Injecting Advertisers Into the Market for Virtual Currency

Ad network Adknowledge is looking to do for the in-game virtual currency market what Google did for search advertising. That is, let advertisers of all sizes bid for the right to offer virtual currency to players of Facebook and MySpace games in exchange for special offers.

Virtual currency is a booming business among a handful of tech startups like Zynga, maker of games like Farmville and Mafia Wars, that get players to pay real money for in-game dollars. These companies also offer players the chance to earn virtual cash by signing up for trial versions of a sponsor’s software, or completing a survey. The sponsors walk away with leads, and the consumer gets more money to buy digital goods.

The practice has come under fire recently as some sponsors take advantage of unsuspecting consumers by tricking them into signing up for expensive programs or subscriptions. In response, makers of the virtual games have promised to do a better job of policing their sponsors.

The Adknowledge marketplace lets any advertiser generate leads by offering free in-game currency to players of Facebook and MySpace games. Advertisers pay on a cost-per-action basis, so they pay only if the placement generates an actual lead. The system launched on Wednesday.

“Historically, large advertisers like Netflix have been very good at monetizing that consumer base,” Scott Lynn, CEO of Adknowledge, said, “but we fundamentally believe that there are literally thousands of small to midsize advertisers who would be very interested in offering a free trial version of their product or service within the social networking community.”

Lynn acknowledged the controversy surrounding in-game currency offers, but said Adknowledge’s system would actually reduce scams by personally reviewing all offers placed through it.

“We believe that all the concern around offer credibility comes down to disclosure,” he said. “Any advertiser that signs up in Bid System goes through editorial review, and we make sure that their offers have proper disclosure so the consumer understands exactly what they’re signing up for.”

Adknowledge’s entry into the virtual currency market was made possible by its June acquisition of Super Rewards, which was already one of the leading providers of virtual rewards in the social media space.

Josh Albom, a senior account manager at marketing firm Tranzact, which specializes in client acquisition, said he planned to use BidSystem 3.0 to help better manage his client’s in-game currency efforts.

“I think from a quality-control perspective it could help [control] what types of applications and what types of traffic I’m looking for in terms of demographics,” he said.

Albom also said he hopes the system will create more transparency in the virtual currency market, “being able to see more what the competitors are bidding and where they’re moving and how the optimization tool really functions.”

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