Viximo

At Viximo, we have evaluated dozens of companies selling virtual goods to identify and compare the common threads between successful and unsuccessful implementations. I will be sharing some of these insights through a weekly blog series called “Virtual Goods Keys to Success.” As the first post in this series the lesson is one which you should think about prior to implementing: making virtual goods part of the core experience rather than just an additional feature.

In order for virtual goods to be successful, they need to be a core part of a product’s experience. Virtual goods need to be more than just one of many features, but a thread throughout the overall social experience. Users buy virtual goods for three primary reasons: status, socializing, and winning. In order for virtual goods to accomplish one of those three goals, they need to be tightly tied with the actions a user commonly takes.

A virtual goods business model is not one that can be “duct taped” on the side of a community (i.e advertising). There is a mindset in the technology industry that you should build the least amount you can to test and see if it works. While in many cases this is an effective means of testing new ideas, in the virtual goods case this typically means the legs are cut from beneath before virtual goods even has a chance to rise. As a result, we see many failed virtual goods implementation attempts that involve a link to a storefront buried within a site, stocked with some images from iStockphoto. While a certain amount of “test” traffic will be funneled to that experience, if a user doesn’t see it as a core piece of the overall experience, they aren’t going to enter their credit card.

Virtual goods turns away from old models, such as ads and subscriptions that are interruptive and stifling, and embodies a business model that is a core part of the social experience which adds value. As a result, virtual goods is a massive opportunity, but one that requires a certain level of dedication and consistent iteration. This is part of the reason we created Viximo, to drastically reduce barriers to implementing and managing a virtual economy, while still being flexible to the differences of every community.

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Virtual Goods and Virtual Currency are gaining a  significant amount of attention these days among the press and the technology industry as a new way to drive revenue.  With online ad revenues plummeting, it is easy to understand that everyone is searching for  that next big thing which will help replace lost revenue.  But for a publisher, how do you cut through  all the hype, and get down to truly evaluating if virtual goods are right for your product?

Is Your Product Social?

Virtual goods are valued by users based on their social implications.   A user doesn’t send a virtual gift because the graphics are worth a lot of money.  They send a virtual gift because it’s a valued social gesture within a community.   For example, a user can send the same virtual gift via email to a friend or on Facebook.  While containing the same graphics, the Facebook virtual gift has much more value since it is posted on their user’s profile, announced in their friends feeds, and sets them apart from everyone else sending that person a message.

Social products typically come in the form of social networks, online dating sites, games, and virtual worlds.  However if your product doesn’t fit within one of those defined verticals, but still has a strong community base, then there may be opportunity.  Conversely, if the social community element doesn’t exist, then it is very unlikely a user will buy a virtual good.

Is Your Product Engaging?

With the explosion of social products over the past 5 years, users are spending much longer on an individual site.  They have become a regular and important part of peoples’ lives.   As a result, engagement has a strong correlation with how much users spend on virtual goods.  A user isn’t going to invest money in a product that they don’t use very often.    The more engaged the users are in the community, the more likely those social values that drive the value of virtual goods exist in the community as well.

Many  products have a segment of “power” users that have much higher activity levels then the rest of the user base.  These are the users that are likely candidates to purchase virtual goods.   Virtual goods help increase engagement, but only make an already engaging product even more engaging.  Virtual goods alone will not turn a boring experience into a captivating product.

Do Your Users Value Status, Socializing, or Winning?

Status, Socializing, and Winning are the three main reasons users buy virtual goods.   One or all of these three elements are highly valued  by users within a strong social community.  Virtual goods provide premium  avenues to tap into these three behaviors.

What Doesn’t Matter

It is interesting to note that items such as age, demographic, or location are not factors.  Users of all ages and demographics have been found to buy virtual goods in the right social environments.   You should not disqualify your product as a candidate for virtual goods based on age, sex, or location especially if you have the above three elements.

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