Facebook Credits may soon become a significant new economic driver in the Internet economy, providing significant new business opportunities for entrepreneurs. Entrepreneurs should start looking for innovative ways of integrating Facebook Credits into their business strategy because Facebook is likely going to be very supportive very soon.
A couple of days before the Facebook IPO, Peter Vogel, an industry expert on Facebook Credits, said that he believes that Facebook will begin promoting Facebook Credits heavily after the IPO, and will make them easier for consumers to use. Vogel predicts that they will double every year for the next five years and eclipse Facebook’s advertising revenue by 2016. One week after the Facebook IPO Vogel’s prediction seems even more likely. Facebook stock has been trending down week. In response, Bill Bonner, writing for The Christian Science Monitor, says “What did you expect? The company has sales of $4 billion. IF…IF…it were able to claw out a 10% profit margin…and IF a fair multiple for its earnings were, say, 10…the company would be worth $4 billion. Not $100 billion. Four billion dollars. And instead of having shares valued at $15 billion, Mr. Zuckerberg would have shares worth about $800 million.”
Of course, the news this past week has been replete with reports of unhappy Facebook investors. The pressure on Facebook to grow profits to drive the stock price will intensify. Facebook’s primary revenue stream comes from selling display advertising. However, many have long criticized Facebook’s performance as an effective advertising platform. The company has other ways of monetizing its enormous user base, the most significant of which involves Facebook Credits. For example, it is expected that Facebook will expand Credits into a micropayment system open to any Facebook application, which has profound implications for major companies like PayPal. But that is not the only monetization strategy available to Facebook.
Many retail companies in the United States sell Facebook Gift Cards, including Target, Best Buy, Walmart, and dozens of other retail outlets. Facebook credits are available in Canada, in select counties in Europe, and through Facebook partners in parts of Asia. Perhaps even more significant are the Facebook Credit-based loyalty and rewards programs that are beginning to crop up. For example, Peter Vogel (quoted above) is the co-founder of Plink, a growing Facebook Credits-based loyalty program.
As noted in the recent press release cited above, “Plink …rewards Facebook members for dining and making purchases at their favorite restaurants and stores. Plink members create an account through Facebook Connect, then safely and securely register the credit or debit card of their choice, and begin earning Facebook Credits by dining-out or shopping at participating restaurants and offline retailers including Arby’s(R), Dunkin’ Donuts(R), Quiznos(R), Red Robin(R) and Taco Bell(R). Plink’s online-to-offline (O2O) loyalty program connects social media marketing to offline sales.”
Facebook Credits, as described on the “Credits” page of Facebook.com: “Just like tokens at an arcade or amusement park, credits are a secure way to play games and buy virtual and digital goods on Facebook. You can buy credits using your credit card, PayPal, mobile phone or another payment method.” The developers who create and sell virtual and digital goods on Facebook pay 30% of the sales price to Facebook, and retain 70% for themselves. Facebook Credits is a virtual currency and is available in well over a dozen currencies including U.S. dollars, pound sterling, euros, and Danish kroner. At the present time, ten Facebook credits equal 1USD.
Opportunities abound in the Internet economy. Facebook Credits are likely to be a new driver in the Internet economy providing new opportunities for Internet entrepreneurs and others. Innovative people who understand Facebook Credits will be discovering and creating new ways to prosper using Facebook Credits as Facebook begins to heavily promote Credits to monetize their vast user base as part of their strategy to support the price of Facebook stock.