Today, we want to go over 2 major things:

1: Facebook’s updates and revised commitment to their Advertising Guidelines.

Talk, speculation, and position statements are plentiful but not so helpful when Facebook’s compliance police crack down.

2: The fictions and real facts on offers, based on our experience and research as a top 3 payments and offers provider.

Note: for the purposes of this article, ‘higher risk offers’ will be defined as those that don’t fully comply with Facebook’s revised Advertising Guidelines.

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1: Facebook’s new Advertising Guidelines

If you’re a Gambit publisher, then you’ve seen our email about Facebook’s changes to their Advertising Guidelines, what actions Gambit has already taken, and what publishers can do to stay happy. If you’re not one of our publishers, then you may have heard elsewhere about Facebook’s new initiative to clean up ads on their platform.

Although this announcement may mean changes for the offers you’re using, we’re actually really excited about better ads, and we commend Facebook for taking the lead. If you’re a Gambit publisher on Facebook, be aware that we’ve manually checked and filtered all offers based Facebook’s newly published criteria, so your app will not be at risk for running non-compliant ads.

Here at Gambit, we’ve provided a wide variety of ads to suite our numerous diverse publishers, but we’ve also recognized that not all ads are created equal. That’s exactly why we made Gambit Ratings, our ratings system that tells you how healthy any given offer is for your business, since the very first day we launched Gambit.

We’ve previously recognized user issues with offers, and if you’re interested in checking out our recommendations for how to keep your users happy and your business healthy, see the full article here.

We’ve been in close communication with our contacts at Facebook, and you can count on us to pass any news right on to you. To make sure you get this, please make sure no-reply@getgambit.com is going to your inbox, not your spambox.

We see this as a positive development that will spark innovation in our industry – both in payments and offers, and in the development of the apps themselves. If you have any questions, we’re right here at team@getgambit.com

Now that we know what’s up with Facebook, let’s bust some myths about offers and ‘Scamville.’

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2: FACT or FICTION?

The offers that pay out best are the ones that scam users, while legitimate offers like Netflix are few and far between.

FICTION

FACT: The offers that pay out best are the ones that bring in quality leads that actually convert.

Netflix is a good example, and it’s not the only one. While some offers providers scramble for their share of Netflix-quality offers inventory, we’re spending our time building out something called Gambit Exclusives – high-quality offers that you won’t see on any other offers networks – so that Netflix and Blockbuster aren’t your users’ only options.

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FACT or FICTION?

Every offer ever published has always been compliant with Facebook’s Advertising Guidelines.

FICTION

FACT: Prior to Facebook’s recent guidelines update, all offers providers were occasionally serving higher risk ads like mobile offers or the now infamous Video Professor offer to meet demand.

Yes, that’s right. ALL offers providers, even Gambit, made limited quantity of these offers available as long as demand from publishers was present – which it was.

Making higher risk offers available does not mean that all publishers using Gambit or another payments company were by default serving these ads to end users. To the contrary, we at Gambit, like any offers provider worth its salt, have always strongly encouraged our publishers to get in to their offers panel and get granular with understanding – and filtering -  offers.

Gambit Ratings is our ratings system and range of filtering tools that enables publishers to monitor offer performance, screen and investigate user inquiries, and get rid of any offer that seems suspect, ’scammy’ or that’s just underperforming. These tools were in place when we right after we first launched Gambit, and they’re still going strong today.

Why even serve these risky offers?

If these offers are so shady and worthless in the long term, why do payments providers like Gambit even bother to make them available to developers?

The answer is simple – to supply to a demand from some of their developer clients. While some developers have publicly rejected risky offers – or offers altogether – others have chosen them as a way to grow revenues.

In the past, Gambit has encouraged developers to be aware of how offers affect their users’ experience, but has ultimately put this choice entirely in developers’ hands. Developers have access to an array of tools and data to review and eliminate offers individually or by category, but the reality is that not everyone does.

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FACT or FICTION?

Offers providers never receive user complaints about unclear or seemingly ’scammy’ offers.

FICTION

We published a post over a month and a half ago about what to do about user complaints on offers.

FACT: Every offers provider – Gambit included – has fielded their fair share of user complaints.

Even the highest rated offers can be confusing, which is why we have our own customer support staff dedicated to handling customer inquiries – and complaints – about the payment and offers experience. We all hire sizable teams to take on customer support  because we know it can be a point of major confusion for end users.

At Gambit, we work extra hard not to offload the responsibility of offers-related customer support onto publishers because we’re the ones with all the superfine transaction data, we’re the ones with the advertiser relationships, and we’re the ones who are best able to solve the problem.

A tip for publishers: your offers and payments provider should always offer full payments-related customer support as a best practice for precisely this reason. And remember, real support staff are always better than autoresponders.

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FACT or FICTION?

You’ll lose the revenue game without higher risk offers.

FICTION

After Facebook’s Advertising Guidelines announcement, we spent the weekend manually combing through every single offer in our inventory and running some calculations on what share of total revenue they represent.

We found that higher risk offers could impact up to 14% of developer revenue.

FACT: While 14% of your revenue is important, 4 potential long-term costs may add up to even more that that:

• Pissed-off users who never want to transact again
• Increased churn rates when users decide they’ve just had enough of the game altogether
• Increased customer service costs. How many tickets do the risky offers generate, and how much time and resources are being devoted to resolving those issues?
• Plummeting brand value in an industry that’s inherently social and reputation-based

Facebook is a social destination where reputation and trust play an even bigger role than in most other online media. It’s also a communication platform where people easily spread messages about their experiences with thousands – or even millions – of other users via their networks and community forums, magnifying the importance of reputation.

Including risky offers can bring on major liabilities that hurt both the short- and long-term value of the business, and end up costing a lot more money than they bring in.

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FACT or FICTION?

<defeated sigh> But lead-gen offers are the only alternative to direct payments, and the only way I can monetize a larger percentage of my users. </defeated sigh>

FICTION

Two weeks ago, we launched Gambit Tasks – a totally new way to monetize by giving them the chance to complete small 10-minute bundles of click-based, crowdsourcing tasks in order to earn virtual currency.

FACT: Gambit Tasks means no lead-gen, no delayed billing, no silent subscriptions. Your user tags some photos with keywords for better data sorting, and is rewarded for his or her time with virtual currency. We’re the ONLY offers and payments provider who has come out with product innovation that’s an alternative to offers, and we’ve got lots more coming down the pipeline.

It’s too early to spill all the beans, but if you want to know about more cool – totally different – stuff we’re working on, email us at team@getgambit.com

Don’t be defeated. Be excited. It’s a good time to be building a virtual economy.

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Just the FACTS

• Offers and ‘product bundling’ aren’t an inherently bad model, but some offers have not been clear to users about the true costs associated with participation. We’ve called these out as ‘higher risk offers.’
• We’ve manually combed examined, categorized and removed all offers that pose a Facebook compliance risk, and we’ve also made sure that our publishers understand what’s going on.
• Higher risk offers represent 14% of potential revenue decline across our publishers on Facebook.
• As an offers provider, Gambit has always had tools and ratings data available to help publishers screen offers.

Now that Facebook has announced specific and enforced consequences to for non-compliant advertising, it’s time for everyone – publishers, payments companies, and advertisers – to get informed and take action.

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CALL to ACTION for developers

This week’s debates and the data presented above bring us to 3 Calls to Action that we think all publishers and payments companies must heed:

1. Understand where your money is coming from. Who’s writing you those checks, and for what kinds of leads or actions? What’s the life-cycle of that revenue stream, and what does its growth or decay trajectory look like?

2. Measure the money you’re getting from offers against your long-term business objectives. This is obvious to say, but difficult to implement when competitors are using – and temporarily thriving on – revenue models that may damage the long-term objectives of your business. When Facebook cracks down, however, everyone will be accountable to the same rules.

3. Use tools to moderate or clean up when necessary. Widely available tools include offers ratings, ability to reject offers by category or by individual offers, and open communication with your payments provider about the offers in question.

If you’re a developer, this is your business, so you get to choose what risks you’re willing to take to achieve your objectives. That’s the fun of being a grown-up. Just don’t make those choices without the necessary information, and don’t make choices that will get your business into major trouble or shut down.

If you’re an ad network, then transparency both to your advertisers and to your offers platform and developer partners will be key in building a business that brings real value to both sides.

If you’re a payments provider, there’s major work to be done. It’s time to clean up offers or start looking to product innovations that provide a payments alternative while creating a payments experience that the user not only tolerates but enjoys.

While still a beta product, Gambit Tasks lets users complete small bundles of Mechanical-Turk-esque tasks in exchange for virtual currency. As the virtual goods industry surpasses its billion-dollar mark, more and more will be at stake.

Developers should expect (and ask for) the product developments and product integrity that will grow this industry into something every player can be proud of.

Previously, we published  an article looking at average revenues per paying user by age clusters with blogger and entrepreneur Andrew Chen.

It’s always good fun to look at data, but given these revenue discrepancies between older and younger users, what’s a developer to do?

This week, we followed up with 3 tips for monetizing social game users.

From the full article:

Get Them Young: 3 tips to monetize younger users

1. Think volume. Look for the users who are transacting the most, and then make sure you understand exactly who they are (and how they might be changing). For example, today your revenue may be driven by a massive group of teenagers, but what will happen when those teens become 20-somethings? In this series, we explored this question by age, but you’ll also want to think about geography, language, and gender. ‘Think volume’ means:

• Mind your game. If your product is subpar, you shouldn’t expect amazing volumes or revenues, no matter how much you…
• Focus on growing traffic through virality. How can you make your game even more social, more addictive, and more spreadable?
• Get users to complete. Users are 3 times as likely to make additonal payments if they’ve completed at least one offer.

2. Hold on to your users. People of all ages get tired of games easily. The last thing you need is a poor user experience to push users over the edge and straight into the database of a competitor. Do certain offers just rankle your userbase (leading to poor conversions, bountiful complaints, and churn)? While your payments solution’s algorithms will help you find the best offers for your users, there are always going to be a couple that just don’t perform. ‘Hold on to your users’ means:

• Pick out and remove underperforming offers, either individually or by offer category, and address customer complaints. For example, ‘adult’ offers may not work well if your game’s users are primarily 13-17 year olds.
• Diversify your product(s). How can you enrich a single game to be more complex and engaging? How can you offer more complementary games so when a user defects, she defects to another game in your suite?

3. Keep your eye on empty spaces. Yes, Facebook is huge. Yes, Zynga is dominating. But, growth potential is everywhere still. As more users of all ages sign up for their first Facebook accounts, more people pour into the virtual economy. As Facebook grows in locales outside the U.S., so do the games and apps that inhabit its ecosystem. As users get tired of specific games, they’ll start looking for other places to spend their time and money. They’ll probably invite their friends, too. ‘Keep your eye on empty spaces’ means:

• Don’t make a play just because someone else is making bank off of it (for now). Today’s leaders got there because they kept their eyes on empty spaces and filled them, quickly.
• Look for under-monetized user groups. How well is your game doing with young males? Can you work in a way for more of these users to complete their first offer (and open the door to additional payments)?

These should be your main considerations:

Growth
What does the growth trajectory look like for young users? How many of these users are already playing games, and how many more aren’t? The online casual games industry is still young and has plenty of room for growth.

Facebook boasts 300 million active users, with almost a third of these in the U.S. Since the entire population of the United States is just over 300 million, that means approximately half of all U.S. internet users, or a third of the entire U.S. population, are on Facebook.* Facebook counts 70% of users as having ‘engaged with a Platform application,’ meaning that most users have loaded an app of some sort at some point in their Facebook time. Judging by the impressive monthly active uniques the biggest developers are enjoying (51MM for Zynga’s Farmville alone), it seems that games have already taken off on the network. With all this, is there still room to grow?

Yes. Here’s why:

• Facebook has saturated the U.S. market, but that doesn’t mean every Facebook user is playing a game. Yet.
• The U.S. isn’t the only country in the world, either. In terms of Facebook traffic growth rates, the U.S. doesn’t even make it into the top 10. As other economies (real and virtual) catch up, markets around the world should start looking more and more promising for developers looking to monetize.
• People get tired of games. One developer’s churn is another developer’s new user.

As mentioned above, younger users contribute the lion’s share of total revenue for virtual transactions – for now. However, Facebook reports that the 35 and up group is their fastest growing demographic, so will we see this shift reflected in game usage and monetization too? Probably. But until the older users reach critical mass on the network, would you rather be competing hard for the same handful of housewives or slyly going for the many younger users at lower ARPPUs and massively higher transaction volumes?

Changing ARPPUs
Do ARPPUs change as users get older? Will your 15 year old user be worth more after she turns 18, gets a better job, and starts opting for direct payment over offers? We know that the typical 18 year old makes you more money than the typical 15 year old, so from this we might guess that it will pay off to hold onto that user as she ages.

Age     ARPPU
15     $2.65
18     $2.92
22     $2.82
25     $2.99
29     $3.33

Older users
Should you try to grow your older userbase? As just mentioned, Facebook’s fastest-growing demographic is the 35 and up set. While actively trying to acquire these users (over others) may divert your resources in ways you can’t afford, it’s likely that your game will indirectly absorb the benefits of Facebook’s demographic growth anyway. If everyone else is focusing on winning the middle-aged housewife segment, would you be better off stealthily (and expertly) acquiring the forgotten younger users? Try it. Measure it. Report back.

Conclusion

In parting, don’t buy into a ‘must do’ (eg. housewives) just because it’s popular today. Popularity doesn’t mean it’s wrong, but it does probably mean that lots of other developers are out there thinking the same thing as you. Instead, look at the data and focus your work where the greatest opportunity currently blossoms. Right now, that’s users who are in their teens and mid-20s.

If you’ve been targeting and you’re seeing interesting results, please share in the comments. What’s worked for you, and what would you do if you were a new developer just entering the marketing today?

You’re a game developer and you want to make money online. The most obvious solution? Develop a game that utilizes virtual currency and set up online payments, which come in two flavors– traditional (PayPal, credit cards) and alternative (mobile, offers). You’re especially excited about alternative payments, because you’ve heard (being a savvy industry-hot-topic follower) that offers can generate 50% of your game’s revenue.

Everything goes live, and within a few hours, your numbers are looking sweet. Offers performance is strong and your revenue is steadily rising. You don’t have to do a single thing other than focus on your game. Who knew it could be this easy to work with online payments?

And then suddenly, you see this user ticket:

immediately followed by this user ticket:

3 Game-Ending User Complaints

At Gambit, we handle thousands of active offers, with more being added every day — that’s a lot. Subsequently, we also see a high volume of user complaints.

Around 80% of these complaints fall into 3 categories:

1. “I did your offer but didn’t get my points. FIX IT!”
2. “I did your offer even though it took forever and now I’m getting spammed. FIX IT!”
3. “I did this free offer and now I’m being charged all this money. FIX IT!”

There are several reasons for these game-ending user complaints:

1. “I did your offer but didn’t get my points.”

Culprit 1: Third-party cookie blocker, anti-virus, or ad blocker software.

If a user’s browser doesn’t allow for third-party cookies, that can interfere with the conversion process; similarly, anti-virus/ad blocker software can also prevent a completed offer from converting properly.

Culprit 2: Multiple offers from the same advertiser.

Often, “free” promotional or quiz offers that require a user to enter personal data– the offer, in other words, pays the user for giving up that data– actually belong to the same advertiser. Because the advertiser has only the one database, duplicate info is worthless and therefore gets scrubbed. Because of this, users can legitimately fill out multiple offers, but if they all belong to a single advertiser, they’ll only get credited for the first offer completed.

Culprit 3: Advertiser-side technology.

Technology on the advertiser’s side isn’t always up to par, and when dealing with a flawed system, conversions don’t get posted back to us, which means our system can’t know to credit the users (and thus won’t).

2. “I completed this offer even though it took forever and now I’m getting spammed.”

Culprit 1: Didn’t read the Ts & Cs.

As mentioned above, “free” offers operate under a transaction of virtual currency for user information. Unfortunately, most users fail to read Terms & Conditions before submitting their data, and so remain unaware that they have now opted in to newsletters and promotional e-mails (i.e., spam) from all of the offer’s associated ad sites.

Culprit 2: Filling out more offers than they thought.

What’s more, “free” offers almost always require the user to go through a co-reg path before it converts to a lead. The length of a co-reg path varies by offer– some can take up to 20 minutes to click through– but the purpose is always the same: to get a user to fill out more offers. Users aren’t required to complete any of these additional offers in order to reach the end of the path, but users unaware of this will complete a few, again not reading the T&C, again opting in to more promotional e-mail.

3. “I completed this free offer and now I’m being charged all this money.”

Culprit 1: Didn’t read the Ts & Cs about the ‘trial period.’

Generally, this is another case of not reading the T&C or the fine print. Many offers welcome new users with “trial” products or memberships; the item is touted as free, and all the user has to pay for is shipping or processing. Some services, like movie rentals or credit monitoring, don’t require the user to pay anything in order to sign up. Once the trial period is over, however, the user gets billed the full, standard amount if they haven’t yet canceled their account.

Culprit 2: Advertiser’s mistake.

There are also a few instances where it’s simply an error on the advertiser’s side, and users will suddenly find numerous, erroneous charges on the credit card they used to sign up.

There’s one last explanation behind user complaints that may be more common than you think: they’re flat-out lying. Misreporting about the offer experience is a problem that’s gaining traction. This Facebook  group dedicated to scamming Super Rewards shows that users aren’t shy either.

Why it matters: Offers affecting users affecting offers

Okay, so a few users are unhappy about offers. You already know that users will complain about anything, so why should this matter to you?

It matters because your users are having a bad experience with an aspect of your game– and not just any aspect, but one that’s supposed to be making you money.

Crappy offers can ruin the user experience and in turn ruin conversions (i.e., your revenue):

Yes, we drew this. We're thinking 2010 t-shirts.

A user who has a terrible experience with offers the first time they try alternative payments will be heavily inclined to never try them again. Usually, the users who are attracted to offers are the ones who already have no interest in directly paying for the virtual currency, so by losing their interest in offer completion, you’ve now lost a potential paying user.

People talk. Unhappy people talk a lot. People who seek justification for their unhappiness by talking to other unhappy people (via forums) also find justification for their resolution to never complete offers again.

In other words,

[ users avoiding offers of their own accord ] + [ users convincing others that they should definitely avoid offers ] = [ fewer users completing offers ] = [ offer conversion drops like a lead balloon ]

Finally, remember that if a user completes an offer, has a good experience, then uses the points they earn to have more fun in their beloved game, they’ll be more likely to pay directly moving forward.

What to do about it

Since we’re the publisher of these offers, we at Gambit take several steps to make alternative payments easy and headache-free for users (and the developers who monetize them):

• We review offers actively to make sure they’re safe and accurate.
• We provide a detailed FAQ about offer completion right in our offer panel.
• We have our customer support team respond quickly to user complaints in order to resolve issues.
• We also publish offers with particular conditions to minimize later confusion on the user’s behalf.

That last step is all about prevention, which is our biggest priority (we don’t want to stay up all night reading venomous user mail either!).

To make sure we can sleep at night, we take these additional preventive measures:

• Regardless of whether the advertiser is claiming a “free” product, we only label offers as “free” if there is absolutely zero cost to the user to complete the offer and receive points.
  For mobile offers, we make it clear that users are subscribing to or registering for a service once they confirm their PIN

• For offers that belong to a single advertiser, we have a grouping system in place that prevents a user from being able to complete any of that advertiser’s subsequent offers once an initial offer has been converted.

As the developer, it’s important for you to take action as well.

If you know that certain offers are causing your users a significant amount of distress and irritation, remove those offers, even if it means a loss in revenue right now. By doing nothing, you’re telling your users that you care more about making a few quick bucks off them than you do about keeping their loyalty and trust– and no user wants to feel, well, used.

3 things you can do right now

1. Get the underperformers out!

To help developers look out for their users and cull the underperforming offers, Gambit also provides an offer ranking method that balances revenue against complaints. Specifically, the rank takes into consideration how much revenue a game is making from a particular offer versus how many complaints that offer is generating for that game’s users– the higher the ratio of complaints to conversions, the lower the ranking. Developers are then able to log into their account and manually remove low-ranking offers from their panel, making it faster and easier to filter out offers that could discourage users from alternative payments. When we were on the game developer side, this was a feature we would’ve loved to have, and we’re hoping it’s saving some of you precious time and users.

2. Go in there and complete some offers.

On a more intense level of involvement, you could also go through some of the offers yourself to understand what your users are experiencing; you wouldn’t push a new game feature live without testing it first, right? Online payments may not be an inherent component of your game, but they become a part of your game by association. By understanding the offer experience first-hand, you avoid being blindsided by users turning on you with complaint after complaint.

3. A warning.

We’ve seen some developers respond to these complaints in a way that we think you should avoid. It’s the quick-fix of simply awarding points to every user who complains. All this will do is encourage users to complain even more (again, through forums, users will inform others that they can quickly get free points just by filing a complaint, legitimate or not). What’s worse, your game will become flooded with currency, reducing its value and cheating you out of profit. Don’t do it!

Bottom line: Pay attention to user complaints – don’t allow those pesky messages to be carelessly dismissed. Invalidating your users’ concerns will only drive those users away (either from offers or from your game, or both), and without users, you wouldn’t be making any money at all.

Keep users happy, make more money.