[casual_games] Portal Sales

[Alex St. John]

Big question, let me see if I can do this justice.  Advertising is a lot of work and expense to sell.  The major portals have large sales forces that get very large commissions for selling advertising media.  Setting gaming aside, in general ad networks share about 50% of the ad dollars they sell with the portal partner that carries the ads.  Of course they try hard to hide their actual cut of the sales in general it's around 50%.  Rev share on advertising is very different from rev share on a credit card sale of a game because it's a lot more work and expense to sell media than it is to process a credit card transaction.  A guideline for calculating a "fair" share of ad revenue from a distribution partner is to take your rev share % of 50% of the ad dollars.  So if portal X sells $1 in media, and your rev share on game sales is 30%, then .50*.30 = 15%.  
   
  It's not as simple as this however because the truth is that in a game network with 200-500 titles only 25-40 games account for 80%+ of the traffic.  Thus there are really only a few  games that are worth negotatiating ad rev share on.  The other challenge for portals is accounting.  I won't belabor the details but actually tracking the specific ad dollars accrued to a specific game is very difficult to impossible because ads aren't usually sold for a specific game, they're sold in packages across a portal and knowing what % of the ad buy corresponds to a specific game is often unknown.  The best a portal can do is estimate, or make something up, which doesn't look good in a contract.  We did a lot of work around solving this accounting problem with WildCoins, but of course that solution is unique to our network.    
   
  My advice to developers would be to negotiate agressively for ad revenue if you think you have the next Bejweled or Cakemania, but otherwise take what you can get.  
   
  *Note that this statement will come back to haunt me, so my price for sharing this information is that you can't use it against my content aquisition guys in a negotiation.  :)
   
  -Alex
   
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  ((If they're running an ad network on their site, they may generate an 
incremental 35K-50K/mo in advertising revenue from that traffic.)) I'm 
reading in this and other forums that portals are willing to negotiate some 
of the incremental advertising revenue with developers. Can you give us a 
whiff of what the criteria a developer has to follow to share in that 
revenue and what is the % portion for star performing content vs newbies, 
with little or no track record? Your comments here are most appreciated. 
Thank you. 


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