As virtual currency and virtual goods begin appearing more frequently in online games and virtual worlds, they're also making some serious inroads into the world of web advertising in many different forms. Buddy Media prides itself on designing the next generation of social media advertising, which it frequently calls "appvertising." The company builds a variety of social apps for big-brand clients, using virtual currency, goods, and other software design elements to build interactive ad apps ready for Facebook.
"There are a lot of tools available to use within the social networks. Those tools that are available to use allow us to tap into this virtual representation of real-life relationships. Anytime someone is interacting with someone else, it's an opportunity to build up an engaging branded experience," said Mike Lazerow, CEO of Buddy Media. "Gifts and leaderboards and challenges and tagging, all of these actions are very social and we'll use them as they make sense with the strategy we're going after."
Virtual currency was the route that lead Buddy Media into the world of appvertising. When the business started in October 2007, Buddy Media's big idea was AceBucks, a virtual currency that users would be able to build up by doing various things on social networks. Users could then redeem their AceBucks for physical goods provided by brand sponsors, letting the scheme function as both a loyalty program and a potentially lucrative form of brand advertising.
The problem with this initial plan, according to Lazerow, was that Buddy Media couldn't get big brand advertisers to understand it at all. The company still made an impression, though. Later, big brands that passed on AceBucks came back anyway to ask for help developing their own social media strategies. Many of the apps Buddy Media designed for these brand advertisers incorporated ideas from the earlier AceBucks idea or similar virtual currency schemes to help engage users. In an ongoing campaign for New Balance, for instance, users can play a casual game called New Balance Rendezvous to earn AceBucks and then redeem the virtual currency for a physical pair of New Balance sneakers.
Not every Buddy Media appvertisement uses virtual currency, though. Lazerow says the mechanic doesn't always fit a particular brand's identity or the emphasis of the campaign Buddy Media is developing for a given brand. For a recent Bud Light promotion, Buddy Media eschewed virtual currency in favor of a virtual gifting strategy. Users could send each other free Bud Light virtual beers as gifts from the Bud Light Facebook Page. Lazerow says Buddy Media used the virtual gift approach here because it reflected the basic nature of the product.
"All of [Bud Light manufacturer Anheuser-Busch's] products are inherently social. It's more fun to drink with friends, it's more fun to go to the theme park with friends. Instead of Anheuser-Busch renting space on the Facebook virtual gift system, we told them to build their own," said Lazerow. "People love sending virtual gifts which are basically virtual greeting cards, so why not let people send their favorite beer as a gift? Everything tied together really well."
The company is currently working on a FedEx campaign built around the notion of letting users send each other free virtual gifts that are "delivered" to your Facebook page in a virtual FedEx shipping box. Every time users choose to send the free virtual gifts, they help spread FedEx's brand around Facebook and are happy to do so.
A Digital Advertising Age
Lazerow contends that virtual gifts, virtual currency, and other social media techniques now have a major advantage over traditional Web advertising: they're proven to work. He believes that the use of virtual goods and virtual currency in social media advertising is only going to grow more widespread over time, as right now it's really the only effective option open to brands that are no longer willing to ignore the 800 million users of social media.
"It's no longer kind of 'Should we do it?' but 'Yes, we have to do it, who is going to help us out and do the development? Who's going to manage it once it's live?'" said Lazerow. "You can no longer ignore this huge segment of the consumer population. Every day there's more people on Twitter and Facebook. Building out your presence in a meaningful way is not optional, it's necessary."
There's good reason to believe Lazerow is right when it comes to the urgency behind social media advertising. Buddy Media was founded with about 8 million in venture capital split between two rounds, all used to recruit the company's sales team, tech team, and handle early operational expenses. Although the company employs thirty people and is not yet two years old, Lazerow says the company is very close to profitability and doesn't plan to seek out any future rounds of venture investment.
What we hear from Lazerow and Buddy Media echoes what we've heard before from other social media advertising start-ups that are slowly teaching big brands how to advertise in the new social media frontier. Although AdNectar chooses to advertise through already-operating applications and Gaia Online launches massive internal campaigns specific to its very social virtual world, they're playing essentially the same appvertisement game with virtual goods as one of their most important tools.
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