Notes of Note from John F. Ince

Archive for November, 2010

Google Acquisition of Groupon Seems Likely, Say Sources | Kara Swisher | BoomTown | AllThingsD

According to sources close to the situation, Google has offered $5.3 billion for Groupon, in what would be its largest acquisition yet, if completed.

Sources said the deal for the Chicago-based social buying site seems likely to be struck, even as early as tomorrow, although it certainly could fall apart right up to the end.

But, if done, it will move the search giant instantly to the top spot in local commerce online and give it huge troves of data about consumer buying habits and merchant information across the globe.

Combined with its pending $700 million acquisition of ITA Software, the travel data firm, that should freak out regulators worldwide and could be considered Google’s own version of a jobs plan for antitrust lawyers.

That said, it is a killer move for Google–despite the high price–given it has long tried to enter the local advertising space, with decidedly mixed results.

With its more than $33 billion in cash and strong stock, it had previously tried to buy local reviews site Yelp, in a deal that fell apart for reasons that are still unclear.

In contrast, Groupon, founded in 2008, has taken off like a Roman candle and dominates the huge market for social shopping and discounting.

While the $6 billion Google is considering paying seems high, Groupon’s fast-growing revenue and profitability make its multiples less daunting, said those familiar with the matter.

It will certainly be a big payoff for Groupon’s investors, including Silicon Valley’s Accel Partners, as well as Battery Ventures, New Enterprise Associates and Russia’s DST Global.

Groupon has gleaned about $170 million in venture funding from them, most of which it has not needed.

That’s because it has reportedly attracted upward of $50 million in monthly revenue.

It has done this by offering “daily deals”–getting a massive discount from local retailers in return for delivering customers via marketing via email and on social networks, especially Facebook and Twitter.

via Google Acquisition of Groupon Seems Likely, Say Sources | Kara Swisher | BoomTown | AllThingsD.

Facebook Credits could be our new universal currency

Facebook Credits could be our new universal currency

Facebook is on the verge of finding the elusive answer of how to fully cash in on its 500 million users scattered across the globe. Banner advertising has made them a chunk of change, but hasn’t generated much relative to the size of its audience, especially outside the US. Already in place in testing markets, the new Facebook Credits system could change that dramatically.

Credits, said to be launching in September, works by filling an account with cash and then using your credits to buy goods within games and apps with one click. There are already individual systems that do this across all the different developers’ platforms, but Credits will create one universal system that can be used with any affiliated developer or company’s goods.

You’re probably thinking that’s great and all, but there can’t be that many people paying for virtual goods instead of using their money for actual goods. In the US alone, $1.6 billion was spent on virtual goods in the past year. That number is rapidly growing. And with a new system in place that takes away the need to fill out new forms for every purchase, the barriers to buying are significantly lowered and spending will almost certainly increase even faster.

It’s not only virtual goods that Credits has can be used for. With wide scale adoption, it could create a whole new sales channel. Here are some ideas on how you might be using Facebook in the not too distant future.

via Facebook Credits could be our new universal currency.

Target to sell Facebook Credits gift cards – USATODAY.com

SAN FRANCISCO — Facebook is coming to a Target (TGT) store near you.The social-network giant is getting into the gift card business, starting Sunday, with Facebook Credits cards.

The new Facebook gift cards will be available in values of $15, $25 and $50 at all of Target’s 1,750 retail stores and at Target.com. Two or three more national retailers will start selling the cards in coming months.

This will be the first time Facebook has had any presence in a retail store. Facebook already has an arrangement with online-payment services PayPal and MOL to purchase Facebook Credits.

Facebook is banking that a sizable chunk of its 500 million members will purchase the cards and use them on their favorite social games, applications and virtual goods.

The gift cards, which look and work like Apple’s iTunes cards, were created by GMG Entertainment, which also produced iTunes cards. Target carries iTunes cards, too.

More than 200 million people play free social games on Facebook each month, according to Facebook. And many of them are beginning to spend money on premium goods and services associated with those games.

“We think (the cards) will be incredibly popular as a holiday gift,” says Dan Rose, vice president of partnerships and platform marketing at Facebook.

The cards can initially be used on more than 150 social games and applications, including titles from gamemakers such as Zynga (FarmVille, FrontierVille), CrowdStar (Happy Aquarium, HelloCity) and PopCap Games (Bejeweled Blitz). Facebook gift cards do not replace Zynga’s existing game cards.

Target — which already sells more than 30 gift cards for online games, such as FarmVille — expects the markets for online gaming and digital music to continue to grow, says Mark Schindele, senior vice president of merchandising at Target. He also noted that Target has more than 1.5 million fans on its Facebook page.

By year’s end, Facebook expects to have gift card credits available for its thousands of games. At least 19 games on Facebook have more than 10 million active users a month.

Facebook is expected to rake in an estimated $1.3 billion in online advertising revenue worldwide this year, up 92% from 2009, eMarketer says.

Facebook’s entry into the growing prepaid gift card market could prove lucrative. The domestic prepaid gift card market is expected to reach $86.2billion this year, compared with $80.6billion in 2009, according to Mercator Advisory Group.

via Target to sell Facebook Credits gift cards – USATODAY.com.

Ifeelgoods Powers Facebook Credits Incentive on Shoebuy.com

Credits continue to extend beyond their original turf with help from third parties. Today Shoebuy.com became the first retailer to offer them on a website outside of Facebook through an incentive program using Ifeelgoods, Inc. technology.

With Ifeelgoods technology, any purchase on Shoebuy.com earns a reward of 50 Credits. Redeem them on Facebook or donate the Credits toward cancer research if you don’t feel like spending the digital coinage on games.

A close look at the terms and conditions reveals this interesting tidbit: If you return or cancel your Shoebuy.com purchase, you don’t get a refund for the Facebook Credits. The $5 gets subtracted from the amount that gets credited back to you. (I hope this means you still get to spend the Credits!)

The terms and conditions specify that you can only redeem the Credits through the IFeelgood application, and only for use on Facebook. Apparently there’s no way to transfer the Credits to another Facebook user. And while the refund policy implies a value of $5 to the 50 credits, Ifeelgoods and Shoebuy.com state that the incentive offer itself has no monetary value. Plus you need to redeem the Credits within five days of making the Shoebuy.com purchase.

I find these rules fascinating because my first thought upon seeing the promotion was to wonder whether I could buy shoes for myself and gift the Credits to someone with a stronger interest in social games, and do so a few weeks from now. Maybe that capability will become available down the line.

This Shoebuy and Ifeelgoods offering is yet another step in a larger trend. Social games sites are using Piggyback technology to accept Facbook Credits, plus retailers are selling the credits on stored-value cards.

Readers, what do you see as the long-term trajectory of Facebook Credits? Will they become a global currency across the Internet and offline?

via Ifeelgoods Powers Facebook Credits Incentive on Shoebuy.com.

The $4 Trillion – Foreign exchange market – A Primer

In a typical foreign exchange transaction, a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market began forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

The foreign exchange market is unique because of

its huge trading volume, leading to high liquidity;

its geographical dispersion;

its continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday;

the variety of factors that affect exchange rates;

the low margins of relative profit compared with other markets of fixed income; and

the use of leverage to enhance profit margins with respect to account size.

As such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding market manipulation by central banks.[citation needed] According to the Bank for International Settlements,[3] as of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007.

The $3.98 trillion break-down is as follows:

$1.490 trillion in spot transactions

$475 billion in outright forwards

$1.765 trillion in foreign exchange swaps

$43 billion currency swaps

$207 billion in options and other products

via Foreign exchange market – Wikipedia, the free encyclopedia.

Forex Trade Returns to Precrisis Levels, Nears $4 Trillion Daily

The global currency-trading business expanded at a double-digit rate in the six months to April this year, data from key monetary authorities around the world showed Monday.

The strong growth puts the foreign-exchange market on track to top a record $4 trillion in daily trading volume, extending its recovery after the global recession caused activity to dry up in the first part of 2009.

Worries over the euro zone’s sovereign debt crisis and concern over the pace of the global recovery are likely to keep volatility—the main driver behind the currency market’s recent trading rebound—high.

via work: Forex Trade Returns to Precrisis Levels, Nears $4 Trillion Daily.

Social City creator Playdom accepts Facebook Credits exclusively across all games – Games.com – The Blog

Just like that, the final domino falls. Playdom is the next company to submit to Facebook’s demands for social game and app developers to accept only its virtual currency. As of today, Playdom will only be accepting Facebook Credits as its virtual currency. Fortunately, the company will, of course, still accept credit and debit cards as well as PayPal payments.

If this deal is anything like Facebook’s previous three, we imagine Playdom will have to deposit 30 percent of all Facebook Credits sales into the social network’s bank account. It also bears mentioning that the unique currencies to Playdom’s games like City Bucks in Social City and Campus Cash in ESPNU College Town aren’t going anywhere; it’s the third-party payment methods that are officially kaput. And thankfully the free offers from Playdom’s ad partners for in-game money don’t seem to be going anywhere either.

This isn’t the first time Facebook has coerced social game companies into using its new currency, which is now available at GameStop and Radio Shack in addition to nearly all major department stores. With CrowdStar the first to go and later Zynga giving in, it was only a matter of time before EA and Playfish accepted the offer too. Finally for Facebook, the company will be reeling in 30 percent of the top four social gaming companies’ profits via Facebook Credits. Let that one sink in for a while and you’ll understand why Zynga might want out.

via Social City creator Playdom accepts Facebook Credits exclusively across all games – Games.com – The Blog.