Introducing The Global Bank Of Facebook

The implications of Facebook's recent announcement that it is now in the movie business have begun to take shape. You can now rent several of Warner Bros.' biggest hits, including The Dark Knight, Inception, Yogi Bear, Life as We Know It or either of the first two Harry Potter movies for $3 or $4 or 30 or 40 Facebook credits. This is essentially the first time you've been able to buy something that costs money in real life using the social currency of Facebook.

This may or may not seem like a game-changer to you. Literally millions of consumers have been using the credits for about a year now to supplement their social game experiences. You can, in fact, put down your credit card and buy as many credits as you want for 10 cents each, with discounts when you buy large quantities. You can even buy Facebook credit gift cards at lots of retail stores. Facebook credits are virtual currency that can be spent on virtual goods (virtual farmland, outfits for your avatar, virtual food, treasure, new abilities, etc.) within apps and social games played on Facebook, like FrontierVille and Farmville. These credits cannot be sold to or given to other players, and until now they had no real monetary value.

The concept of virtual currency is itself anything but new. We've seen many companies like IGXE.com pop up and happily sell you gold in World of Warcraft or currency in 70 other massively multiplayer games. And for more than six years you've been able to buy real estate in Second Life (anyone remember Second Life?), if you just gave them your credit card number.

In fact, Linden Lab, the creator of Second Life, says the Second Life economy generated roughly $3.6 million in virtual sales in the month of September 2005, and as of September 2006 Second Life was reported to have an economy of more than $60 million. That was $60 million in real money being exchanged for a virtual currency called "Lindens" that players in the game used to dress up their avatars or buy and furnish their virtual homes.

But here is why we really need to pay attention. Unlike World of Warcraft, with 12 million players, or Second Life, with 20 million registered users at its peak, Facebook currently reaches more than 600 million people and is still growing. It is 50 times the size of World of Warcraft and 30 times the size of Second Life at their biggest.

Also, Facebook is its own reserve bank, meaning it has complete control over the value of its credits. It has arbitrarily decided to make them 10 cents each for now, but what will happen when demand for the credits goes way up, let's say for a limited or exclusive product release, or Super Bowl tickets? What reason will Facebook have not to simply "print" more money? Or to split it like a stock? I'd like to have my hands on a few million credits when they split. Wouldn't you? Especially if I can use them to make purchases on Amazon.

And although most consumers won't likely jump at the chance to watch a movie on Facebook, they will certainly be willing to buy other goods and services there, just because it will be easier and possibly even cheaper (through volume discounts such as you find on Groupon or Living Social) than elsewhere.

What retailer wouldn't want to move their online store to within one click of 600 million worldwide users?

And think about this: At present ads on Facebook are sold on an either cost-per-thousand or cost-per-click basis. Marketers buy the ads and then figure out their return on investment based on how many people click on them, "like" them (remember the value of a "like") or take some other action (sign up for a contest, download, etc.). Imagine if instead of trying to guess at ROI, a retailer could literally get someone to buy something without having to leave Facebook? Closing the loop that way on ad effectiveness would in some ways make the Facebook ad marketplace as powerful as Google's. It would be another big reason to put your online store on Facebook.

So now we have two reasons to put your store on Facebook: to make it easy for 600 million shoppers to find you and because you can tell exactly what your ads on Facebook are worth to you in real U.S. dollars. Or in Facebook credits. Or whichever is still around in 20 years.

Anyone want to start a Facebook Bank?

Note: The government will very likely step in long before Facebook credits become a ubiquitous form of currency. And there are many laws governing how any currency can be used to make purchases in the U.S. But you certainly want to pay attention any time a new currency is introduced to a population twice the size of the Unites States. Keep your eyes and ears open on this one.

Dave Martin is senior vice president for media of the marketing agency Ignited.

Thanks to Forbes