Thursday, November 26, 2009

Zynga: an America's Hottest Brands Case Study

When Mark Pincus looked around the internet in early 2007, he noticed something was largely missing: fun.

"It was all utility," he recalled. "It was Amazon, eBay, Craigslist, even Facebook was a social utility." It was also about the time that Facebook opened up its platform to outside developers,and that led Mr. Pincus to build his social-gaming company, Zynga.

Its popular games -- "Mafia Wars," "Texas Hold 'Em," "Farmville" and "YoVille" -- have helped the company quietly become a big player in the expanding social-media space, with a daily user base of 50 million, per, and one of the early examples of a real, major revenue driver in a space still struggling to prove it can be a big business. (Annual revenue estimates vary between $100 million and $250 million by industry watchers, and we may soon find out the real number if the company goes public as some are suggesting.) It's worth watching for its virtual economy, driven by users purchasing points and virtual goods for games. The other half of the business is generated by ads and partner offers; players can fill out a survey or buy services from Zynga partners for more points.

Zynga came under fire for several less-than-reputable offers showing up in its games. Techcrunch surfaced video from last spring of Mr. Pincus recounting Zynga's early quest for financial independence to a crowd of developers. "I did every horrible thing in the book just to get revenues," he said -- and the CEO spent early November backpedaling in an effort to save Zynga's reputation. In the end, he decided to remove offers from Zynga.

"My mission is to build Zynga into a sustainable consumer service with enduring value to our users," he said in a blog post. "We will continue to do whatever it takes to earn our users' trust and respect for the long-term."

For Zynga, user experience and trust is everything, as its players are its best marketers: The game play taps into the network effect of social media: People invite their Facebook and MySpace friends to play games, and, in turn, invite more in.

Its next move? "Smartphones," Mr. Pincus said. "They're the next frontier in social gaming." 

Zipcar: an America's Hottest Brands Case Study

Tony Pettinato
How has Zipcar boosted its membership more than 40% in the last year? By not really focusing on the whole car thing.

"Our vision is to build a global lifestyle brand," said Zipcar Chairman and CEO Scott Griffith. "Its not about cars, it's about urban life. We're creating a lifestyle brand that happens to have a lot of cars."

But since the car-sharing service is in 12 cities in North America plus London, media campaigns can't really reach the brand's target audience: urbanites within 10-minute walking distance of its cars.

"Even with today's highly targeted web, it's hard to target at that hyper-local level," Mr. Griffith said, adding the brand has marketing teams in each city that report back to Zipcar's Cambridge, Mass., headquarters. "So, our street teams do it block by block, zip code by zip code."

That initial strategy was put in place nearly five years ago and has since evolved to include some local web ads, transit advertising, PR and car fleets that are tailored to local Zipsters -- what the brand calls its members. In Seattle and Portland, Zipcar has cars equipped with bike and ski racks, as well as passes to get Zipsters into local parks for free. On the less-outdoorsy coast, that city-specific customization looks like transponders in the toll-ridden city of Boston.

On the street, Zipcar aims to exhibit the need for car-sharing in potential customers' neighborhoods. In Washington D.C., street teams planted a couch on one busy sidewalk with the sign "You need a Zipcar for this." The brand has also entered into partnerships with local businesses such as dry cleaners and coffee shops.

This year the brand also launched its second Low-Car Diet, one of its few all-market efforts, where it asked urban residents in all its 13 cities to give up their cars and blog about it. Zipcar partnered with a bike company to give away a free bike to one dieter per city, had fitness experts at related events and created a content partnership with Everyday Health. Surveyed dieters reported spending 67% less on vehicle costs compared to previous months with their own cars. Plus, nearly half of them said they lost weight.

Tapping Zipcar customers to evangelize the environmental, health and cost benefits of car sharing, and aligning itself with those warm, fuzzy qualities, has paid off for the brand. The company reports 30% of new members come to the brand because of existing Zipsters.

All that adds up to 325,000 members at third quarter, and that's just the beginning. This year, Zipcar issued a study of 75 global cities that estimates a potential global car-sharing market of more than 37 million members and annual revenue exceeding $10 billion.