Facebook digital gifts worth around $15m/year January 23, 2008
Posted by jeremyliew in 3423228, digital goods, facebook, gifts, virtual goods.trackback
Although Facebook has primarily focused its monetization efforts on advertising, it has also experimented with digital goods. There are three typical use cases for digital goods; (i) increased functionality (ii) self expression and (iii) communication. Facebook’s Gifts fall into the third category, whereby a particular communication is emphasized because a gift has a price associated with it, thereby creating some scarcity value.
Facebook creates a certain fixed number of each type of gift. When the number remaining for any particular gift drops below 100,000, Facebook displays the number left. The most common size runs are 100,000 and 1,000,000 but they range as high as 10,000,000 and as low as 15,000.
We noted the number of available gifts of each type over a seven week period to be able to better understand the sales rate of digital gifts. Excluding free gifts, we found that the average number of sales per week for a gift was 846. Since there were 322 gifts available for sale when we completed our last survey (Jan 8th), that implies that Facebook is selling just over 270k digital gifts per week. At $1 per gift, that implies an annual run rate of just under $15m. Facebook sometimes allows users to pre pay for gifts at a discount if you buy multiple gifts, so this number may be slightly lower.
The top four fastest selling gifts were the only four free gifts, all sponsored by an advertiser. On average these gifts were given at a rate of over 150k/week. This is a rate almost 200x faster than the regular Facebook gifts and speaks to the penny gap.
Holiday themed gifts (e.g. Santa hat, eggnog, Happy New Year!) dominated the list of top selling paid gifts, averaging 4,755 sales per week. Romantic gifts (e.g. “Be Mine” cookie, chocolates in a box) also sell better than average. This reinforces the use case of communication as these gifts all have a clear communication overtone, relative to gifts without a clear message (e.g. an espresso bean, a beach ball or a lemon).
WordPress doesn’t let me upload excel spreadsheets, so a .pdf is available below.
I suspect that as we see more social games emerge on Facebook we will see digital goods that take advantage of the other two use cases, increased functionality and self expression.
users get a free gift credit when they sign up. you have to back that out of the quantity “sold” to get to the true number of actually paid for.
good stuff. i wonder how many gifts are purchased due to users getting a free credit by signing up. i would assume a high portion at 200k new users a day.
have you accounted for free gifts? members are given a credit (at least i was) for their first purchase. that should be backed out.
Surya and Noah, you are right of course, but I don’t think that there is any way to back out which are the initial gift credit and which are paid. Can you think of one?
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jeremy: you might be able to sample some # of public (non-anonymous / non-private) gifts, and try to determine whether they were given by someone who joined relatively recently or someone who’s been around for awhile (is your FB join / new member date public? i seem to remember you can triangulate on that somewhere).
while this probably isn’t very scientific / empirical, you might be able to make a decent guess as to what % of gifts are free (if given earlier in someone’s FB lifecyle) vs paid (if given later in someone’s FB lifecycle, after they expended their initial free credits).
as a random guess, i’d say gifts given in the first 90-180 days are probably free; those given after are probably paid.
- dave
(ps - i’m frequently in error making small change, so please don’t trust my math any further than you can throw me
Hi Jeremy,
Thank you and others for putting this article and report together. My partner and I have a digital gifts application on Facebook that’s doing well. This is helpful for gauging revenue when charging for gifts. Currently, we’re monetizing through ads. We’re still bullish on gifts in general even though there is a decline in usage of Facebook gift apps.
hmm…how about this:
survey with two questions:
1) how many people have used their free gift
2) how many people have ever paid for a gift
since facebook’s growth statistics are pretty out there, you should be able to use the % of redeemed free gifts as a (very imperfect) proxy for number of free gifts. doesn’t take into account the delay between signing up and redeeming gift, but using sampling methodology, it’d be way too imperfect to estimate that.
this would at least get you to a ballpark $ number. and question #2 can serve as a check to see if the numbers are even closer.
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Do you have age statistics on the people that have purchased these gifts? im sure kids without credit cards have less access to use these features.
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