February 9, 2011
WildTangent Not Playing Around When It Comes to Advertising in Social Games
More advertising is inevitable as social gaming increases in popularity and the number of people who are willing to pay for virtual goods plateaus.
However, exactly how it will be accomplished, no one quite knows.
WildTangent believes it has found the winning formula, and, surprisingly, it goes against what others, like social gaming leader Zynga, are already doing in the space.
Over the past 12 years, the Redmond, Wash.-based company has toyed with all sorts of business models.
But the picture started coming into focus a couple of years ago, when WildTangent made the decision to stop developing games itself in favor of helping other PC game makers distribute and monetize their games. Six months ago, it expanded from working on only PC games to social games, too.
In an interview, Mike Peronto, WildTangent’s president and CEO, and Dave Madden, EVP of sales, marketing and business development, said social gaming has quickly become the company’s fastest growing segment, with revenues tripling year-over-year.
WildTangent is best known for its consumer-facing game platform, which comes preloaded on 85 percent of PCs sold today. The platform, which is also accessible online, attracts 20 million monthly active users and is monetized through a combination of players paying for coins at 25 cents a piece, subscriptions and ads.
Madden said the problem it is now focused on solving is how to monetize social games when only two to three percent of players are willing to pay for virtual goods.
That means advertising is inevitable, but it’s still too early to tell how it will play out.
Last month, Zynga told us it was focused on product placements within games, where virtual goods are sponsored by brands, like blimps in FarmVille and branded cars in Mafia Wars.
But Madden argues that approach doesn’t scale. “We know it doesn’t scale because we’ve tried to build a business doing it,” he said.
“Product placement is appropriate in some media, and games are no different, but it’s not supported well by agencies, and we are trying to chip away at the broadcast budgets. There has to be metrics for them to compare it to other mediums….It’s difficult to measure a sign or blimp.”
Today, WildTangent works with some of the largest brands, including PG&E, Unilever, automobile makers and insurance companies. It also works with some of the biggest social games companies, like Playdom, Digital Chocolate, Crowdstar and others.
While WildTangent does sometimes work with brands on product placements–like a Scoop Away litter box in the Happy Pets game on Facebook–generally, it requires players to watch a short video, or offers the option of playing a very simple game.
So far, Madden and Peronto have been happy with the results. Of all of its social advertising campaigns, WildTangent has been averaging a 10 percent click-through rate.
WildTangent, which has 130 employees, hit profitability two years ago and has been in the black ever since.
Next up is integrating social games into its platform so it can have access to their vast distribution network, and then it will bring what it has learned from advertising on social networks to mobile phones.