Patriotism Is Stupid

Posted in Opinions You Would Agree With If You Weren't An Idiot on December 2, 2009 by themaroon

Someone left this comment, and I thought the response to it was too meaningful to end up five deep in a comments section, so I’ll do it here instead:

With all due respect, I don’t think I like your attitude. There most certainly is a place for the mom & pop establishments in America espscially coffee shops. While I will agree with you on this point ”
But people don’t give a shit about locality or being different, at least not enough people to matter. ” , you have to understand that there seldom are any alternative to the corporate establishments and people are too lazy to seek out independant alternatives so they ultimately take the path of least resistance. Corporate anything in America pretty much blows. If you can’t agree that indepedant business should be patronized over the corporations than I can only assume that you own stock in Starbucks or know someone who does….either that or you live outside of the U.S. Not only will I continue to seek out independant Family owned alternatives but I will also seek out the ‘Made In America’ label in everything I buy. Shame on you.

I really couldn’t care less about those things, and I find people who do small-minded. It reeks of patriotism, exceptionalism, and xenophobia. One of my all-time favorite quotes comes from George Bernard Shaw and sums this one up pretty nicely:

Patriotism is your conviction that this country is superior to all other countries because you were born in it.

Patriotism is merely a tool of the strong to control the weak. It’s been used, especially over the last two decades, primarily stifle genuine criticism and discredit opposing ideas. Conservatives especially use it to rail against any form of change. Don’t believe me? Ask yourself what the hell tea parties (which were originally about taxation without representation) could possibly have to do with health care. The answer is nothing, they’re merely a patriotic symbol meant to imply that the people on the other side, fellow countrymen who won the same free elections the tea party-goers voted in, are not. Not liking the guys in office and not being represented, to quote Jules Winfield, “Ain’t the same fucking ball park. It ain’t the same league. It ain’t even the same fucking sport.”

So patriotism is total bullshit. Which, by the way, is not the same as saying “I hate my country” as those who use it as a leash so love to imply. It’s just that I don’t consider Americans superior to the rest of the world. We’re no more worthy of life, liberty, and Toyota Camrys than anyone else. Sure, we have more of that stuff, and I’m thankful for it, but it’s just because we happened to be one of the small percentage of people lucky enough to have landed on the right spot on the map. The only difference between someone from Boston and someone from Botswana is luck.

(From an evolutionary psychology perspective, nationalism is an artifact of our tribal ancestry. It was of great benefit 10,000 years ago and its easy to see why the meme thrived, but as Africa, the Middle East, and other tribal regions show today it has long since outlived its usefulness.)

So when I buy a shirt, whether the job of making it went to an American or a Chinese person, someone got paid and I’m happy for that. I don’t think Americans, by virtue of having won the genetic lottery, are any more deserving of a factory job than people in any other nation. If anything, the third world needs it more. Recent recession aside, our manufacturing industry has been slipping away for decades and yet our GDP has been growing and unemployment has remained, even by first world standards, fairly low. Meanwhile most of India doesn’t have running water.

I certainly don’t hate small businesses either. I own two of them. They certainly have their place when they can compete against, and serve the customer better than, their larger rivals, as is sometimes the case in coffee. But the reason for their existence isn’t their size or the fact that they are locally-owned. It’s because some segment of the target audience has decided they’re better. It has to be that, because in the end that’s the only reason any significant number of people will choose them.

If you are a small business owner and you find yourself hoping people will patronize your business because they live near you or buy your product because it was “Made in America” then you’ve already failed. You might as well pack it up and go home because Starbucks or Wal-Mart or some exporter in Shanghai is going to steamroll you, and other than a few yuppie mommy bloggers lamenting your passing on their TypePad the world will never know the difference.

Similarly, if you want a job that pays well you should acquire a skill that is in high demand and low supply. You are a small business, and your labor and your knowledge are your product. And if all of your knowledge came from one week of training at the Ford plant then 6,000,000,000 people out there are selling the same thing for lower prices. You don’t deserve to be paid any better than the guy in China for doing the same job and no matter how much you tilt at that windmill, those $60k/yr + benefits jobs inserting tab A into slot B aren’t coming back.

And that’s the way it is and the way it should be because at the end of the day we’re all human. Whether American or Taiwanese, what determines how deserving of success we are isn’t where on the globe our moms happened to give birth to us, or how close the owner of our coffee stores live to the people buying the lattes, it’s how we well we all compete in the global economy. And that’s an idea that is as American as apple pie.

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Starbucks

Posted in Stuff That Pisses Me Off on December 1, 2009 by themaroon

I was reading this hatchet job from Reuters about Starbucks because, well, I’m a glutton for intellectual punishment. It’s about how Starbucks has been experimenting with stores using other branding, trying to go for a more local feel.

This article posits that “Perhaps consumer really do want something more than branded artifice; they want something genuinely local.”  Bullshit.

This is wishful thinking on the part of people with a fetish for local mom-and-pop businesses. They write the same victory speeches on their LiveJournals every time one Wal-Mart moves out of a neighborhood, despite the fact that for every instance of that hundreds more move in.

Starbucks is facing attacks on all sides. They’ve got Peet’s and Caribou growing quickly. They’ve got McDonalds and Dunkin Donuts both heavily promoting their coffee lines these days. They’ve got the fact that they drastically overbuilt in the first place (though I thank them for it, as it inspired what was quite possibly the greatest standup comedy bit of all time) coupled with a double-digit unemployment rate that makes people think twice about that daily $5 cup of joe.

True, they do have local coffee shops improving the quality of their offerings as a direct response to Starbucks. Unlike retail, which is all about using volume to reduce costs while retaining a thin sliver of a profit margin, it’s not nearly so hard for local businesses to compete in an industry with 1,000% markup. The fact that they have to buy their coffee for 20% more than the chains is virtually irrelevant.

But people don’t give a shit about locality or being different, at least not enough people to matter. They all eat at Fridays and Olive Garden and shop at Wal-Mart and Target. Hell, go to any public place and at least 75% of people are wearing pants made of the same fabric and in the same color. Seinfeld once joked that we all ought to wear the same thing, the way aliens always do in sci-fi movies. Well, we haven’t settled on the shirt yet but we’re half way there.

So it’s hard for me to believe that a nation full of people who all own at least 4 pairs of blue jeans really worry about sameness when it comes to buying a latte. That’s just wishful thinking on the part of people resistant to change.

I don’t know where mom-and-pop stores got this recent mystique, but the whole fetish is just the modern equivalent of tilting at windmills. Thankfully it’s relegated largely to blogs and drum circles too, because I do love my Venti Apple Chai Latte.

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Fixing America, One Problem At A Time

Posted in Pointless Words of Wisdom on November 28, 2009 by themaroon

I was talking to a friend the other day about the future of our country. I mentioned that I was worried about what would happen to our deficits, and then our currency, once all of the baby boomers were in retirement homes on the taxpayer’s dime. She mentioned that in Japan this would never be a problem because apparently their society values the elderly and taking care of them is considered an honor. I realized she had hit on the perfect solution.

Let’s ship our senior citizens to Japan. Hear me out.

For one, the seniors will love it. They’ll get to go on nice two-week Pacific cruise, at the end of which they’ll be at a place where they can eat most of the food without bothering to put their dentures in. And we’ll just tell them they’re in Florida. I don’t know if you’ve ever been to Disney World, but let’s just say the demographics in Orlando and Okinawa aren’t far apart. Build one giant golf ball and nobody will be the wiser.

The Japanese will win too. Americans are bastions of productivity and get far more done in a work day, even in retirement, than the Japanese. They must anyway, because why else would our auto workers get paid three times as much? Also both groups, if you believe the stereotypes, are equally skilled at driving.

You’re welcome America. And Japan.

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Using Google Voice To Track Performance of Online Ads

Posted in bidness on November 17, 2009 by themaroon

At Blue Frog Gaming we spend a lot of time on metrics. One of the unique aspects of high-volume online businesses is that you have access to a wealth of data and ways to use it that a lot of traditional offline establishments don’t.

One of the best examples is the ability to track your advertising spend. John Wanamaker famously once said “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” He obviously wasn’t making websites. Giving customers who view ads a special URL, then using that to set a flag in the database and make special reports detailing exactly how much Revenue Per User (RPU) one gets is de rigueur online. You’d be hard pressed to find any web-based business spending more than $10 a day in ads that doesn’t know how much revenue they’re generating with that money to the cent.

But what about offline businesses who advertise online while doing all of their sales from a brick and mortar establishment? I was recently talking to the ad director of a local chain of tire shops who mentioned that they need to find ways of tracking the customers who click through their ads and end up buying tires from the store.

Customers who come in via email or the contact form on the web aren’t too hard. You’d simply track them up through the point of contact the same way any online business would, then make sure whoever handles them in store puts the appropriate flag in the user system. But what about the surprisingly large number of people who still make their first contact the old fashioned way, via telephone?

That’s where Google Voice comes in. Google Voice (formerly Grand Central, which I was an early user of) allows anyone to get a second phone number which forwards to their original one. It has great built in message handling and call tracking, which would help an offline business track customers through that portion of the sales funnel.

Here’s how it would work:

Bob’s Tire Shack gets one Google Voice number for each of their stores. Bob purchases Facebook ads pointing to a special URL which then stores a session variable indicating that the user came from a Facebook ad. When a user clicks through to the contact page, it gives them the Google Voice number, given only to customers who came to the website through the special URL, rather than the store’s normal number.

When someone calls to set up an appointment Bob can then tell which number they called, and therefore whether or not they came from a Facebook ad. It will be much more accurate than simply asking people “how did you hear about us?”.

This could work across a variety of channels simply by getting different numbers, which Google sells fairly cheaply.

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Random Brain Dump

Posted in Uncategorized on November 7, 2009 by themaroon

Random smattering of thoughts for you today:

Scamville

A lot of people seem to have misconstrued the purpose of my last article. It wasn’t to give anyone, be it the promoters of “scammy” advertisements, the offer systems who bring them to Facebook customers, or the apps they do so through, a pass. As I said in my entry, I agree it is a problem. The only acceptable number of scams is zero.

The point of that segment of the article (which seems to be the only one a lot of people read) was that Arrington was overestimating by a large margin the amount of dollars coming from scams. He specifically said “The games that scam the most, win.” and that is totally untrue, as they’re a relatively small portion of developers’ incomes, and thus the whole “ecosystem of hell” idea was overblown.

Spam vs. Ham

I’ve also noticed lately that many people in the software industry overlook the nuances of words like “spam” or “scam”. Everyone wants to eliminate these, but the problem is that one man’s spam is another man’s ham.

For instance I’ve read dozens of people calling Farmville and Farm Town invites spam. I can’t say I totally disagree, I hate those things. But my wife, when she was playing loved the free chickens. And overall the platform median acceptance rate nearly doubled to around 60% as a direct result of them. Clearly most do not consider them spam.

Someone also mentioned Free Credit Report as a scam. I’ve used that site and ones like it and never had a problem. I think we can all agree that loss leaders and free services given in order to advertise a premium service are a pretty standard and, assuming they are not misleading, ethical business model.

It says what it does pretty clearly on the homepage:

From what I can tell they had a settlement with the FTC back in 2005 (long before there were Facebook apps) about some deceptive marketing practices, but I had personally used them well before that when I was cleaning up my credit. They were very helpful in that, and while I’m not the sort of person who reads the fine print, I was aware that if I did not cancel within a few days I’d get hit with some monthly fee. If I remember correctly they made cancelling as easy as a phone call back then, and while I was fairly annoyed that I couldn’t simply do it online, I still got it done with just a few minutes of effort.

So despite the fact that clearly some people consider them a scam, some people clearly consider it a valuable free service. And to get some extra Farm Bucks too? Bonus.

The point I’m making here is that it’s not always so black and white what is good and what is bad, and to simply dismiss everything you don’t like or think unethical as such is intellectually lazy.

Politics

I was watching last week’s elections intently, as Ohio had a casino issue on the ballot that looked pretty promising. It passed, and soon there will be legalizing gaming an hour from my house. Presumably they will have a poker room as well, so I may actually visit occasionally. Welcome to the 21st century, Cleveland.

I made the mistake of reading general political articles and blogs around the same time and had forgotten how dumb they are. Most tended to focus on what the Republican Party winning a few key spots means for Obama and the Democrats. The answer is, of course, nothing. Chris Christie (a name I could never vote for, regardless of competence) beat the extremely unpopular Jon Corzine. All of the political blogs are talking about how Obama’s inability to get one of the least liked Governors in the country reelected means he is losing political clout. If anything the fact that someone that incompetent got 44% is impressive. Without Obama it may have been a blowout.

But regardless, as always, it came down to the independents. Republicans want to paint Obama as some vapid cult of personality, and it’s easy to do because so many of his supporters are obviously drinking the Kool Aid. But in the end he won, like Bush before him, because he captured the independent vote. He convinced them he was the more competent candidate, as did a couple Republicans last week. That really says nothing about national trends.

Obama

Love him or hate him, you have to admire the guy for his balls of steel. He’s dealing with an economic meltdown, a growing environmental crisis, winding down Iraq, a worsening quagmire in Afghanistan and everything else that comes with the War on Terror, and he’s still trying to get health care legislation pushed through. Most Presidents are afraid to tackle that in good times. You might argue that the proposals he supports there on a mistake, and I’d even somewhat agree with you, but you have to give the guy credit for trying. It’s a stark contrast when compared to the laziness (intellectual and otherwise) of his predecessor.

Also Word 2007 tries to correct Obama by changing it to Osama. That may explain half of what’s been said on Fox News in the last two years.

Health Care

Just kidding.

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Scamville? Not Exactly.

Posted in Startup on November 4, 2009 by themaroon

TechCrunch wrote an article this weekend entitled Scamville: The Social Gaming Ecosystem of Hell that’s stirred up a lot of controversy, and even some changes, in the social gaming industry. This is an area I know a little something about so I thought I’d comment.

Arrington’s not entirely off-base here, but he’s not entirely on either. For one, he’s probably off by an order of magnitude as to how much of the money flowing through these platforms comes from scams. In our time running games, we’ve generally seen direct payments make up somewhere between 50-60% of total revenues. That’s counting banner ads (which are low, maybe 5%) and offers. This is pretty typical from what I’ve gathered in talking to other developers.

Of the offers, most of the money comes in from the legitimate pay ones like Netflix and Blockbuster (the two biggest), Free Credit Reports, Credit Cards, DirectTV, Gamefly, etc. Customers may be scamming those a bit, but that will just cause them to reduce payouts a proportional amount, ensuring developers get paid about the same regardless.

And then of the free offers, many are legitimate, albeit very low-paying. There definitely are some that will get you on the hook for $10 per month on your cell-phone bill if you’re not careful, but there aren’t that many of them and they haven’t paid out excessively well for months now, so as an overall percentage of platform revenues they’re not very significant. Trust me, there aren’t many offers me and my coworkers have not tried, and only once has one of us fallen for that. I’ve seen a couple pop up myself but was smart enough not to receive a code in a text message and then type it in, or to give a real phone number.

Mike also seems to be confused about who does what in the whole ecosystem. He says “Game developers, desperate to monetize, then search for ever more questionable offers to make up the difference.” Game developers don’t ever search out offers as far as I know. Rumor has it that one big developer is testing their own offer platform, but that’s the only case of it I’ve heard of.

Offer providers search for new and better offers, game developers simply display an iframe. And offer providers, like any sane business, don’t look to replace revenue, they look to maximize. They’re not like “hey Netflix dropped from $25 CPA to $20 CPA, we better find something scammy that’s $25.” They simply look for what pays the most and put that at the top at all times. It’s a state-based effect, and having Netflix’s rate change doesn’t make them any more or less hungry to find other high-performance offers.

“And recent moves by Facebook to shut down application spam only make the problem worse in some way – game developers have to spend more money on advertisers to get users now that the viral channels are shut down. That means the games have to monetize even better. Which means more scams.”

Yes and no. Yes the new changes may impact virality, which may in turn drive Facebook’s ad sales, which as I mentioned in my last post is probably not an unintended consequence. But no amount of ringtone hucksters are going to make up for that. The new platform will be all about engagement. Game developers will strive to get higher RPUs not by doubling their revenue from adding more bullshit PC Doctor DVDs, which aren’t doing that much for us anyway, but by making games that customers want to play more frequently for longer. Also new Facebook ad rules (along with Arrington’s post)have prompted many offer providers to remove hundreds of low quality ads.

On the other hand, I agree with Arrington in that the number of scammy free offers is still far too high, in that it is not zero. We personally use two offer providers. One of them (Peanut Labs) I use largely because they have the most reliable free offers, and scams are almost nonexistent. The other one allows me to block offers I don’t like, and I do this whenever we get complaints about specific ones. That’s not easy because often the customer doesn’t even remember the name of the offer that sucked them in, but I do my best to hunt them down and make sure they’re never seen on our games again.

We as game developers hate the idea of someone scamming our customers. Even discounting the ethical issues, which we do not, it’s just plain not good for us. The scammy offers are a low percentage of revenue, but a high percentage of support requests, and are probably why a lot of people quit playing our games, and therefore quit paying us money. The math just doesn’t work out. Even if we really didn’t care if our customers got ripped off (which they always blame us for, by the way, even to the point of threatening lawsuits) it still just wouldn’t make sense on our part to knowingly sponsor these.

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Platform Changes

Posted in Uncategorized on October 30, 2009 by themaroon

Facebook announced their platform changes minutes after my posting and, as expected, fixed some of the problems I mentioned. They’ve introduced a new roadmap (there’s great overview of it with timelines on Inside Facebook). Overall I’m unsure exactly what the new plans they’ve laid out will mean for Facebook customers and developers. I think much of it is good (as does Eric Eldon at Inside Social Games), some of it possibly bad, and the majority depends on details that have not yet been decided and/or announced.

As far as Facebook user experience goes, it’s mostly a big win. They’re cleaning up the home feed so you’ll no longer be bombarded with friends’ quiz results. That’s good for everyone who wasn’t making a quiz app, and even those people had to know it wasn’t going to last. Facebook is too smart to let third parties degrade their user experience just to turn a quick buck for long. It lasted a few months, which shocked me. I figured they’d stamp it out sooner than they did, but I think it hit them by surprise (and won’t again) and they’ve initiated changes that will allow them to do so in the future. It’s unfortunate too because the feed, used properly by apps, could be great for developers, Facebook users, and Facebook itself, but as with anything so easily abused a race to the bottom occurred and ruined it for everyone.

Virality is the big issue for developers, and I’m not clear how this is going to be affected overall. Most apps other than quizzes don’t rely so much on the news stream as they do invites and notifications, so what happens there is going to have a much larger impact on highly engaging, highly viral apps like the ones we try to produce.

Notifications are going to pretty much disappear. User-to-user notifications are mostly gone, being moved to inbox messages that have to be approved by the sender, so there’s going to be a drastic reduction in those. I can live with that, since it’s something we game developers didn’t rely on overly much. Developers will push users to send Facebook messages where possible, but the fact that you’ll have to type each recipient’s name in by hand will make it much less frequent than invites now, which are easily sent to many friends with just a few clicks using Facebook’s invite selector widget.

App-to-user notifications, on the other hand, were a key driver of engagement. People on Facebook frequently install your app (along with 20 others) and then totally forget about its existence. In all of our games we use the app-to-user notification to alert customers that their special daily mission is now available, or something to that effect, and it has a huge impact. If we disable them for awhile, then turn them back on, it will often lead to a 50% traffic boost in one day.

In the long run, though, these probably have substantially less effect as people disable them or learn to simply ignore them, so again I don’t think they’re too key. And if their disappearance makes Facebook itself a little less spammy for everyone, it might be a long run win for all of us as well. The more people enjoy Facebook, the more they’ll use it, and the more they use it the more they’ll use apps built on top of it.

The real question, in my mind, is what is going to happen to invites. Facebook says “we’re going to consolidate invitations into a special section which will either be located in the Inbox, and/or in the Application and Games Dashboards.”

Implementation is key here. What I fear is that they add them to a special section of the Inbox, and don’t count invites toward the messages total. In that case someone with pending invites, but no other messages, won’t know they have unresolved actions waiting for them. Their screenshot indicates this will be the case.

image

As you can see, the user has 490 messages (really?) plus 9 updates and 2 invites, yet up top the count by Inbox shows only 490, indicating it excludes invites and updates. That’s really bad. On the other hand, the screenshot (which I’ve cropped slightly) actually indicates 4 invites, not 2, so it is possible that this is just a mockup rather than a screenshot of a functional implementation. Let’s hope that’s the case.

On the other hand, if invites are put in the Games dashboard, as it appears they are considering, and therefore are visible from the user’s home page by default, we may have an overall uptick in acceptance rates which could make up for lost virality on other channels. So I’m crossing my fingers on this one. It’s going to come down to details that apparently haven’t been decided on yet, and the implementation is going to be very key to virality on the platform.

It also appears as if invite texts may no longer be customizable. This will have the massive effect of getting rid of gifts sent via the invite message. That’s been a tremendous driver of both engagement and new users for a lot of games, and moving those to messages, where sending one-to-many becomes much more difficult, will have a massive impact. Developers will push these as hard as possible, and they’ll increase the load of messages in your inbox possibly to the extent that they’ll start annoying everyone, but the difficulty in sending them will ensure they don’t make up for losses on the other big channels.

It will also make app naming and icon selection more important as they will be the only thing differentiating your invite from the rest in someone’s inbox.

On the engagement side, the news seems mostly positive. Notifications been replaced by new dashboards that are enabled by default on the homepage and allow you to show users how many updates they have in your game. This is fantastic.

image

If there’s one thing people cannot stand, it’s seeing that they have new action items they have not yet resolved. It’s why the progress bars on LinkedIn make people who know they’re probably never even going to use that site again seek recommendations from friends. It’s why I think that inbox invites with notifications in the top bar are great, but without them are near-worthless.

Now if someone bookmarks your app (which they’ve even given us a new button to add to our nag screens to help them do) you’ll be able to bring them back to it better than ever before. That’s a pretty good thing for developers.

Also Facebook is now giving developers the ability to email users directly. I’m not sure how this is going to shake out. Getting customers to give you permission to email them is not trivial. Sending emails to large numbers of people without ending up exclusively in spam folders is not easy either. On the other hand, having direct communication, not limited and/or filtered by Facebook opens new doors. It will take some time for developers to figure out how to best take advantage of this, but we’ll get there.

So overall on the engagement front the changes may be a big win. On virality the verdict’s out, but it may be a small win, or it may be a loss.  Potentially a huge one. I suppose we’ll know in a month or two.

A lot of developers think Facebook is out to kill virality in order to sell us users via advertising. Right now a lot of game makers buy traffic from Facebook’s self-serve ads. My company supplements our user growth with this, though the lion’s share still comes in organically. Increasing engagement (and therefore Revenue Per User) would enable developers to place higher bids on customers, resulting in higher CPMs on their ad platform, which are otherwise abysmally-low. Decreasing virality would make ad purchases a necessity to get traffic on the platform.

If that’s their goal, it’s a short-sighted one. It will be a huge deterrent to build on the platform and force developers back to simply building on the web. It will also lead to long-term stagnation. The story of the platform has so far been something like:

1. Guy in basement invents the next big app. At first it was pokes/gifts. Then RPGs. Then quizzes, and most recently farm games.

2. Big companies (lately mostly Zynga) copy them, improve, throw millions of dollars worth of marketing/cross promotional muscle at them.

Remove the guys in basements and who is Zynga going to clone? Once they’ve outbid all of us little guys, who do pretty much all of the innovating, for the traffic then what are they going to spend their ad dollars promoting? The little guys will lose because they won’t be able to afford the ad  buys it takes to get traction. Customers will lose because platform innovation will slow drastically. Zynga will lose because they’ll run out of innovative new ideas to copy. And Facebook will lose because in the end they’ll end up with less ad sales, and less profit from the payment platform.

Moreover, it will result in significantly less overall traction on a platform that could probably monetize far better for Facebook through payment processing than ad sales. If Facebook made their payment platform public today, even at a relatively steep fee like 5% of sales I’d integrate it immediately. It would take a much larger platform for that to be a better business model than ads.

So in the end I’m all for Facebook trying to improve their own user experience, and I think in a lot of ways they’ll improve the platform by doing so. I just hope they manage to do it in such a way as to keep virality reasonable, spam low, and independent developers competitive. And if they just want to cash in on the big ad budgets of Zynga, EA, etc., that’s their prerogative. It’s their house, so I’ll pack up my toys and go somewhere else. There’s always that internet thing.

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Twist of F8

Posted in Startup on October 28, 2009 by themaroon

Since my company, Blue Frog Gaming, shifted focus to developing Facebook apps nearly a year ago, we’ve seen a lot of changes to the platform. Some of them have probably been for the better, some for the worse, and one in particular has been disastrous: the rise of gifting. In the last few months it has fundamentally broken the platform.

In the early days of the Facebook platform there arose a bit of a spam problem. Developers incentivized customers to send invites to their friends, often even paying them in-app currency to do so. It quickly became obvious that apps employing such tactics could grow to millions of users almost overnight and, in the process, create tremendous volumes of invites that hampered the Facebook user’s experience.

Facebook reacted by doing a couple things. First they banned rewarding users for sending invites (or using other similar platform integration points) and they limited the amount of invites a user could send from any one app to 20 per day. The limit made it impossible to spam your entire list in just a couple clicks and the new incentive rules made users much less apt to spam over time. The idea was that if people were so constricted, and rewarded only when their friends actually signed up rather than when they sent the invite, people would be more considerate, invite only friends who might actually be interested, and the number of unwanted invites being sent out would decrease dramatically.

Those changes helped, but still they wanted to do better, so they later changed the allocations such that the “better” apps got more invites per day (up to 60) and the worst offenders were choked off entirely. Invites are the lifeblood of almost all Facebook apps, so it worked. That seemed to be an improvement until a few months ago when developers figured out how to game the system.

The problem is in how Facebook determines which apps are “better”. They do that mainly by looking at the app’s invite acceptance rate, as well as the rate at which those invites are blocked or ignored. An app’s allocations are based on how their rates compare to the median. When we first started developing about a year ago, the median hovered somewhere around 20-25%.

This method is, it turns out, easily gamed. The original solution, used by Mob Wars and the like, was to create in-game “buddies” that come from an invite and give you in-game benefits. Want to run a job in Mob Wars? You’re only allowed to if you have enough friends in your mob. Want to attack people? Your success in battle will be almost entirely dependent on your mob size. You may need 20 buddies to do a mid-level job and 500 to attack another player with any shot of success. At some point the buddy requirements get so high that the only realistic way to get them is to send buddy invites (via Facebook invites) to large numbers of people who already have the app, which you found on some large “Add Me” lists.

This of course boosted Mob Wars’s invite acceptance rate. When you install the app, you might invite your real friends for a week until you run out. Let’s say you send 100 invites to actual friends, and 10% sign up. Not bad, but you need 20 to do that next job. So you join an add-me list.

Next thing you know you’ve got 400 new friends, all of whom were on the list, and almost all of whom are sure to accept your invite request. So you invite them over the next couple weeks and they almost all accept. Despite the fact that only 10 out of the 100 new people you sent an invite accepted (not a particularly high rate) your total invites were accepted by 400 out of 500, making for an average of 80%. The acceptance rate didn’t go up because the developers made the game better, they just hacked the platform to make sure the people who already used it sent and accepted more invites.

This still wasn’t that big of a problem because most people never got that far, the needed number of friends wasn’t too high, and the active players really didn’t need to send out the full 20 invites per day for very long. It pushed the median invite acceptance rate up as RPGs grew, but not ridiculously so. Then came gifts and the rise of Farm Town.

As far as I can tell, in-game gifting as a platform hack was first figured out by MyFarm, and then later put to spectacular use by Farm Town. The idea is to have one app send many invites to people who play the game every day for as long as they play the game. Combine this with an engaging game and you’ve got an invite acceptance machine.

When you first log into Farm Town, you are taken to the gifting screen, where you can easily choose an item (such as a pig or an orange tree) and then send it to all of your friends. Each gift is a Facebook Invite that has to be accepted in Facebook (not in the Farm Town app) from your requests page. So you click the accept button, go to the app, are given the gift, then have to hit the back button and do it again for every gift you have.

Now just about everyone who plays the game is sending out the full amount of gifts per day. And what happens is that their friends who play accept nearly 100% of them. The ones who don’t click ignore once, and the ones who do click accept 100 times. As a result, the median invite rate for the entire platform has since shot to near 60%, and it isn’t because spam has been reduced, it’s because it’s been increased but the non-spam invites have been increased many times more.

Imagine if your email provider, instead of blocking spam, somehow made you receive twice as much of it but then somehow made half of their customers (of which you may or may not be one) receive 100 times as much non-spam email. Your overall user experience suffers, and in fact even the people who are getting more non-spam are suffering, but the overall % of emails that are spam just decreased by a wide margin.

That’s exactly what has happened on Facebook. Even the people who play the farm games don’t want that many invites. They want the gifts, and that’s fine, but surely nobody wants to log into Facebook, see 20 Farm Town gift invites, and have to accept them one at a time by clicking accept, loading the app, then clicking back to the requests page. It’s slow and painful. From a usability standpoint gifts should be given in-game and not even require acceptance (who would ever not want a free chicken?) but the developers get a tremendous advantage from the acceptance rate so the user has to suffer in order to help them game the platform.

Another problem this creates is that you simply cannot have a top app without gifting, no matter how nonsensical its existence in your game is, or how much it detracts from the user experience or game mechanics. Your game could be the most engaging on the platform, but without a solid gifting system your invites are going to get choked off. Take a look at Restaurant City, which is maybe the most engaging game ever launched on the platform. It’s also a great platform citizen, attempting to get new users largely by making a game so engaging people want to tell their friends about it, rather than by giving them large rewards for spamming friends.

Restaurant City’s invites per day are down to 12 and it’s a Verified App. Being Verified means it gets boosted 2 buckets in the allocations. To put that another way, if it were not Verified it would be getting 6 per day.

Scroll down through the top games on the Facebook platform and install them all, as I have, and you’ll see a trend appear very quickly. Almost all of them dump you immediately onto a gifts page every time you log in. This is no coincidence. It’s because it’s the only way to keep reasonable allocations.

The solution is simple: only count requests sent to someone for the first time when determining the median. Or better yet, switch to a better metric entirely like engagement. Facebook knows how much time my users spend on my apps (or at least they could if they so desired). Why not base my allocations on that rather than forcing me to beg my customers to send a dozen gifts with every login?

I wrote 90% of this post over a month ago, and was prompted to write it today by the fact that the platform is probably changing in about an hour and a half. I’ll admit, I’m somewhat dreading it. It’s been a long time since Facebook made a change that made me think more highly about developing on their platform, and with each knock to developers’ allocations they’re going to push more and more people off. I worry that if trends continue, at some point we’ll be left with just Playfish making new games and Zynga cloning them and then marketing them to the top. Our new game on Facebook is doing very well, and we’re already thinking about how to parlay that into a standalone web success. I know we’re not the only app developers thinking along those lines these days, and Facebook should take that seriously, if for no other reason than to give Zynga someone’s games to copy.

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An Internet Advertising Primer

Posted in tech on October 19, 2009 by themaroon

I’ve been talking to some people a bit about the internet advertising industry lately, and it’s occurred to me that many people even in the web industry have little or no understanding of how it works. To save myself the time of repeating it to each, because a lot of people may find it interesting, and because some of the topics I’ll be covering here in the very near future relate to it, I thought I’d write up a quick primer on the various terms, how they’re defined, and what they mean in practice.

Here are the basic terms, in logical order rather than alphabetical:

Ad Terms

Impression: This is what one view of one ad is called. Every time you see an ad anywhere, that’s one impression. A webpage with multiple banners might serve up one impression each for many different ads.

Publisher: The website displaying ads. The term is a holdover from the days of print marketing, but probably could use some updating nowadays. It’s a pretty big stretch to call the authors of most blogs or a social network "publishers".

CPM: Cost per 1,000 impressions (M being the Roman Numeral for 1,000). This is the amount a publisher gets paid to serve up 1,000 ads. For instance, I might purchase 1,000,000 impressions (1,000 times 1,000) of an ad on Facebook for 12 cents CPM, so my total bill would be 1,000 * .12, or $120.

CPC: Cost per click. Many ads are paid for only when someone actually clicks them, regardless of how many impressions are shown. This is very typical for ads on Google, Facebook, Myspace, and many other platforms. So if I pay Facebook 30 cents CPC to run my ad, and only one person clicks it, then it doesn’t matter whether they showed it once or one million times to get that one click, I still pay exactly 30 cents.

CTR: Clickthrough rate. The number of impressions of an ad that are clicked on by the viewer divided by the total number of impressions of that ad shown. If Facebook shows my ad 100 times, and 3 people click on it, that’s a CTR of

3/100 = .03

This is also sometimes expressed as a percentage (which in the above case would be 3%) but if so will need to be converted to a decimal for calculating eCPM, which I’ll get to after…

CPA: Cost per action. This is the amount of money an advertiser pays a publisher to drive one user who performs a certain action. For instance, suppose Netflix pays publishers $20 every time an ad banner on the publisher’s site gets Netflix one new member who signs up for a monthly service plan. Netflix is paying $20 CPA.

What constitutes an action is generally determined in advance by the advertiser, and in most cases involves a user purchasing something. (There’s also a similar method called CPL, or cost per lead, which I’ll ignore since it works about the same way but usually doesn’t necessitate a purchase.) This is a very common method of marking online through affiliate programs.

eCPM: The effective cost per 1,000 impressions. This is a useful metric when estimating the cost to run ads paid for by the CPC or CPA method rather than CPM. The formula for calculating it is:

eCPM = CPC * CTR * 1,000

or

eCPM = CPA * CTR * 1,000

So let’s say I’m paying Facebook 30 cents CPC, and I get a clickthrough rate of 1%, then I am effectively paying Facebook

$.30 * 0.01 * 1,000 = $3

eCPA: Effective cost per action. The effective amount an advertiser purchasing ads by any method other than CPA (for instance by CPC or CPM) pays for one action.

Ramifications

For publishers everything comes down to eCPM, for advertisers it all comes down to eCPA. Once you understand those two simple rules, the rest flows naturally.

Publishers have limited inventory (i.e. impressions) and want to maximize their profit, and the way to do that is to run the ads with the highest eCPMs. Even if the advertiser is paying by the CPC method, the smart publisher is automatically calculating which ads are paying the highest eCPM (which, remember, is CPC * CTR * 1,000) and displaying them first. (The same applies to CPA, but I’m going to continue just using CPC in my examples both for clarity and because it’s considerably more common among major ad platforms.)

Advertisers are all about maximizing the productivity of their ad budget. They seek to allocate their funds to the places that have the lowest eCPA. If that eCPA is less than the profit they make from the acquired customer, they’re making money. If not, they’re going to end up poorer.

So regardless of the tracking method used, every intelligent advertiser is looking at their eCPA, and every intelligent publisher their eCPM. This is why when I see ludicrous articles like this one about how we should stop using the CPM method (oddly by someone who formerly ran the Interactive Advertising Bureau and should know better) I laugh because the payment method is entirely irrelevant. It all boils down to the same thing in the end.

As an advertiser bidding by the CPC method, there are therefore a couple things you can do to maximize your profit. For one, you can pay more. If you double your CPC bid, you’re doubling the eCPM you’re paying the publishers, and therefore your ad will be significantly more likely to run. If your profit margin drops to half of what it was, but your volume quadruples, you come out a winner.

But since no advertiser is ever in a hurry to pay twice as much when there are other options available, it’s usually more common to focus on improving the CTR. Double your clickthrough rate and you’re paying the ad network twice the eCPM, however you’re still paying the same amount per click, while only using up half as much of the advertiser’s inventory. It’s a win-win for the advertiser and the network, which is why you’ll find a lot of helpful tips on the networks’ sites (and even frequently get contacts from staffers) on how to improve your CTR.

There are two very good ways to increase your CTR. One is to make your ad more appealing. Experiment with different images, sizes, and texts. This is both art and science, and time-intensive to boot, but it’s a powerful way to maximize your return on investment. If you are purchasing sufficient volume you can multivariate test the results of different ad texts pretty quickly.

Another common method of improving CTR is to improve your targeting. With search-based ads, such as those found on Google, find the keywords that convert best and most cheaply. On Facebook or Myspace, target users who fit your desired demographics and interests, and tailor your ads specifically toward the keywords being targeted.

So there you go. You now know everything you really need to know about how internet advertising functions at a basic level. There of course are thousands of little tips and tricks that people have collected over the years, some of which they’ve shared, many they’ve probably not. I’d recommend searching around for all of the advice you can find and then figuring out the rest through trial and error.

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Still Alive

Posted in Uncategorized on October 15, 2009 by themaroon

I know, it’s been a rather long while between updates for me. I’ve been busy lately. Really busy.

My company, Blue Frog Gaming, put out a new game a month or so ago called Starfleet Commander and it’s been doing really well. The volume of support work has been huge, 4 or 5 times all of our other games combined (though the other games add up to much more traffic). Some of its due to the fact that we just haven’t ironed out a lot of the kinks yet, but most of it’s because people are just getting way more into it. We’ve got significantly higher engagement, growth, and revenue per user than we’ve seen before.

So I haven’t had much time for writing, but what I have had time for, I’ve gone a little overboard with. I’ve been holding it back because I’m always loathe to publish some 20,000 word blog post, but I’ve got a good series about the state of internet advertising, especially as related to social media, that I think I need to at least serialize and get out there. It starts with a rather lengthy primer that’s totally skippable to anyone who knows the difference between CPA and eCPM, but is a great intro to how ads work online for everyone else. I’ll probably try to get that live in the near future.

I’ve got some stuff to say about the public health care debate too. I know, who doesn’t? But it’s one of the most fascinating and complex issues our country has dealt with in living memory, and I find most of the arguments both for and against it to be focused on the wrong things, and the task of arriving at any firm conclusion to be almost entirely impossible. I also plan to write about why Libertarianism has become nothing but a religion for people who think they are too smart to buy into the other ones. It may be Target to Christianity’s Wal-Mart, but it’s still just a big-box retailer.

So more coming soon, I promise.

 

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