Case Study: Converting Virtual Purchases Into Real Revenue

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virtualgoods_smallADOTAS – Historically, companies have used display advertising to drive traffic to their website’s landing page. Once on the landing page, companies use other more direct forms of communication like email and website messaging to drive people down through the sales funnel.

In the social gaming industry in particular, where converting free users to paying customers is essential to business success, companies rarely use display advertising to its full potential. In addition to being a major part of marketing efforts, display advertising can also drive users down the conversion funnel, transforming them from “freemium” subscribers to “premium” customers.

IMVU, an avatar-based social network and virtual world boasting the world’s largest virtual goods catalog, was looking for a way to use their advertising dollars more effectively. IMVU primarily used display advertising to drive people to their web site where they would register, choose an avatar and then download the game. Once the registration data was captured, IMVU’s perception was that display had done its primary job, and now email, website messaging and the nature of their immersive world were the best ways to drive that person to spend on the site via micropayments on virtual items for their avatar.

IMVU turned to Rocket Fuel to better understand how its ad dollars could generate more conversions on their Web site. We first developed a series of experiments, the basis of which me and my cofounders first learned while working at NASA, using an exposed/control methodology to benchmark the lift that display advertising could create for IMVU.

The results showed that users who saw an IMVU ad were 10% more likely to convert versus those who didn’t see an IMVU ad. We also used this data as the basis for IMVU to assign a “view-through” conversion metric to understand the value of users who saw an ad, didn’t click it, but came back to the website later to register.

Our next experiment helped IMVU capitalize on consumers purchasing behavior associated with Black Friday and further proved the lift that display advertising could provide. In this test, IMVU’s ad to users promoted 2-for-1 credits for customers to purchase virtual goods on their site for Black Friday. IMVU members who saw the display ads spent an average $4.76, whereas users that didn’t see the ads spent an average of $2.22 — the campaign generated 100% lift in average spending.

Rocket Fuel built an automated real-time bidding model to efficiently choose the right impressions for IMVU based on best performing audience model characteristics including time of day, day of week, sites, login-spending behavior, gender and age. Instead of paying a flat cost-per-impression for buckets of users, Rocket Fuel could bid high or lower, on IMVU’s behalf, based on the individual value of the user and the available ad impressions.

By turning to more sophisticated forms of display advertising, IMVU was able to go beyond traditional remarketing efforts like email to find demographic sweet spots, drive better response rates and consistently provide fresh creative to its audience. By putting Rocket Fuel’s display advertising rocket science to use, IMVU’s marketing efforts began converting customer prospects to premium paying users.

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