Facebook's virtual gifts – money well spent?

In a post at VentureBeat yesterday, Eric Eldon shared some estimates that suggest Facebook’s revenue from virtual gifts this year will be in the range of $28 million to $43 million. That’s a serious amount of coin for nothing more than an image on a web page.

Gifts are priced at $1 each, and the study found that an average of 470,000 are sold each week.

Facebook introduced the gifts feature in February of 2007. A gift is simply an image of something, like a heart, a flower, or hundreds of other options, that when given, shows up on a “gift box” in a user’s profile. If the gift is public, then the recipients’ friends can see it, too. If it’s private, only the recipient and the giver can see it.

I think the key there is “simply an image”. This is definitely one of those things where you can’t help but think “why didn’t I come up with that!”

Clearly, gifts are a good source of income for Facebook. I wonder who buys them though. Why are people so happy to pay $1 for a bunch of pixels on a web page?

Surely that $40 million could have been spent on something better?

6 thoughts on “Facebook's virtual gifts – money well spent?

  1. “Why are people so happy to pay $1 for a bunch of pixels on a web page?

    Surely that $40 million could have been spent on something better?”

    Why are people to happy to spend to many hours a day on Facebook doing not a lot?

    Surely those 100s of hours coulld have been spent on something more productive?


    People are funny beasts. Find a way to take their money.

  2. I only use the ‘FREE’ ones. Sure I could spend a whole $1 but I’d rather not leave my creditcard number on Facebook 😉 bad enough they have full rights to photos I upload, right?

  3. I think the key is that they are only $1. That’s the most brilliant part of Facebook’s idea. It’s not that they’re selling “nothing,” it’s that they’re selling it for a low enough price that people are willing to say, “Hey, it’s only a buck.”

    To the guy that wants to send his girlfriend a little red heart on Valentine’s Day, it’s only a buck. To the girl who wants to send a virtual teddy bear to a sick friend, it’s only a buck.

    Yes, these people are spending $1 on “nothing,” but to most people, a single dollar is the monetary equivalent of nothing. People view a dollar almost the same as they used to view a penny.

    If Facebook raised the price of these virtual gifts by even a single dollar (to $2 each) I bet they’d see a huge drop in sales.

  4. Now what would make the world of difference (I feel) is if they had a decent micro-payment system, so people could completly be devoid of “paying” – people now associate whiping out their CC with paying. Premium SMS would work well in this situation.

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