Facebook Credits Gaining Momentum in eCommerce: New Opportunities and Challenges for Retail Video
I interviewed Paul Verna, senior analyst for the digital intelligence and research agency, eMarketer, to talk about how Facebook credits can be a key strategy for retailers to reward customers, and turn “likes” into loyal fans.
Facebook Credits has become the mandatory virtual currency for buying virtual goods in many games and apps created for the Facebook platform. We originally covered the topic of Facebook Credits in Video Commerce 3 months ago and now I am giving it a deserved update from the analysts who follow Facebook most closely.
Why Video Commerce Professionals Should Consider Facebook Credits
“Facebook Credits has already achieved considerable traction as a virtual currency,” said Verna in our interview. Consider this analysis from this eMarketer report issued just last month: “Facebook Marketing: Strategies for Turning ‘Likes’ into Loyalty.”
For many businesses, having a branded Facebook page has become a near-essential part of their marketing arsenal. In the year since Facebook began encouraging businesses to deploy the thumbs-up button across the web, brands have been racing to rack up “likes.”
To be successful in this “like” phase of Facebook marketing, companies will need to excite their fan base by writing compelling posts, having interactions that spur a sense of community, and rewarding their fans for their ongoing support. Brands that do not make Facebook marketing a priority will risk seeing their hard-earned “likes” churn away.”
The Beginning of Video in Facebook Credits: Display Ads in Social Gaming
Some companies are starting to realize that the way to help build and maintain audience interest is to offer some kind of rewards program for their users’ time. Facebook credits are still very much in experimental mode with retail advertisers, who are testing it out with display video ads on Facebook. (See “Would You Watch a Clorox Video Ad for Facebook Credits?”) But Paul said that paying consumers in Facebook credits seems a viable way to get them to engage with certain types of branded video content.
“Once [Facebook Credits] becomes the exclusive payment system in all Facebook-hosted social games starting July 1 and continues its penetration into mass retail chains such as Target, Best Buy and WalMart, Facebook Credits will only gain more momentum.” he said.
Challenges of utilizing Facebook credits for video commerce today
- Facebook’s large cut – Facebook takes a 30% cut of the developer’s share of the transaction, making it more akin to Apple’s and Amazon’s share of content sold on their digital storefronts than a purely transactional system such as PayPal. Given that dynamic, the penetration of Facebook Credits will be limited by the number of developers (esp. game publishers) who decide to go along with this system. “Many have already signed on, but a large contingent of smaller and mid-sized players have expressed strong objections to the size of Facebook’s share.” said Clark.
- Too niche of a market for now? Paying consumers in Facebook credits seems to be a viable way to get them to engage with certain types of branded content. However, Clark explained that a virtual currency system will work better in certain segments – such as social gaming – than across a broader spectrum of Facebook users. “Gamers who are already invested in the Facebook Credits ecosystem will probably appreciate the opportunity to earn a few extra credits for watching an ad. And Facebook might even draw some new users to social games on the promise of credits for ad views. However, it’s difficult to envision a scenario in which this type of incentive will take off on a mass scale. It seems more of a niche play for select types of content among a portion of the Facebook population.” he said.
- Only virtual goods for now. Facebook has not announced any plans where Facebook Credits can actually be used for retail purchases, including products you could buy in a store or have shipped to you.
- Would consumers truly be interested? For now, there’s no easy way for users to gain a significant amount of Facebook credits without sacrificing a large degree of their time. And even then, there aren’t many things yet available for consumers to purchase with those credits on Facebook even if they are social gamers (and many Facebook users aren’t.)
So will Facebook Credits ever truly work for the rest of us?
Despite these initial limitations, Facebook Credits still holds very exciting future opportunities for retailers and eCommerce sites. Some marketers are predicting the next major step for Facebook will go beyond simple, social interactions to true social commerce – buying real products and services using Facebook Credits. Stay tuned for my next post on what I see as some truly viable possibilities for:
- How Facebook Credits can really take off with interactive product video, featuring examples from existing retailers and their Facebook Fan Pages.
- How Facebook video shopping can be greatly enhanced by having virtual currency available for real-world purchases.