Facebook Crimps Ad Views-for-Credits Players

When Facebook moved to institute Facebook Credits as the network’s only virtual currency this month, it wasn’t just virtual game platforms that were affected. A cottage industry sprung up to trade consumer attention to video ads in return for virtual tokens redeemable in social games on Facebook.

Under the new Facebook rules, companies in the attention-for-currency game must use Facebook Credits and operate on Facebook’s terms. For one, such views-for-credits campaigns must be executed via TrialPay, Facebook’s preferred tech vendor for such transactions. It’s unclear whether what effect this will have on the market in the long term, but early signs show that Facebook is convincing some in the views-for-credit game to shift course.

Jun Group, for instance, has ditched giving out credits for ad views, instead moving towards providing users with virtual goods in exchange for enduring an ad exposure. The company works with advertisers like Kraft and Fanta.

“A bunch of people have been negatively impacted,” said Corey Weiner, principal and COO of Jun Group. “This policy seems really out of their character, their open model. It puts a damper on innovation. It’s really short-term thinking from a company that is know for long-term thinking.”

Other companies — SocialVibe, EpicSocial, Sharethrough all run views-for-credits campaigns — are faced with the same kind of decision, say industry sources. WildTangent, RockYou and Selectable Media have already ditched ad views-for-currency programs.

RockYou’s popular Zoo World is a good example of the stance many social games are taking with regards to views-for-Credits. While there are numerous ways for users to earn free Facekbook Credits from direct response brands (sign up for a Netflix account, subscribe to US Weekly), the game doesn’t currently provide the option to watch an ad to earn Credits.

What’s the problem? For one, Facebook imposes a heavy tarriff. Using Credits means passing a 30 percent cut to Facebook for every media buy, a stiff price to pay for an ad network. Others chafe at working with TrialPay.

“It’s shaken up the market,” said Bill Clifford, svp/gm of WildTangent Media, which delivers ads into major Facebook games produced by developers like Digital Chocolate and CrowdStar.

RockYou used to provide users with virtual currency in its games for watching ads, but changed course specifically because when “Facebook forced a TrialPay mediation layer,” said RockYou Media gm Julie Shumaker. “It didn’t make any sense to continue.”

Shumaker listed several reasons why. For one, running everything through TrialPay inhibited Facebook’s partners from differentiating their targeting or inventory. And it make Credits-for-views campaigns cost “20 times more than the market value,” she said. RockYou now sees more value in rewarding users with virtual goods for consuming ads.

But not everyone finds Facebook’s rules so restrictive.

SocialVibe is running campaigns inside multiple Zynga games where it provides users who watch video ads with free Facebook Credits to be used for Farmville Cash or Cityville Cash. SocialVibe CEO Jay Samit disputed the idea that Facebook’s Credits policies were oppressive.

“Brands are lining up,” said SocialVibe CEO Jay Samit. “Accessing Facebook is very appealing to Madison Avenue, and to be able to reach people where they live, when they are actively engaged in social games is huge.”

Others in the industry are of the opinion that Facebook is actively pursuing a thriving market, not a gated one. Naturally, TrialPay co-founder Terry Angelos sees it that way.

“The environment Facebook has created will be good for brand advertisers,” Angelos said. Especially if Facebook Credits start getting adopted beyond games and on sites other than Facebook, which will make them more valuable and appealing to consumers.

But won’t that result in “cheap” engagement, i.e., users simply sitting through video ads just to load up on Credits?

“All forms of advertising involves a tradeoff of sorts,” said Angelos. “Nobody sitting around watching Top Chef says ‘I hope Toyota interrupts me!’ But they understand the value exchange.”

Angelos claims that views-for-credits campaigns deliver stronger engagement numbers than some might think — something others in the space echo.

Still, he acknowledges that some companies are being driven from the model towards pushing virtual items — a trend he believes has scalability problems.

“It’s a way to leave Facebook out,” Angelos said. “I don’t see a big sea change though. Major brands like scalable campaigns. [Virtual goods] won’t be able to satisfy all the demand out there.”

Will some companies move to abandon the business altogether? There have been examples of that in the recent past. For example, last year Offerpal Media, marginalized by Facebook following the scamville scandal, became Tapjoy. As of July 15, the company will move out of the Facebook ecosystem to focus exclusively on mobile app monetization.

But others see Facebook becoming more flexible, as it may soon feel some competition from Google+.

“Facebook isn’t going to be alone anymore,” said Jun’s Weiner. “That’s going to limit their leverage.”