The Monetary Future interviewed SponsorPay CEO Andreas Bodczek on May 13, 2010, shortly after Facebook announced their intention to become more aggressive with Facebook Credits, their proprietary virtual currency. SponsorPay is the European market leader in the field of virtual currency monetization for online games, social applications and social networks.
Andreas: Europe is a diverse market, it’s not even one, but many markets with different languages and mentalities, and there is a huge range in how well these markets are developed - if you compare for instance Eastern and Western European countries. This diversity is the biggest difference to the US and it’s also one of the biggest obstacles in entering the European market, whereas the US can be considered one great and already developed market. On the advertiser side, Europe is characterized by a very fragmented and local structure as well. For virtual currency platforms this means: moving closer to the users and having a unique approach for these different countries as well as knowing the specifics of the respective market and being well connected locally.
Jon: What is the differentiating factor that SponsorPay provides to the marketplace?
Andreas: No other platform is so consistent in its genuinely localized approach towards end-users (in the iFrame and the individual offers), publishers and advertisers (affiliates, ad networks & direct advertisers) including a direct contact to local counterparts. This is provided by a team of more than 30 people covering 15 languages. Also, SponsorPay is committed to fair and transparent offers since its inception and hence always avoided Scamville pitfalls.
Jon: What do you see players asking for most in the marketplace that could change the direction of the virtual currency business?
Andreas: We see a couple of trends that not only could but will seriously impact the direction of the virtual currency business. Security will become more and more important, provided by trusted advertising partners and technical measures to protect the users’ privacy. The players will also demand more value: good offers that are fun to do, useful and improving their gaming experience.
Jon: What security features are built into your virtual currency platform and do you permit anonymous accounts?
Andreas: As an offer-based monetization platform, SponsorPay works with IP tracking, real-time analysis of transactions, velocity controls and various heuristics. We usually do not have personal information about the user other than his user ID and the IP address he is using.
Jon: With Facebook Credits on the scene now, how can SponsorPay respond and prosper in this new environment?
Andreas: Facebook credits will help to make the use of virtual currency even more widely accepted and we appreciate this development - one uniform currency across multiple applications is certainly a benefit for the end-user. On the other hand, it poses a huge challenge for Facebook-centric publishers who have developed business models and entire ecosystems around their own virtual currencies. Facebook and their publishers will have to bridge this gap. Since SponsorPay has the broadest portfolio of international advertisers and continues to expand this we should profit either way.
Jon: Will virtual currencies ever become portable outside of the gaming environment?
Andreas: I very much believe so. The gaming environment was a really effective booster to this concept, but virtual currency can be much more. It is becoming a monetization strategy in other fields, like dating, news, videos and basically everywhere where premium content is provided.
Jon: Is a virtual currency that is convertible to the outside "real world" an advantage? Do you anticipate entering the market for freely-convertible currencies in MMOs and virtual worlds?
Andreas: Virtual currency never existed outside the 'real world' – it’s connected to it. Just look at China, where the government prohibited virtual money to buy real world goods to limit the negative impact of virtual money on the real currency. Virtual currency is a powerful concept for the monetization of digital content, certainly, there will be cases where the demarcation between real and virtual world gets blurred. However, for the foreseeable future I expect virtual currencies to be somewhat related to and dependent on the internet.
Jon: What do you encounter on the regulatory side with a virtual currency that is exchangeable between persons and then convertible to outside "real world"?
Andreas: Fraud is a huge problem: With currency, incentives to trick the system are becoming even stronger. From an economic perspective, large virtual economies can impact real economies if the amount of ecosystem is just large enough, as it happened in China.
Jon: What new products and/or features are forthcoming from SponsorPay?
Andreas: We have a few things coming up. The next step will be a direct payment option to make SponsorPay a one-stop shop for obtaining virtual currency in Europe, either by taking ad offers or transferring money to buy the currency directly.
Jon: How do you see the virtual currency platform business evolving in the future?
Andreas: The possibilities of the virtual currency platforms are just beginning to be explored. More and more advertisers begin to see that, and so the quality of the overall experience is rising. This means that the user can get better offers and the segment will be even more precisely targeted.
Jon: Thank you.
For further reading:
"Is This the Dawn of the Facebook Credit Economy?", Ian Schafer, AdvertisingAge, May 20, 2010
"Sponsorpay and CJ extend existing cooperation globally", Virtual Currency Platforms, March 24, 2010