The Social Web: This Changes Everything for e-Commerce

The social web has irrevocably changed the way that web users interact with the Internet. Sharing thoughts, opinions, reviews, and personal responses to what we find online creates a vast pool of deeply valid consumer information. This empowers consumers to make choices that are informed by their peers, rather than relying on the PR and Marketing delivered by sellers. It also changes usage expectations: today’s buyer is looking for more than a storefront, a catalog, and a checkout page.

There is no greater indication of this shift than the rise of social applications, particularly games, within the wonderful world of Facebook. Zynga recently suggested that they expect to drive $1B in revenues through their games on Facebook – in 2010 alone! What drives the popularity of those games, and the resulting monetization? Sure, there’s advertising and PR, but fundamentally the drive for users to join the fun is the recommendations and comments of their connections within the network.

Simultaneously, we see the same shift occurring in the MMORPG world. The newest Lord of the Rings MMORPG is making headlines due to the announcement that it will offer Free-to-Play (F2P) access to absolutely anyone. The expectation is that monetization will happen within the game through the in-game commerce (and also that free players will convert to paid memberships, of course). The underlying assumption is high volumes of participation will drive more revenue through upsells and cross-sells than could have been captured via subscription payments alone. This is the network effect writ large!

The core of this shift is explained by some pretty simple behavioral economics: once a consumer has something, it is more valuable to them than something they simply want. When I read glowing accounts of Farmville from my friends, and watch the notifications that their farm is getting bigger and better, I’m already immersed – and want to participate more actively. Similarly, my spending patterns within my favorite MMORPG are driven by the desire to compete with my friends far more than a simple motivation to succeed.

Interestingly, casual game studios are in amazingly good shape to take advantage of this set of consumer behavior changes. Their games are already resident on players’ computers, and presence is, to re-write an old saw, nine tenths of the law. What casual game studios have known for years is that trials are infinitely better than storefronts: as soon as one is installed, the player feels they own the game. This makes it very much easier to fill in the missing links between the player’s impulse to buy, and the necessary steps to have them complete the process.

The tactics to take advantage of this are shockingly simple. During the first sale, ensure that a cross-sale or up-sale promotion is present – it’s amazing to me how high the customer-attach rate to these is, yet how few online sellers maximize their potential here. Once the sale is made, use the wrapper application you implemented to secure the game to provide messages and promotions to other items; those items can be completely free, because you know that your trials convert really well.

Go one step further, and ensure a customer creates an account somehow – add a check box to allow you to store that account in your checkout page. That way, when they come back next time, you can eliminate the friction of re-typing personal information and deliver a single-click experience. Eliminating that painful step can double your checkout conversion in a single stroke.

The bottom line is that casual game studios, while staring down the barrel of the threat of games moving to the social web, are also faced with a wonderful opportunity to build longer-term relationships with their players. Jumping in now represents a strong move to build strategic advantage in the marketplace – and don’t we all need one of those?

We’re at Casual Connect in Seattle this week – and will be presenting on this very topic on Thursday afternoon at 1pm at the Triple Door, so come by to hear more and ask your questions.

Simon Jones,

VP of Strategic Solutions