It May Sound Crazy Right Now, But Zynga's Ad Platform May Save It.
Today Zynga made two announcements, one about the massive layoffs at the company, and the other announcement was that they are working to develop an ad platform for their social games. I’m sure you can guess which announcement overshadowed the other. Right — the news of the layoffs was front and center.
While the layoffs are unfortunate, and are something I hate to see it, I think the news about the development of a Zynga-owned ad platform is actually very positive. I also think it could potentially save the troubled company. How could an ad platform save Zynga? I’ll explain.
Up until now, Zynga has been hesitant to utilize advertising, instead relying on the sale of virtual goods, with 30% of the revenue from the sales going to Facebook, for the majority of its revenue. And with the lack of a new smash hit game, that has proven to be increasingly problematic. But with an ad platform, Zynga could use ads to monetize its approximately 300 million active monthly users in its own games, and those of other developers as well. In essence, making Zynga less vulnerable during a “game drought” (a period of time where they don’t have a new hit game) because they would be able to piggy back off the success of other third-party games by taking a cut of the ad revenue.
Additionally, if Zynga is working with third-party game developers to sell ads, they will be able to build stronger and more valuable relationships with the other game makers, which could lead to more strategic partnerships or even acquisitions.
Of course, one of the other major benefits to anyone having their own ad platform is that you own all of the data. And, as we know, data is everything these days.
Zynga’s new ad platform could be all that I just said, or it could just be a way to entice another company to acquire it. I guess we’ll have to wait and find out. I really hope it’s the former, I’d love to see Zynga make a comeback.