As an amateur video maker who works in social games, I find it extremely surprising that Social Games, once derided as having no possible profit potential, are able to generate powerful revenues. Because in the video world, ‘monetizing content’ is still a far-away dream.
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If we are to go by the latest patent filed by Microsoft, the company could be soon rolling out their own social advertising product. The patent by Microsoft’s inventors for user generated advertising model describes the problems faced in traditional social network advertising and how their model improves on that.
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This evening Mark Pincus, the CEO of Zynga, announced on his blog that Zynga would begin phasing back in offers after temporarily shutting them down due to the whole “ScamVille” controversy. The primary source of controversy was IQ Quiz advertisements which we’ve covered extensively on AllFacebook over the past year. While sources vary on how large of a revenue stream offers were, sources stated that accounted for upwards of 33 percent of Zynga’s revenue.
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gWallet, one of the newest monetization services for social applications, announced a new round of funding today, which brings the total amount of funding raised to $12.5 million. The service is run by Gurbaksh Chahal, who previously sold two startups at the peak of the internet bubble (at only 16 years old), and has also been featured on the Oprah Whinfrey show, making him a relatively high profile Silicon Valley entrepreneur, although he’s rarely seen at industry events.
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Offerpal is one of the primary targets of the recent complaints about aggressive offers on the social web. However following those criticisms, the company brought in a new CEO, and today is releasing a new set of advertising policies which holds the company “to the highest standard of ethics and corporate responsibility.” If you want the full details of the advertising policies, you can read them here. The advertising policies are relatively clear, however the “gray” areas which generate a large portion of revenue for many publishers, still exists.
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This morning Peerset announced the launch of their flagship psychographic targeting product. We all know that online advertising still has a long way to go. Just yesterday I posted about how Facebook’s engagement ads highlight some of the future opportunities. There are two important components to quality advertising: top notch creatives and relevance. The second component is what Peerset is focused on. Last week I had an opportunity to demo the product which I found to be well developed.
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Earlier this week I had the opportunity to speak with Will O’Brien of TrialPay to discuss the company’s offering and the current state of offer-based advertising on the web. While there has been the argument that social applications don’t have effective monetization strategies, there’s no doubt that social games have already cracked the monetization nut and are bringing in significant revenue.
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Friendster is launching a new Do It Yourself advertising option for local businesses that would like to market on the social networking site. The new DIY program is being offered through the support of ZEDO, an ad serving company for web publishers. With the inclusion of ZEDO, Friendster is looking to keep costs down and extend its advertising capabilities without having to necessarily add staff or heavily build out its own marketing infrastructure.

This is likely the best approach for Friendster, given the current economic climate and the ongoing talks of Frienster putting itself up for sale. As Friendster has witnessed firsthand the ruthless nature of social network waning in the states, the company had spent the past few years seeking and gaining success overseas. But Friendster isn’t immune to the overall shift in advertising, which has largely affected the social networking, which has been rather reliant on ads for revenue.

A necessary change in the way in which ads are displayed and served across social networks has been a point of contention for social networks for several months now, and all the major social networks have had to make adjustments internally and for their client-facing options as well.

MySpace is probably the other notable social network that’s pertinent for this particular discussion, as it has undergone some hefty restructuring with its employees, programs and partnerships to streamline its advertising program as well. And as far as Facebook goes, the necessity to continuously update and improve its DIY ads doesn’t go unnoticed. Others still, including Trulia, have been seeking out the benefits of providing a highly localized DIY marketplace for individuals and businesses that would like to advertise within a social network setting.

To that end, Friendster will need to ensure the effectiveness of its ad server, as well as easy-to-use metrics and feedback tools. Leveraging its existing social network for the purpose of an inclusive DIY ad program can really help Friendster create a self-sustaining marketplace for local businesses. Building this out in other areas for local markets will likely add value to Friendster in the end.

To start, Friendster DIY Ads will be available globally in 75+ countries, though targeted ads are only supported in the US, Canada, Singapore, Indonesia, Malaysia, and the Philippines. See here for more details.

Weeks after announcing massive layoffs and international restructuring, MySpace is teaming up with a subset of its parent company Fox International Channels (FIC) in order to combine and streamline advertising deals. Under the terms of the partnership FIC will manage local advertising, marketing and promotion in several countries including Brazil, Argentina, Spain, Italy, Poland, Mexico and Turkey.

These are all countries in which MySpace has a localized version of its social networking site. These are also countries that are remaining active and nurtured after the major restructuring of MySpace as a company. Under the restructure, MySpace seemingly cut back on a good portion of its international efforts, closing several offices and combining the work towards an effort to create a more centralized account of localized sites and advertising methods. This was named as an initiative for focusing on innovation, which is an area in which MySpace has been lacking in relation to competitors such as Facebook.
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Whenever a platform becomes a standard, there are usually other companies that create platforms atop this initial one in order to help facilitate the available actions between third party developers and that platform. Such is the case with AdWhirl, which has announced a $1 million round of funding led by Foundation Capital.
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