Facebook aims its ad machine at virtual goods and video games
The world's largest social network is offering developers a way to sell virtual items to its users.
Facebook is juicing up its advertising efforts by going after one of the most popular spending items in the app store: Video games.
The social networking giant said Thursday it was launching a new advertising effort that allows developers to sell virtual goods within an ad on its site. The ads can appear in both the news feed and the typical advertising section on the right-hand column of the company's website.
Facebook said the effort is particularly focused on video game developers, and with good reason. Consumers spent about $16 billion on mobile apps last year, according to a study by App Annie and IHS; Spending on video games represented more than 70 percent of that amount.
The move has the potential to bolster Facebook's advertising business, which is its primary source of revenue. The company has so far proven its advertising business is as healthy as ever. In particular, the company's relatively new effort to advertise on mobile devices has grown so quickly that it represented 59 percent of its overall ad revenue in its first fiscal quarter, and up nearly a third from the same time a year earlier.
Why would video game developers get on board?
Facebook says its test show this new advertising effort is very effective. In one test, Kixeye, a San Francisco-based video game company, aimed advertisements at customers who still played one of its titles, "Battle Pirates." The company offered discounts on in-game currency, which can be used to do things like customize ships. Facebook said 10 percent of customers who saw the ad clicked on it, and half of them actually bought something.
Pin Lu, a Facebook engineer who helps develop desktop ads, said in a statement that the new features are designed particularly to offer an easy transition for customers from reading about their friend's lives to playing a game.
"A developer with a desktop game on Facebook can now promote the sale of a virtual good, such as an extra booster pack, and gamers can purchase the virtual good directly from the ad and start playing the game," he said.