Today we announced a new partnership with GamerSafe, in which their community of over 10,000 online game developers and publishers will now have access to our in-Flash payments platform. Founded in 2009, GamerSafe is a powerful tool that allows developers and publishers to add high quality features into their online games, such as universally saved games, achievements, microtransactions, virtual currency and more. By offering Social Gold’s in-Flash payments platform, GamerSafe’s development community will be able to provide an unparalleled payments experience to their end users.

In-Flash GamerSafe purchase with Social Gold

We’re particularly excited to be working with GamerSafe because they provide Flash developers with a great ecosystem for creating robust online gaming experiences. Flash continues to be a dominant format for online game development, and so we’ve developed our in-Flash Payments API to manage payments securely and directly within Flash games. We anticipate that GamerSafe’s community of thousands of Flash developers will continue to adopt the microtransactions-based business model to support their online games, and we’re proud to provide our Social Gold platform, so that developers can generate sustained revenue as well as a provide a frictionless payments experience for end users.

For more information about GamerSafe, please visit http://gamersafe.com. You can sign up for Social Gold in-flash API at getsocialgold.com

As part of our ongoing initiative to provide 100% coverage of currency and payments support everywhere in the world, we’re proud to announce that the Social Gold platform now enables customers to purchase virtual goods in their local currencies. Currencies already live include Euros, Pounds, Swiss Francs, Danish and Norwegian Krone, Swedish Krona, Canadian Dollars and Australian Dollars. We will be expanding our offering to support additional currencies over the course of this year.

Users can switch the default currency if they want

In addition to enabling customers to purchase in their local currencies, we will soon be revealing our partners for support of local payment methods in global regions. Audiences in different markets prefer diverse payment methods, so we’re building direct integrations with regional payment providers so that customers can purchase goods online by whichever method they prefer – whether that’s using credit and debit cards, mobile payments, cash or bank transfers. Additionally, we will ensure that exchange rates, regulations and local fees don’t get in the way of profits and market penetration for publishers.

Along with this, we have also optimized the customer purchasing experience: customers who enter the Social Gold payments platform locally from a specific region are automatically provided the choice of their local payment methods and the local currency. By listing the local payment methods at the onset of the purchasing interface, this ensures a seamless user experience and that the customer is never neglected from a monetization standpoint based on their local region. Unlike payment platforms where a customer must review countless payment options on a single page, through the Social Gold platform, customers only see the payment methods most relevant to them. Additionally, the default payment methods are further personalized based on most common usage. Customers can also override the default currency, and bring up non-local payment methods if they choose, and this does not disrupt the user experience.

Stay tuned for upcoming details on our partnerships with regional payment providers!

Yesterday, Chris O’Brien contemplated the growing success of virtual goods on PBS’s Idea Lab, noting that while he was first puzzled by the popularity of virtual goods he now sees the great potential they hold for redefining online business models. As virtual goods economies have continued to flourish in a time when monetization of online business is still elusive for many companies, more people are examining the value behind virtual objects. Some people who are unfamiliar with these economies question the value of virtual goods and wonder why users spend real-world money on intangible online gifts or objects within social games. Virtual goods are not simply about gifting cute or quirky icons. The real value of virtual goods is the emotion they deliver, the experience they create and the feelings they generate.

Virtual goods fuel experience economies online as consumers become deeply immersed within social games. Successful virtual goods economies have turned profits because they create a differentiated and fun experience for consumers. Virtual goods are of little value if the foundation of an absorbing consumer experience is missing. Why buy seeds for a virtual farm, for example, if there is no satisfaction or amusement in planting and nurturing them? However, social games that hook players and draw them into an engaging, entertaining virtual world create an environment where virtual goods have the ability to prosper. Virtual goods may enhance an in-game experience by heightening entertainment, offering the chance to improve performance or enhancing relationships with friends on social networks.

Chris discussed what news sites and content providers can learn from the success story of virtual goods in online games. First, it is more than obvious that users are willing to pay. So, the argument that people will not pay does not hold water. Second, the users will pay for a differentiated, unique experience. It is important to emphasize this: getting users to pay for content will be much harder than getting them to pay for the experience. News sites, as much as they want to monetize, should also focus on the experience they can create for their users. A common story we hear from many news sites is that they see a lot of one-page visitors: people visiting from Google news or MSN or elsewhere, follow a link, read an article and move on. It is critical for news sites to engage their audience. Money will follow the engaged experience.

It is important, then, to support a smooth purchase transaction or else the user experience will be disrupted. People are willing to pay for virtual goods as part of an enjoyable experience but if, for example, they must leave a Facebook game to purchase a new object, this is distracting and disrupts any efforts of engagement. Social Gold helps preserve a fun and deep gameplay experience for players by enabling in-game transactions, so purchasing virtual goods is quick and simple. It’s not the object itself that holds value but rather, the quality of the overall experience in which virtual goods function.

We here at Social Gold continuously strive to bring seamless payments experiences to customers while enabling developers to further expand and monetize their paying customer base. It is with this objective in mind that we’re pleased to announce our new partnership with Kwedit.

Going forward, all games and virtual worlds leveraging the Social Gold platform for in-game payments will now have access to the Kwedit service, which allows customers without credit or debit cards, or who would simply prefer to pay with cash, to purchase items without having to buy a prepaid card. This is particularly relevant for tween and teen audiences who are heavily engaged in online games and virtual worlds, but don’t have access to credit cards. Large online communities such as Gaia Online, who frequently receive cash-filled envelopes from their community members in exchange for virtual goods, can greatly benefit from a more streamlined online approach to cash-based transactions.

Unlike prepaid cards where a customer needs to physically be in the retail store to purchase, customers will be just a click away from buying virtual currency while they’re online and fully engaged in the experience. After a purchase is made, customers can print a receipt with a bar-code and pay at their nearest Kwedit authorized location, such as 7-Eleven, or simply mail cash to a Kwedit payment processing facility. It’s just that easy.

If a player has to leave their computer to search for a store that sells a game’s specific prepaid card, their desire to purchase a virtual good may wane or dissipate completely. By receiving goods first and paying for them later, developers can also capitalize on impulse purchases from cash paying customers. Additionally, developers are reliant on third parties to produce and distribute prepaid cards that take a cut of the revenue generated by them, and so our partnership with Kwedit will enable developers to sell direct to customers online and keep a greater portion of the revenue.

Finally, our solution will eventually enable customers to choose the exact amount of their purchase, versus prepaid cards that have fixed denominations. With prepaid cards, often there are amounts of money leftover that is never used. Instead with our online solution, customers will be able to use the full value of their purchase. Variable denominations are not available at launch, but will soon be!

At Social Gold we’re deeply committed to bringing developers the tools they need to better monetize and satisfy their customers’ purchasing needs – creating a win-win for everyone. We anticipate that today’s launch with Kwedit will further bring value to both developers and end-users alike.

When it comes to measuring the monetary value of an online gaming community or virtual world, the industry standard as of late has been ARPU (average revenue per user) and ARPPU (average revenue per paying user). ARPU is essentially the total revenue divided by the total number of users, and ARPPU is calculated by dividing the total revenue by only paying users. But, are these the right metrics for measuring the financial stability and success of a community? As social gaming and virtual world communities continue to grow in 2010, it’s relevant to explore these metrics further.

What’s good about the ARPU and ARPPU metrics?

• In the user-paid model, these are metrics based on the total number of users rather than impressions or clicks. That’s good because it helps you focus on the right things:
  • Growing the user base
  • Ensuring the user experience is good — if you truly believe that the experience is what users are paying for then these metrics will reflect that
• Combine ARPU or ARPPU with a viral coefficient and growth numbers, and you can arrive at the amount you should need to invest in acquiring customers. At least it seems reasonable.

What’s missing in the ARPU and ARPPU calculation?

• By accounting for only revenue in these metrics, the actual cost of generating this revenue is overlooked. People often claim that the cost of virtual goods is marginal, but it still remains that hosting, payment processing, customer support, licensing, and development are costs that must be accounted for. So, when calculating the acceptable cost of customer acquisition, you should really be using profit instead of revenue in this calculation.
• It is also important how you define revenue. If you calculate your revenue before taking out the payment processing costs, and you use a high cost payment system such as iPhone payments (30% per transaction) or Facebook credits (again believed to be 30% per transaction), then you are going to be very far from the true measurement of total revenue. Alternatively, you may think your costs are nominal because you use a Paypal or credit card payment fee structure, say $0.30 + 3%, but even this is 9% of a $5 transaction value – and as high as 33% of a $1 transaction value. In other words, cost of processing micropayments can be a significant portion of your revenue, and you should question if ARPU is really the right metric. Clearly, if your ARPU comprises a lot of $1 transactions, your margin per user is much smaller than if ARPU derives from larger price points.
• Once you start investing in acquiring customers, you will need to look at additional metrics, such as customers acquired via paid advertising versus customers acquired through viral adoption. As an example, on average it may cost you $0.20 to acquire a user and if your ARPU over the user’s lifetime is $0.50, then your profit margin per user is actually $0.30 as opposed to the ARPU calculation of earning $0.50 per user. Further, hypothetically, you may generate lower revenue from free users versus paid users and this may lead you to believe that paid users are more valuable than free users. However, by looking at the margin or profit per user, you may arrive at a more accurate metric about the value per user.

No metric is complete in itself, and so it is questionable if ARPU is really all you should be looking at to measure the success of your community. We suggest that Average Margin Per User (AMPU), as opposed to ARPU, may be a more important metric to measure and track. Once you factor out the variable cost associated with the revenue as well as the cost to acquire the user, you have a better sense of what is the true value of the user to you.

How does Social Gold help? First of all, the cost of processing transactions is much lower than other systems, including iPhone payments and Facebook credits. In the example above, inclusive of all payment processing costs, Social Gold pricing never exceeds 10% of the transaction and we scale our processing fees for merchants with higher transaction volume.

Secondly, and more importantly, our in-game payments flow significantly improves conversion and revenue — we consistently see merchants achieve more than 20% revenue lift by using Social Gold. Social Gold’s zero-friction payments solution increases the likelihood of repeat purchases by more than 200%. And finally, we tune the payments flow to convert a larger number of users from free to paying users. In other words, your costs do not increase as user base increases, but your ARPPU as well as your AMPU grow.

In the end, the short answer of whether ARPU is a good measurement of success in our opinion is “not by itself.” We recommend looking at AMPU as much as looking at ARPU in order to get a complete perspective on the welfare of an online gaming community or virtual world.

As always, email us or follow us on Twitter — and we would love to work with you to increase your AMPU.

We are excited to announce a new, self-serve feature that allows developers to create a customized look and feel for their in-game payments experience. Think of it as a way of creating customized skins on the fly that match and blend with the colors of your game. This, in turn, helps to extend your brand and to increase user engagement and conversion rate.

So, how does it work? Simple. All you do is share the hex code of your game’s primary highlight color, and we do the rest. We generate a color palette and gradient that matches and blends with your game’s look and feel, and you are ready to go.

Here is how you instantly customize the payments flow for your in-game payment.

Log into your Social Gold account to configure your in-game payments offer.

Edit your Account Settings

Choose the integration (offer) you want to edit (or create a new one). Next, go down to the advanced settings. Go to the customize highlight section and add the hex code of your game and hit enter. Hint: You can always change the hex color if you are not satisfied with your original choice.

Edit your integration settings

Set up the Primary Highlight Color

Save, and voilà! You have a a new, customized skin that matches and blends with the look and feel of your online game.

Colors to match your game

The new, customized in-game payment window appears in the context of your website/online game and blends in with the flow of the game. As much as we love our color schemes, they can sometimes appear jarring to the user playing your game, especially as they are about to open their wallets and send you money.

Why would you want to customize the in-game payments experience? There are three simple reasons. First, you can now control the look and feel of your website. Second, you can improve your conversion rate. Our initial tests have shown an improvement of around 10% across several applications. Third and most importantly, by deploying a natural, blended looking in-game payments experience, you provide your users with a natural way to pay without interrupting the flow of their game. The payment window appears in the context of the game and blends in with the flow of the game. This ensures that the user stays engaged in the game.

So, go ahead and give it a spin. Take control of your game and effectively increase user engagement, increase conversion rate, increase your revenue, and most importantly extend your brand. Skin your Social Gold in-game payments flow now!

Don’t forget to let us know what you think and ping us. We want to hear from you.

There are moments at every startup when the vista suddenly expands before you. Today is one of those for Jambool. We’re announcing a $5 million financing round that will accelerate growth of our virtual currency platform, Social Gold.

The timing couldn’t be better, as the virtual goods space has exploded to become the de-facto monetization strategy for social games and applications. So, more developers are going to need to create currencies and accept payments seamlessly within their applications. Social Gold is poised to provide the solutions that these companies need to take advantage of this market opportunity.

Our startup journey: it’s all about the team
It’s been a long and winding road since Reza and I started Jambool more than 2 years ago. Although we were incredibly naïve about life as a bootstrapped startup, we never compromised on assembling a top-notch team or building a superior product, which allowed us to weather more than our share of rough patches. Today’s announcement is a reflection of what you can achieve with a dedicated and incredibly-talented team.

The original idea for a startup is rarely the one that sticks, and Jambool is no different. We started as a destination site for collaborating with friends on travel itineraries. And when Facebook opened its platform in 2007, we shifted our focus to social applications, generally. We had some initial flops before finally gaining traction with a virtual gifting application called Send Good Karma, which still boasts nearly 400,000 monthly active users.

An idea is born: it should be easier to get paid
By early 2008, we had several popular applications, all of which incorporated some form of virtual currency. We started spending more and more time analyzing the “micro economy” within each app. We tinkered a lot with ways to bring money into an app without breaking the flow for users, and we couldn’t find an existing solution that met our needs. The more time we spent on it, the more we realized how critical an in-app payments experience is.

We also realized that building a sustainable virtual economy at scale requires deep analytic insights. But, unlike traditional ecommerce or even online advertising, there were no analytic tools available for virtual goods. So, payments and analytics represented pain points for us as app developers. This realization quickly led us to the next step in the evolution of our company.

Social Gold: building a virtual currency and payments platform
We decided to refocus Jambool on virtual currency, payments and analytics, so we began to assemble a dream team to tackle these issues. During our time at Amazon, Reza and I worked with a handful of dynamic, high-performing engineers, most of whom were successful entrepreneurs in their own right. We wanted to get the band back together, and we found that the opportunity to build the next great platform for social networks made it pretty easy to recruit. In October of last year, Social Gold was born.

Social Gold is a turnkey solution that manages all aspects of a virtual economy and, by extension, frees up developers to focus on the more creative (and fun) aspects of app development. Specifically, Social Gold enables developers to

* create and manage their own white-labeled virtual currency
* provide an unparalleled, in-app payments experience to their users, and
* optimize their virtual economy using robust analytics

Some of the largest social games and applications use Social Gold, but our easy-to-integrate APIs allow even the smallest applications to launch a virtual economy in a matter of hours. We have, by far, the most seamless in-app payments experience, especially for returning users. We also provide the most detailed and insightful analytics to developers for their virtual economies.

Growing through collaboration
We are very proud of what we’ve been able to accomplish over the last 10 months, and we are even more excited about the road ahead. A recent eMarketer study estimates that virtual goods will become a $1 billion business in the US in 2010 (and $2.5B in 2013). We’ll be right there collaborating with any developer, publisher or platform that considers virtual goods as a key component to its go-forward strategy.

-Vikas

We presented our virtual economy analytics as a part of the Facebook garage on Analytics. Here are the slides.

You can also browse them on Slideshare.

In brief: Social Gold platform can help create vibrant virtual economies, in large part due to the detailed, insightful and actionable analytics. Specifically, you can get insights into inflation, determine whether to increase prices (or if the market in your economy is automatically increasing the prices), figure out the right pricing of your virtual goods, and most importantly decipher the items that drive your revenue.

We are always looking for comments, suggestions, feedback — email us at business -at- jambool.com.