Membership has its privileges — even in the virtual worlds of social games. Zynga, the maker of FarmVille, Mafia Wars, and other social games, is announcing today that you can use your rewards from American Express credit cards to buy virtual goods in its offerings.
The strategic relationship is a first between a social game company and a major credit-card rewards program. The American Express Membership Rewards program gives rewards to cardholders in the form of points. Users who play Zynga can take their American Express points and spent them on virtual goods in increments that are as small as 200 points, which is enough to get you a $2 gift card that you can spend on items in the game. A purple cow in FarmVille, for instance, costs 540 American Express points.
For students of consumer behavior, the implications of the deal are mindblowing: It’s the ultimate union of two virtual currencies.
Sponsored by VB
American Express helps Zynga achieve one of its longstanding goals: convincing mainstream consumers that the virtual goods in its games — which have no physical embodiment and are really just digital ones and zeroes — have value in the real world. Some people think it’s silly to buy virtual goods in a social game because customers are using real money to pay for something that doesn’t exist.
Frequent-flier miles and credit-card points are often seen in the same light. For whatever reason, consumers prize them more highly than their real value ought to imply. For cardholders with spare points lying around, the frivolous fun offered by FarmVille and other games might seem like a harmless way to use them up. And then, Zynga hopes, they might start forking out real cash.
As Zynga chief executive Mark Pincus has said, people are willing to go to the movies and pay money to see a show, even though they don’t walk out of the theater with anything but a ticket stub. In many ways, consumers have come around to that point of view.
Facebook struck a deal with Target stores to sell Facebook Credits gift cards, which can be used to pay for virtual items in Facebook apps. And Zynga itself has a deal with the 7-Eleven convenience store chain that lets users buy gift cards and other goods that can be redeemed for virtual goods in five Zynga games.
But the American Express deal is perhaps the biggest attempt yet to win over mainstream consumers. It is also an indicator of how popular Zynga’s games have become, as more than 225 million users play the company’s games every month. While Zynga is only about four years old, it is now cutting deals with some of the biggest brands on the planet, and that should help it set itself apart from its smaller social game rivals.
The small redemption value means that credit card users will be able to spend their membership rewards quickly on limited-edition Zynga items, rather than have to wait a long time before they can redeem the rewards.
Jonathan Flesher, general manager of business development at San Francisco-based Zynga, said in an interview that American Express and Zynga are logical partners for demographic reasons. A lot of Zynga’s players are older women and mothers. Comedian/talk show host Ellen Degeneres is American Express’s leading spokeswoman in commercials, and Amex’s customers are also mostly women. AmEx cards are also a very common means for paying for virtual goods in Zynga games, Flesher said.
Both companies will market the other partners’ program to their users. But Flesher isn’t sure if the American Express deal will lead to more Zynga users. Rather, he thinks the main benefit will be that current Zynga users will be happier and more likely to stick around.
While the relationship doesn’t currently flow back the other way — allowing, say, FarmVille players to earn Membership Rewards points — it would be intriguing if it did. Zynga could probably teach American Express a thing or two about how to make a rewards program more fun.
There’s already an element of gaming in rewards programs, with avid points collectors scheming to maximize their rewards. But Zynga could take that application of game concepts to non-game activities — a movement known as “gamification” — to the next level, Flesher said.
“There is potential for that,” Flesher said. “But it is not something we have in the works. The potential for gamification of retail experiences is there. I wouldn’t be surprised if, in the future, you could add a layer of gaming on top of the massive database of items and users that credit card companies have.”
VB’s research team is studying mobile user acquisition: Chime in here, and we’ll share the results.