using affiliate marketing tactics to make money. Based on his findings, Pinterest was using a service called Skimlinks to add affiliate links across its site.

In Davis’s initial post, he wrote:
Pinterest doing this is big news in my opinion for two reasons: (Emphasis not added)
- Pinterest has taken this action in a quiet, non-disclosing way.
The nondisclosure aspect is really what caused a media frenzy and, particularly, the notion that Pinterest was being deceptive with its monetization strategy.

Do you believe Pinterest should have disclosed its use of Skimlinks to make money? What do you think?

Furthermore, the drama continued after Pinterest‘s CEO indicated that it had stopped using Skimlinks.

Although, at this time, no one from Pinterest was available to talk with us, WebProNews was able to speak with Alicia Navarro, the CEO of Skimlinks, to find out what really happened. According to her, Skimlinks is a service for publishers of all sizes that allows them to automatically turn product links or references into affiliate links.

“It’s a way for these websites to earn money through affiliate marketing without having to do all the manual effort,” she said.

Navarro added that it was a “no-brainer” for a lot of sites to include the service into their revenue strategy since Skimlinks provides analytics as well as a tremendous savings in time and effort.

While she didn’t want to “disclose confidential information” about Pinterest, Navarro did tell us that it had used Skimlinks for “many years.” She said that the companies have a “happy relationship” on both sides but did point out that Pinterest had halted their partnership not long ago.

“They paused it recently for their own reasons, partly probably because of the media storm, partly probably because they’ve raised a lot of money,” said Navarro. “They now have the luxury of being able to take the time to work out their revenue strategy.”

After all the news came out, there were rumors suggesting Pinterest‘s relationship with Skimlinks was experimental and that the startup was using this story as a cover up for some of the negative press it had received. When asked about this, Navarro said that a lot of the information released was taken out of context.

“There’s nothing as scandalous as the press… I think people just like a good story,” she said.

On the disclosure side of the issue, Navarro told us that it encourages its publishers to disclose. They also have badges available to make it an easy process. However, she doesn’t think that Pinterest did anything wrong.

Since the incident, Pinterest has added a new section on its “Help” page entitled “How does Pinterest make money?” It says:

“Right now, we are focused on growing Pinterest and making it more valuable. To fund these efforts, we have taken outside investment from entrepreneurs and venture capitalists. In the past, we’ve tested a few different approaches to making money such as affiliate links. We might also try adding advertisements, but we haven’t done this yet.

Even though making money isn’t our top priority right now, it is a long term goal. After all, we want Pinterest to be here to stay!”

Navarro did point out that, if Pinterest did decide to try ads, it would “find a way to make it look beautiful.”

Speaking of the overall incident, she said that the response Skimlinks has received has been one of support.

“People are overwhelmingly supportive of Pinterest‘s use of Skimlinks, particularly because it allowed them to make a revenue stream without at all affecting the user’s experience,” Navarro added.

In other Pinterest news, the company also recently made available a “nopin” metatag to help alleviate some of the scrutiny its received over its use of copyright material.

What will happen next with the hot new startup? Let us know what your predictions are.
February 23, 2012
Exclusive: Does Facebook’s IPO Make Good Business Sense?

Companies file for IPOs all the time, but the recent filing by social networking giant Facebook has seemed to connect with nearly everyone, and in a big way. On Wednesday, Facebook filed for its IPO in hopes to raise $5 billion or more, which would make it the largest initial public offering from an Internet or technology company.

Facebook is unique in that its users have played a significant role, if not the most significant role, in what it is today. According to its S-1 filing, Facebook has 845 million active monthly users. Due to this widespread user base combined with the nature of Facebook, the news of the IPO has been particularly intriguing.

Users are excited because they feel a special connection to Facebook. While it is substantial news, there are some issues being raised about it from a business perspective, particularly over its estimated valuation.

Is Facebook worth $100 billion? What do you think?

According to Francis Gaskins, President and Partner at IPODesktop.com, the past 4-5 quarters are very indicative of its future. Based on the information that was released in the filing, he does not think $100 billion is a reasonable valuation for Facebook.

“At $100 billion market cap, Facebook would be selling at about 53 percent of Google’s cap,” he said.

As he explains, Facebook’s revenue in 2011 was $3.7 billion. Google, on the other hand, had revenue of $46 billion, which is more than 10 times the amount of Facebook’s. Given this data, Gaskins doesn’t see how Facebook is worth 53 percent of Google.

Gaskins also points out that the past quarters are telling of the company’s rate of growth. He told us he was “quite surprised” when he saw the details.

“[If] you look at what happened for December 2010, March, June, and September of 2011, oddly enough, what you will find is the operating earnings were flat,” he said. “The net after tax earnings were flat, and the margins – the profit margins – went down.”

He believes the $100 billion valuation points to the ego of Mark Zuckerberg as well as the fact that Facebook is falling into the trap of believing their own press releases, a move that he calls “very, very dangerous.”

“The credibility of management’s forecast is very, very important,” he said.

Gaskins told us that Facebook didn’t have a solid strategy for being profitable that would appease Wall Street, especially since its revenue was flat even without any real competitors. However, now that Google+ exists and is appearing to gain ground, he said that Facebook’s current projections could really hurt it. He believes that Facebook should have filed its IPO last summer when it was the only player in the space.

Another issue he sees from a business perspective is how Facebook is defined.

“It’s not a technology company,” he said. “It’s a consumer of technology, which is different. They’re offering a service, and they’re not selling technology.”

Facebook is, however, an Internet advertising company like Google. According to Price Waterhouse, the yearly compound growth rate for Internet advertising will be 12 percent through 2015. So, at this rate, it doesn’t translate into high multiple market growth for Facebook.

With these revelations and others being analyzed, the social giant will likely face a lot of scrutiny. What’s bad is that Facebook is about to enter the quiet period, which means that it will not be able to respond to the negativity.

On the bright side, Gaskins did say that Facebook’s IPO would have a positive impact on the economy.

“It’ll definitely help the economy because there will be a lot more money flowing around in the tech area,” he said.

February 4, 2012
GotCast CEO on the Intersection of Technology and Hollywood

With celebrities quickly taking to Facebook, Twitter, and Google+, it’s clear that the entertainment industry is embracing technology and the digital space. What’s interesting is that some people in Hollywood are finding that they prefer the freedom technology and the Internet provide, as actor Kevin Pollak explained to us in this interview:

In another recent interview with Alec Shankman, the CEO of Hollywood interactive community GotCast, he told us that technology and the entertainment industry were “merging quickly.” Sites such as Hulu, Netflix, and, of course, YouTube are creating many new opportunities for both known talent and budding talent.

While there are many opportunities, there are also challenges in bringing these two industries together. After being an agent for several years, Shankman realized that there was a gap in connecting fresh talent to agents, producers, and casting directors. He and his business partner Wil Schroter took this problem and developed a platform for bridging this gap called GotCast.com.

“We’re actually merging the way talent is discovered and the way that talent finds work with technology,” said Shankman.

They wanted to create options beyond American Idol, The Voice, and other talent oriented shows.

He went on to explain that the service has both a free and premium model and anyone that wants can sign up. The service also has a social-based component called MediaBlastr that allows family and friends to vote for their loved ones on various social sites. Brands such as MySpace, Dove, and Sony Playstation have created contests that have gone viral through this element.

“It’s really difficult for a brand to get talent to, or anybody for that matter, to speak about the brand across Facebook and Twitter without getting paid for it or without having a really specific reason,” Shankman said.

“But, in this case, when you’re saying, ‘Hey, I wanna be the new face of Dove, come vote for me,’ and you’re posting it on Twitter and Facebook and Google+, and then your friends go to vote for you and they sign up and they post the same thing, it gets really viral really quickly; and it’s incredible for brands,” he added.

The other challenge with this intersection of technology and entertainment is monetization. The entertainment industry is accustomed to having tried and true business models, but this new space is different. Shankman told us that GotCast, and the others that are embracing the two, are still experimenting with revenue models.

“Technology is growing like crazy everyday, so it’s gonna be in the entertainment space whether entertainment’s ready or not,” he said.

Despite these challenges, Shankman said that Hollywood was motivated to integrate technology because it didn’t want to “miss the boat” like the recording industry did.

January 22, 2012
Is Advertising the Best Option for a Business Model?

It’s no secret that many businesses today, especially in the tech industry, create great services but wait until after their service has taken off to come up with a revenue model. Twitter, for instance, is one very useful company that began this way.

This model works in many cases, such as with Twitter, but the question of whether or not it is an effective business practice is still debatable.

Should the business model or the success of the business come first? What do you think?

Many of these online businesses find their business model in an advertising platform. While we’ve seen multiple companies have great success with advertising, studies show that consumers are often frustrated by the excessive ads.

In a recent interview with WebProNews, Jeff Tinsley, the CEO for MyLife, told us that businesses have more than one option when it comes to finding a revenue model. He said, “Advertising is not the only model that works, as proven by us and proven by LinkedIn.”

In addition to MyLife’s free service, it also has a premium model with three different subscription services for users. He told us that users are willing to pay for what they consider to be valuable. In this case, in particular, users see value in connecting with people they want to hire and vice versa.

Tinsley said that both sides benefit, so it makes it something that is worth paying for. He went on to say that this model has worked so well for MyLife that there is potential for an IPO in the future. He said that it is something that they “seriously want to take a look at.”

More than likely, opinions are mixed on determining the best form of monetization for a business. However, I think it’s safe to say that most of the deciding factors depend on the business itself. Any thoughts?

June 30, 2011