Selling Virtually Nothing for Literally A Lot

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How brilliant are the facebook virtual gifts?

Not only do they sell the absolute most random “things”, but they’re all only $1. Who doesn’t think $1’s worth a bit of a laugh at least? It’s the perfect impulse buy.

And apparently, it’s darned lucrative. The gift application is estimated to bring in between $28,500,000 and $43,500,000 in revenues to facebook per year. And since it requires no physical inventory and no actual shipping, it’s pretty much all profit.

But as in any online search and/or shopping scenario, somethings always stay true. As I recently read on CNET News:

“The vast majority of Facebook gifts are bought from the first screen of gifts in the directory–almost 80 percent of the total sales come from the group of the first 20 gifts. This points to the self-reinforcing nature of popularity (the crowdiness of crowds rather than the wisdom of crowds) when popularity data is made public.”

The first sentence is obviously true in any search engine. People tend not to click past the first page of google query results, for example, or purchase items “hidden” further in a store’s online inventory.

Re the attraction of “the crowdiness of crowds” vs. “the wisdom of crowds,” well that’s a philosohpy of its own.

It’s quite likely that facebook virtual gifts do not feature dynamic adjustment to reflect shoppers’ actual purchases. It’s more likely, certainly for the homepage gift offering, that the recommended “product” is one suggested internally by the big brains behind facebook. So this would of course support the crowdiness theory.

On the other hand, google, as far as we know, is more wisdom based, with a fine tuning of display results between links, clicks and relevance.

Either way, it turns out, it’s good to be on top.

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