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20 September 2020

Can Virtual Gifts Monetize Location-Based Social Networks On Mobile?

virtualgift Can Virtual Gifts Monetize Location Based Social Networks On Mobile?

The other night my wife, a certified Facebook junkie, noticed that there were some new Facebook virtual gifts being passed around.  From Dell, eBay, and Sephora, I wondered what the significance of these gifts were and starting digging for more information.

Turns out, according to AdAge, the gifts are part of a holiday promotion.  This weekend, the three companies are each offering 250, 000 free virtual gifts in order to drum up conversation and a little brand recognition.  The ultimate goal, of course, is to convert involved Facebook users into actual buyers of products that cost money.  In an email from Facebook corporate communications executive Matt Hicks to AdAge, he said over 30, 000 of the virtual gifts had been sent in the first night alone.

Gift-giving on Facebook and other social platforms is nothing new.  Facebook opened a Gift Shop in February 2007, and since then over 60 million gifts have been given.  Many are free, but many people will pay $1 and up for these gifts.  In fact, Lightspeed Venture Partners‘ Jeremy Liew estimates that Facebook gifts have a $35 million run rate.

All of this makes me wonder: Can virtual gifts be used to monetize location-based social networks? I would think so.  A recent ABI Research study revealed that 46% of dot-com social network users have visited a social network on a mobile device.  70% of those have visited MySpace and 67% have visited Facebook.  MySpace has always been a profitable business and Facebook could likely leverage its dot-com user base to make random virtual gift giving a successful revenue stream on mobile.  But what about location-based social networks that emphasize mobile like Loopt ?

The same ABI Research study mentioned above said that no other social network aside from Facebook and MySpace reached above a 15% mobile penetration rate.  And none of the social networks with a mobile focus have substantial dot-com visitors either–not relative to the two biggies anyway.  What location-based mobile social networks do have though is the ability to use place as a way to target gift giving.  In essence, offering virtual gifts with more social and geographical relevance.  If company’s did this right, gift giving could become a significant revenue stream that none have tapped into so far.

What do you think?  Could this work?

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