Social application and game developers such as RockYou, Slide, Zynga and Playfish are benefiting from a burgeoning market on social networks for games and related virtual payments. Zynga alone -- which makes popular games on Facebook including "Mafia Wars," "Texas Hold 'Em" and "YoVill" -- is on track to generate more than $100 million this year.
"Games have been the biggest change and the biggest success over the last couple of months," said Lisa Marino, vice president of sales at RockYou, best known for Facebook's popular RockYou Live application (formerly Super Wall). The company also offers a host of casual and other games.
As a sign of the growing connection between games and social networks, Marino pointed to Electronic Arts' recent move to incorporate tools into the latest title in The Sims franchise that let players create and upload content to sites such as Facebook and YouTube. Often linked to social games are virtual payment systems that allow players to acquire virtual goods with in-game currency.
That virtual currency is earned by responding to offers from marketers, such as completing a survey, signing up for a service or taking some other desired action. Companies such as Offerpal Media and SuperRewards act as middlemen in providing such in-game offers, which help developers monetize their games.
They also work with companies such as PayPal to facilitate in-game payments for players that want to pay for virtual goods directly. These and other app payment providers on Facebook enjoyed 35% growth in both transaction and dollar volume in the first quarter, according to the Inside Facebook blog.
Facebook itself last month began testing a virtual currency system allowing people to spend "credits" (purchased with actual dollars) in Facebook applications. "You're going to have a lot of value creation from this ecosystem we've created," said Michael Lazerow, chairman and CEO of Buddy Media, which helps brands manage their presence in social media.
Pauline Malcolm-John, director of East Coast sales for Slide, also noted that it's no longer just entertainment brands expanding onto social platforms, including packaged goods companies such as Nestle. "More and more advertisers are gravitating to the social media space," she said.
But she acknowledged that Slide and other companies have to help demystify the process of advertising on social networks and applications. "We as an industry have to develop more uniform measurements or success metrics to make it much easier for advertisers," she said.