Massive customer base.Incredibly socialized.Low cost of acquisition.Highly engaged online audience.High margins, low COGS.Repeat purchases.Commerce platform deeply integrated into social, especially Facebook.
Facebook has a bazillion monthly active users.Zynga has leveraged the social phenomenon to build a booming business.Zynga accounts for 12% of Facebook’s revenue – which is about $120M.In 2010, Zynga grossed $575M from virtual goods.
This was the hypothesis for our research.We work with numerous leading retailers at Argyle. We see mixed results from our customers.
There are a thousand reasons that online retailers don’t see the success that Zynga sees. But we were incredibly surprised to see such little traction.Online retailers are some of the most aggressive, savviest marketers around. And they’re incredibly conversion-driven. And they have technology budgets to spend.Why is Zynga in the stratosphere? Why are traditional online retailers sputtering?And what can we learn from the exercise?
Over half of the sample has fewer than 100k combined Facebook & Twitter followers.We didn’t telephone survey all participants, but I imagine that the social audience is a fraction of the email audience.Contrast these audiences with Zynga and you get the glaring strawman for this entire talk. Zynga has built a massive captive audience that is easy to monetize at scale.
Contrast the typical commerce experience with Zynga.Zynga is deeply integrated into Facebook with social gestures, sharing, and Facebook credits.Farmville users can purchase a new tractor seamlessly.Retailers are not making the effort to provide the same customer a similar experience…perhaps purposefully.The shopping experience is certainly better at home base and there are long-term data advantages to bringing shoppers on-site.Still for the purposes of this exercise, a lack of social integration seems to be an important driving factor behind the lagging performance of retailers.
Contrast the typical commerce experience with Zynga.Zynga is deeply integrated into Facebook with social gestures, sharing, and Facebook credits.Farmville users can purchase a new tractor seamlessly.Retailers are not making the effort to provide the same customer a similar experience…perhaps purposefully.The shopping experience is certainly better at home base and there are long-term data advantages to bringing shoppers on-site.Still for the purposes of this exercise, a lack of social integration seems to be an important driving factor behind the lagging performance of retailers.
Previous research in this area indicates that marketers that post social content containing calls-to-action significantly outperformcuration-only marketers.