All Things Tech & Social

Edge Magazine is reporting Zynga spent $120 million on marketing in 2011, predominantly for the recruiting of new users. In that time they only acquired 400,000 new monthly users, which basically means “they spent $300 on each new customer. Since new customers stick around for 12 to 15 months and spend around $150 during that time, this means Zynga is losing $150 for every new customer.” This isn’t good.

Why is Zynga spending that much money to market a “social game”, and why are they spending that much money to market a “social game” on Facebook? I believe they’re doing it for two reasons: 1) because they don’t understand why new user retainment is falling (why user growth is plateauing, why there’s a low conversion rate of users who become paying customers, why new user engagement is shrinking), and 2) because they assume increasing Zynga’s market presence will assure new user retainment upon trying their games. As was said in the Edge Magazine article, “The really hardcore [players] are, perhaps, finding themselves trying FarmVille, Castle World and CityVille. The newer audiences are trying and finding that this is all the same and leaving”. It is obvious Zynga needs to redirect their focus from new user retainment to new user adaptability, because they appear to be approaching user retainment from the same understanding they had when user growth skyrocketed, and that was when it was attached to the rapid growth Facebook experienced.

That was then and this is now, and as of now there’s no reason for them to spend that amount of money to market on Facebook. Why? Because the new user and retainment numbers they’re experiencing aren’t “eyeball” or company consciousness problems. To me it’s more of a user fulfillment problem: the games fail to garner attentive interest, and this ultimately points to the “Zynga experience”. They need to figure out what is Zynga now, and how does “what is Zynga now” translate to what Zynga can provide to these new users. The motivation for why new users will give Zynga a try today is different from their motivation for doing it two years ago. When Zynga’s utility was of convenience this was because it was attached to a users social graph on Facebook, while now it’s attachment to Facebook appears to have grown into dependency (it has to be experienced through Facebook for the “social game” to be meaningful). This will only hurt the “Zynga experience” because new users appear to care less for social gaming with friends in the “Facebook experience”: this benefit has lost its novelty.

I would focus on figuring out what’s changed from the user fulfillment standpoint, and how this behavioral shift can be accounted for when designing for user adaptability. This is important because there has to be a stronger level of user fulfillment if you’re hoping to get at least 1 out of 4 users to spend money, and fulfillment only comes from there being value in time spent using the service. If there is no value in gaming with friends through your social graph (Fcaebook), what’s the value of Zynga? I find this important to figure out because at some point Facebook can no longer be their primary point of entry. As usership continues to slow through Facebook, it will be more imperative they increase product relevancy in the consciousness of the “new users”, who could fit their target audience outside of Facebook.

Edge Magazine: http://www.edge-online.com/news/analyst-zynga-losing-150-new-customer