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AOL is offering a robust platform for political advertising, called the Politics hub, that will allow marketers to create targeted campaigns across AOL’s growing properties across the web. The move should be one of many as ad networks work to take advantage of spending by political groups.

According to Jeff Levick, President of AOL Global Advertising and Strategy, the goal is to create a clear resource in AOL for political marketers to use:

“Our Politics hub lets campaigns and issue advocacy groups take their messages directly to voters and key influencers in a proactive way through display advertising, and we make the on-boarding process something that is simple, easy and intuitive.”

AOL’s network has grown as the company has concentrated on acquisition of new content sites hitting specific niches and creating content for those sites to draw more users. The result is a network of more than 80 sites and an audience of more than 250 million.

One figure sure to attract political marketers is that according to AOL, 83 percent of voting age Americans use the Internet. The platform will feature display ads that will take advantage of geo-targeting, being able to focus down to the congressional district level, and make no mistake local is the key to all of this since political battles usually ebb and flow district to district. Combined with targeting AOL is hoping to leverage their more traditional user base combined with their in-display to provide a political marketplace that most sites short of Google won’t be able to match.

Political Advocacy Groups Have Adopted Social and Search, Will They Adopt Display?

Facebook has already seen an influx of political advertising because of the network’s ability to slice up user data by sex, age and other lifestyle interests allowing political marketers to more accurately select the type of audience they want to target.

“This cycle, we don’t have a major Republican candidate who isn’t asking about Facebook or isn’t doing it,” said Peter Pasi, the Executive Vice President of Republican online consulting firm Emotive LLC, in an TechPresident article.

The Supreme Court’s recent ruling to loosen limits on corporate spending coupled with the successful blueprint of online and social media outreach which helped vault President Obama into the White House in 2008, should create a large push in political dollars this year online. Republicans in general are taking a page out of President Obama’s playbook and investing in online outreach. The Tea Party activists found success on the conservative side with social networking activity. It helps stretch the advertising dollar.

As Lauren Dugan of SocialTimes looks at it:

“Dollar-for-dollar, Facebook advertising money might not directly equal more votes. But with larger budgets, politicians are able to do more with their online presence and ultimately increase their visibility, attractiveness and reputability on social networks like Facebook. New media, including social networks like Facebook, might not actually be all that “new” in terms of how politicians reach the people, with higher campaign budgets bringing in more supporters in the end.”

AOL is looking to be the next choice for those advertising dollars after Facebook as it can sell eyeballs that are reading very narrow content while at the same time bringing bring more strategy and campaign assistance to the table. It also has a slightly more conservative base than Facebook another point that AOL is banking on to win some dollars.

While Google still sits at the top of the political advertising food chain, AOL’s move highlights the trend of another traditional vertical moving away from traditional media in order to find green pastures online, thanks to rich metrics. As long as traditional media offers sketchy information about who is watching and who is engaging, online advertising markets will increasingly hold the edge.

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In my last article, I discussed the dynamics of Facebook and Zynga and one reader was astute enough to catch on to the money talk that would be the crux of this topic.  As a quick refresher, Facebook already gets a piece of the revenue pie when Zynga and other social games advertise on Facebook, but if Facebook is able to insert itself into the flow for virtual goods in these games, all of these games, it would amount to a sizable pile of found money. Pause and think about how much money Facebook could add to its coffers.

So, here’s a quick breakdown of money flows in the social game ecosystem, where I use Zynga as a proxy for all social game providers:

• Zynga advertises on Facebook
• Users see ads, click and play games, ad $ are consumed
• Users buy reward points from Zynga, good for virtual goods,
• Users do ‘offers’ for reward point through services like OfferPal
• Users buy reward points from mobile payments companies, through an interface provided by OfferPal
• OfferPal pays Zynga a discounted rate for the reward points distributed to user

In this ecosystem Zynga is the big winner. Facebook gets advertising dollars. OfferPal takes it’s cut for managing offers and mobile payment providers. Zynga spends money on advertising, and gives a cut to PayPal or OfferPal.

For Zynga to make more money, they would pursue two main paths: cut costs, or gain more users.  Cutting costs means reducing either cost per transaction for reward points and/or reducing the number of merchants/middlemen taking a cut. Gaining more users entails growing the user base through advertising or cross-promotion — where both are potential cost centers at odds with cutting costs. For Zynga to make the most money it’s in their best interest to drive people to zynga.com or the game pages off of Myspace and Facebook by cross promoting their other games, offering in-game incentives for lead gen to other games, and using off-network marketing to draw users – preferably using email and social media tools.

Zynga is on track to take all those steps, even requiring you to enter your email when your create a Mafia Wars account, and reaching out to your address book. To top it off, Zynga and others have started to offer reward points at retail, further connecting with and establishing offline relationships with customers.

So what does Facebook do to stem the tied of social network games being sucked into Zynga and earn more cash? Enter Facebook and its new offers.  This trial is what I was hinting at in my last post. The ecosystem described above and in my last post provide a sense that Facebook could be missing out on cash, but also strategically on controlling its users. Facebook isn’t discussing it, but when game users start giving away their email addresses to play Zynga games and give personal, private, and sometimes financial information to OfferPal, their entire livelihood is threatened. Users who pay or do offers are a highly desirable demographic, and currently Zynga and their likes have more of these users than Facebook.

Facebook’s move into offers is the first step in what should be a larger strategy by the firm. The implementation of credits may look like a way to manage and enable payments for Facebook gifts, but expect them to follow the lead of Zynga by allowing credits to be used for events, rewards, incentives, advertising, music, and games, with credits eventually purchasable at retail as well. Wide adoption of credits, Facebook creates a loss economy, where users are incentivized to come back and do things, even play games, on Facebook. Those credits will initially be available only on Facebook, but eventually used on other sites, but in each case – Facebook has taken a cut.

Financially, this allows Facebook to materially participate in the successes of all of this apps and games, however by using offer companies like TrialPay, now, and OfferPal later, Facebook joins the game, so to speak, but is always giving away a cut to someone else. If credits take hold, Facebook could double or triple their cut by acquiring one of those firms.

Consider this: if Facebook acquired OfferPal, they would have intimate knowledge of not only Zynga’s finances but of every major social game provider. While that may sound attractive on the surface, Facebook would be saddled with the ’scamville’ baggage discussed on earlier posts on ReveNews. Another fruitful action could be an acquisition of TrialPay, its offer partner, which has other game changing properties: Facebook leverage the acquired offer technology beyond social networks and games, but to general publishing and content where TrialPay already has a foothold and reputation for higher quality leads. Lastly, there’s the hidden option – the Zynga funded “DoubleDing” which appeared to be an early attempt to control their destiny, but was caught up in the scamville scandal that resulted in Facebook suspending a Zynga game.

It seems to me that Facebook needs to compete with its biggest customers like Zynga. They have the user-base to do it, they’ve suspended Zynga games in the past, and they’re partnering with another offer provider that they could easily acquire. These small steps spell a much larger play in this game where Zynga and Facebook cooperate in the short-term, but may compete for the hearts, minds, and wallets of users in the not-so-distant future.

Read more here:
Facebook Credits And Jealousy At Platform Games

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Recently I’ve been hearing some low-level buzz over plans by Facebook to dip into the revenue stream of the social gaming companies feeding off its network. This follows close on the heels of Zynga’s estimated valuation of $5 billon in an article by Second Shares. I don’t have any desire to partake in rumor mongering; however, I and other former micropayments executives expected Facebook to make this move a year ago.

Why does this seem obvious? For over a year now, we’ve seen a phenomenon on Myspace and Facebook that I call the “Now what” moment. This is when you’ve found and connected with your groups and friends  in the system and now there’s nothing left to do.  I had the same experience trialing Friendster and Xanga way back when.

Enter Mobsters, Mafia Wars, and Farmville – somewhat addicting games on Myspace and Facebook. If you’ve studied these dynamics, you have seen massive friending efforts, fake account creation, and addicted users who waste every spare moment stuck in these games. These games have driven new account creation and ‘active user’ minutes on these social networks. I expect that some of the growth, especially on Facebook, is based wholly on these games, where new accounts represent fake social graphs and possibly users with multiple accounts.

What can be learned from studying trends associated with these games comes from when the ’special items’ go on sale.  These are scarce virtual goods that help you in the game, costing 20 to 80 points of some kind, where points typically run from $0.25 to $0.50 each payable to Zynga, Playdom, or other social game operator. Those points are also ‘earnable’ by doing offers, some of which are scammy and covered here, which funnel funds to the game companies through offers providers list in scam articles.

Recently, I’ve seen 30,000 rare items sold in one day, suggesting massive payment volume or offer completion rates to cover the cost of those items. These were all transactions happening for in-game goods and services on Facebook and Myspace, and without the involvement of the social networks. In a simplified model, 30,000 items at 30 point would mean 900,000 points. At $0.25/point (low end) that suggests a possible $225,000 a day, or over $82 million – for just one game. Multiply that by three to estimate the impact of the other blockbuster games, and we’re talking serious money to Zynga – and none of it directly to Facebook. Repeat the same revenue calculations for Playdom and PlaySpan to get an idea of how big this market is on Facebook just for social games. Of course these revenue estimates are on the high-end, but if you were Facebook, wouldn’t you want a cut?

Pause and think about how much money is flowing here and how much revenue could be at stake.

While it’s natural for Facebook to want a cut, doing so is not going to be as easy as generating new revenue from partnering with EventBrite as discussed here on ReveNews. Stay tuned for my next article to expand on the complexities of tapping into the social games revenue streams.

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Facebook vs. Social Game Companies: The Fight For Game $$ Via Credits

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Cost-per-action is a sure way to earn income on the internet, its fast, easy to setup and is also a passive source of income.

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