You know the type — social game addicts who pepper your Facebook page with updates about the wine recipe they created playing “FarmVille,” or the gem broker they robbed on “Mafia Wars.” To fuel their gaming, those same people may soon be posting updates about the sneaker they designed for Adidas, or the app they downloaded for Coke.

With Americans now spending a third of their online time logged into social networks or playing games, advertisers are trying to harness that enthusiasm to get people to engage with their brands. No one expects game-based social advertising to supplant Google‘s huge AdWords search business or Yahoo‘s lead in banner display ads, but the model is another example of how the explosive growth of social networking and gaming offers new opportunities for advertisers to target an online audience.

“We see it as an entirely new kind of advertising product,” said Arik Czerniak, chief operating officer of SupersonicAds, a company that allows people to earn the virtual currency needed to play games on social networks like Facebook or hi5 by watching video ads or responding to targeted offers.
For example, players who need “city bucks” to keep playing Playdom’s “Social City” game on Facebook can earn one city buck by watching a 4 minute, 23 second Butterfinger ad starring aging TV stars Adam West and Erik Estrada, or pull in 113 city bucks if they sign up for a new Netflix account.
The fee an advertiser like Butterfinger or Netflix pays each time a consumer responds to an ad is split between SupersonicAds and the developer of the game where the virtual currency is used.

SupersonicAds says it can get social network users to engage more deeply with a brand than is possible with standard Internet display advertising. For example, Czerniak said a large brand such as the German sneaker company Adidas could offer game players a chance to earn virtual currency by clicking on a link that allows them to spend several minutes creating a “design” for a new kind of shoe. The user could earn even more virtual currency by sharing their Adidas design with their friends on Facebook.

“It isn’t something that annoys you and stops you from having fun,” said Czerniak, adding that the interaction itself is kind of a game, and may cause game players to feel affectionately toward a brand like Coke, because “Coca-Cola helped me buy the money for my ‘FarmVille’ tractor.”

A recent Nielsen Online report found that Americans now spend more time online on social networks like Facebook or playing games than they spend sending and reading e-mail. And the growth in gaming and social time comes at the cost of online activities like Google search and Internet portals like Yahoo.

Given the growth in social gaming, SupersonicAds’ “opportunity is huge,” said Michael Fauscette, who follows emerging trends in software for the research firm IDC. “It’s not the new next Google, but it could be something that Google buys down the road, or Yahoo buys, or Amazon buys — or Facebook buys. It’s one more component of building loyalty in a community and keeping people engaged in the community.”

In a sense, the virtual currency strategy includes elements of “loyalty” programs like airline frequent-flier programs, but Fauscette said the creative engagement of promotions like the adidas shoe design could make people feel “it’s not really advertising “… I think it’s different from, ‘I’m hawking merchandise that I don’t have any investment in.’

On the other hand, given that the rules of engagement in social networks are anything but settled, it’s also a strategy that could backfire if people suddenly feel overwhelmed with brand promotions from online “friends” they hardly know in real life, said Andrew Frank, an analyst with Gartner.
“You wonder whether this kind of behavior crosses the line from friendly promotion to where you are manufacturing interest, because people aren’t really interested in your product. They are interested in playing the games,” Frank said. “How annoying is it if my friends start spamming me with brand promotions I’m not interested in? I would certainly consider unfriending people for that kind of behavior.”
SupersonicAds’ list of advertisers includes Cisco Systems, Air France, Nokia, T-Mobile, The New York Times and Nike. Based in London, the company also has offices in San Francisco and Tel Aviv. SupersonicAds initially focused on Europe, where Czerniak said there was “a huge vacuum,” but is now focusing more on the United States, and recently received a $2 million round of funding.
Michael van Swaaij, a former executive with Skype and eBay who was a lead investor in that round, said one thing that attracted him about the company was that the advertiser, the consumer and the game developer all get something out of the transaction.
“Everybody is happy, and that’s relatively unique in advertising,” van Swaaij said. “Games are huge, and we are making them better. And it’s worldwide; it’s not a local phenomenon. This is growing much faster than the rest of the Web.”

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