EA Acquires Playfish For (Maybe) $400 Million

Social network games - and by extension, social networks themselves - received a strong endorsement this morning as a major acquisition was announced.  Electronic Arts has bought Playfish, a maker of said games, for at least $300 million.

Barry Cottle, Senior Vice President and General Manager of EA Interactive, explained in a statement, "Social gaming, with its emphasis on friends and community, is seeing tremendous growth and this is the right time to invest to strengthen our participation in this space."

Indeed, Playfish should make a good partner for EA.  The company describes itself as a leader in the social gaming industry, and has received backing from Accel Partners (which also invested in Facebook) and Index Ventures (which put its weight behind Last.fm and Skype).

Moreover, Playfish claims that over 150 million of its games have been installed.  (Playfish's top games are Country Story, Pet Society, Restaurant City, and Who Has The Biggest Brain? in case you're curious.)

And that large number brings us back to the matter of Playfish's price.  EA's paying $275 million in cash and $25 million in "equity retention arrangements" up front.  Then, as much as $100 million more will be delivered if unspecified performance milestones are met between now and the end of 2011.

Have You Read This?

> 20 Goals For Business Social Media Use

> Nearly Half Of Consumers Would Recommend A Product On Facebook

> Facebook Most Widely Used Network Among Businesses

Reaching Your Audience Via Internet Marketing

Blogging, social networking and email newsletters all have one thing in common, they fall under the umbrella of Internet marketing.

(Coverage of the BlogWorld conference continues at WebProNews Videos.  Keep an eye on WebProNews for more notes and videos from the event this week.)

In the session "Internet Marketing for Smart People," the panel discussed the various ways to reach an audience online.

Brian Clark, founder of Copyblogger, said, "there's always things and people you can learn marketing from."

Chris Brogan, President of New Marketing Labs, said, "email marketing is far from dead."

Darren Rowse, founder of ProBlogger, started email marketing for his dad with the intention he thought RSS would kill email. His email marketing has been successful and now they forcefully push it. Email allows them to connect and engage with customers.

Clark said email is a different environment than a feed reader. It builds trust and it takes a lot for people to hand over their email address.

When it comes to blogging, Rowse said the more you can get your readers to interact with each other, the more you as the blogger become the match-maker. You can build relationships with your readers. It's important to allow them to interact and connect. Give them as many opportunities as you can to do this.

Brogan said community is a privilege, not a right. It's a whole lot easier to market when you don't have to. Smaller blogs that have great content are sometimes more effective than mega blogs.

When it comes to the recent FTC guidelines for bloggers, Rowse said he had been expecting rules for a long time and there is no reason why endorsement rules would not apply to bloggers. The FTC rules validate bloggers as media.

WebProNews Video reporter Abby Johnson contributed to this report.

Bloggers Can (Not?) Be Fined Up to 11K Per Post for Non-Disclosure

Update 2: The FTC is now saying that the $11,000 fine is not accurate, at least for the first violation. Fast company got some responses from Richard Cleland, assistant director, division of advertising practices at the FTC, who says:

“That $11,000 fine is not true. Worst-case scenario, someone receives a warning, refuses to comply, followed by a serious product defect; we would institute a proceeding with a cease-and-desist order and mandate compliance with the law. To the extent that I have seen and heard, people are not objecting to the disclosure requirements but to the fear of penalty if they inadvertently make a mistake. That’s the thing I don’t think people need to be concerned about. There’s no monetary penalty, in terms of the first violation, even in the worst case. Our approach is going to be educational, particularly with bloggers. We’re focusing on the advertisers: What kind of education are you providing them, are you monitoring the bloggers and whether what they’re saying is true?” [empahsis added]

Cleland addresses more of the concerns here.

Update: The new FTC guidelines have come out today. The FTC says:

The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.

Bloggers can be fined up to 11,000 per post for not disclosing when they receive payment or free products from a company they're writing about.

Original Article (05/20): We've known for some time that the Federal Trade Commission (FTC) intends to start regulating blogs and social media with regards to word-of-mouth marketing (aka blogs and social media). An article from BusinessWeek this week looks at the FTC's intentions to regulate advertisers who are paying bloggers to write glowing reviews (whether that be in the form of cash or free stuff).

"The world's more ambitious bloggers like to call themselves 'citizen journalists.' The government is trying to make sure these heralds don't turn into citizen advertisers," writes BW's Douglas MacMillan.

Some bloggers are of course taking issue with the idea of such regulation. But there are more than a few points to consider. Carlo Longino at TechDirt writes:

"It's as if the FTC is trying to mandate credibility, and this raises a couple of interesting points. First, audiences generally seem pretty adept at rooting out when people are being paid to talk nice about a company or product, and there are plenty of examples of company's payola schemes getting found out and causing a backlash against them. Second, why do bloggers get singled out for special treatment? Plenty of old-media reporters get freebies tossed their way, but the FTC doesn't seem to think they deserve the same level of attention."

A post from Susan Getgood at Marketing Roadmaps actually looks at official documentation (pdf) from the FTC. It's quite a lengthy document, and published in 2007, it's the most recent document from the FTC on the issue. She sums up three main points from the document related to bloggers:

1. Liability for false statements in a sponsored post

2. Disclosure of receipt of free product

3. Anti-astroturfing. Requires disclosure of material interest when making an endorsement.

For each of these, she pulls quotes from the official documentation. Keep in mind, this document is a request for public comment. Getgood takes the stance that bloggers are perhaps blowing the effects of such regulation out of proportion.

"So what’s the big deal? Doesn’t this all make sense?" she asks. "It will come as no surprise to readers of this blog, but apparently to some: businesses do not always act in the best interests of consumers. Sometimes they even lie. That’s why we’re in a recession."

So I ask you, what do you think of the FTC's intentions? Do you think regulation is in order? Comment.

Twitter the Most Dangerous Network?

Crowd Science revealed some interesting findings from a survey on Twitter use today. It would appear that Twitter is the most used social network by drivers. I'm not sure if that's the kind of endorsement Twitter wants (the most dangerous network), but its short-form texting-like format caters to the mobile user.

"Twitter is more of a mobile media phenomenon than other social networks, so these results, while a little disturbing, are perhaps not so surprising," noted John Martin, CEO of Crowd Science. "And even though checking updates outpaces tweeting by almost two to one, the bottom line is that either type of activity takes a driver's attention away from the road."

According to Crowd Science, about 11% of Twitter users admitted to accessing social media while driving in the preceding 30 days, compared to only 5% of other social media users. 29% of Twitter users said they had accessed social media from cars at some point in the past, compared with 13% of non-users.



Additional Findings from the survey:

- twice as many Twitter users as non-Twitter social media users (8% to 4%) had accessed any social media from a theater during a movie or live performance (during the preceding 30 days).

- During the same period, 17% of Twitter users vs. 12% of non-Twitter social media users had accessed social media from a washroom or toilet.

- nearly three times as many Twitter users as other social media users have accessed social media from restaurants (31% vs. 12%).

- 40% of Twitter users access the service via mobile at least sometimes (compared with 32% for Facebook users, for example), and 8% use mobile all the time (vs. 3% for Facebook).

- 41% of Twitter users prefer to contact friends via social media rather than telephone, compared with 25% of non-Twitter social media users, and 11% (vs. only 6% of those not using Twitter) actually prefer social media over face-to-face contacts.

- 14% of Twitter users said they have revealed things about themselves in social media that they wouldn't under any other circumstances. Then again, 8% admitted to "frequently stretching" the truth about themselves online.

- More than twice as many males than females (32% to 15%) access Twitter primarily through a third-party application.

- 43% of Twitter users employ a third-party application at least some of the time, and 26% as their main mode of access.

- Twitter users tend to be older than non-Twitter social media users (54% over 30 years old, vs. 42%), twice as likely to be self-employed or entrepreneurs (18% vs. 9%) and to be planning to start a business during the next six months, and more tech-savvy (24% vs. 15% "buy gadgets/devices when they first come out," 48% vs.

- 30% have created a website, and nearly four of ten (37%) currently maintain a blog, twice as many as non-Twitter social media users).

The study was conducted among over 600,000 visitors to multiple websites within Crowd Science's open research network. The survey targeted social media users age 12 and up, and was conducted August 5-13, 2009. They have another study on MySpace on the way.

 

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