How IMVU Makes $1 Million a Month through Virtual Goods

Today Offerpal announced a partnership with IMVU, an avatar-based social network and virtual world, to enable users to earn IMVU credits by taking part in Offerpal’s targeted advertising offers. With more than 35 million registered users and 5 million unique visitors per month, IMVU is clearly doing something right in terms of growing its user base. But a deeper look into IMVU’s virtual economy demonstrates that the company is doing something right in terms of monetization as well.

IMVU engages its users with their virtual economy from the very beginning of the user experience. You’ll earn 1,000 credits simply for setting up an account and picking an avatar. Then, for installing IMVU on your desktop, you’re given a free “room” plus a few additional virtual goods. This gets the user accustomed to interacting with IMVU’s virtual goods and starts them down the road to wanting more.

Once you’ve registered an account, you are offered 500 credits for verifying your email address, a simple enough task that any user would be foolish not to complete. And yet, this verification is very important for IMVU in that it assures them of the validity of their new user’s data. The user gets an easily-earned 500 credits and IMVU gets a qualified user…a win-win.

Dual-currency system helps train new users

So now you’ve registered for an account, verified your email address, and you’ve received 1,500 credits to go spend. But wait, these are called “promo credits,” or “predits,” which are almost as good as the real thing but not quite. Predits are like a bicycle with training wheels – they let you test out the experience and give you enough training so that pretty soon you’ll be off and running for real. Predits can be used to purchase most virtual goods, like clothes and accessories for your avatar, but not others, like music. And, the 1,500 threshold is just enough that you can purchase an item or two — just enough to whet your appetite for more — but not enough to purchase more than that, so you’re still likely to want to purchase more credits or fill out ad offers to earn more.

Promotion is key

IMVU does an excellent job of promoting their virtual goods and virtual currency as well. One of the first messages you’ll receive in your inbox tells you who designed the clothing and accessories you selected when you first created your avatar and invites you to check out their other cool designs. Another message offers you a free sticker to place on your profile page and explains how you can get more. Another offer — from Miss Greenbacks, the official banker of IMVU and “giver of sweet deals” — gives you half price on up to 20,000 IMVU credits to be used in customizing your avatar. And yet another offer lets you earn 5,000 credits by playing the “double credits game,” in which you get paid to chat with friends. All of these promotions engage the user with IMVU’s virtual economy while simultaneously increasing usage and in some cases adding new users through viral marketing efforts.

Merchandising virtual goods

IMVU’s store itself presents a lesson in merchandising that other publishers can take lessons from. Users can browse the store by product categories — Tops, Rooms, Actions & Poses, etc. — or they can shop by interest, such as Urban, Goth, Punk or Vintage. They can even narrow their searches by sub-category, designer, or price. Every item comes with details on its own page and can be added to a wishlist or given as a gift. It’s almost like Amazon.com for virtual goods. Check out the screenshot below.

Creating a capitalistic economy

Another really smart thing IMVU does in their virtual economy is tap into their user base to create virtual goods on their behalf. This allows them to grow their catalogue — which already includes more than 2 million digital goods developed by more than 100,000 users — at an unprecedented rate, while also saving the company considerable money in development and design costs. At the same time, users are rewarded for designing new goods by earning credits whenever their items are sold through the catalogue, putting even more money back into the economy. The designers are given complete control over the pricing of their goods and can even mark their products as “derivable,” meaning they can share them with other creators so they can make new products based on the original (and get paid any time the new product is sold).

Conclusion

There are many takeaways that can be learned from looking at IMVU’s virtual economy:

• Get your users involved early and often in the economy by giving them some “starter” currency and showing them how they can spend it
• Consider a dual-currency system in which your users can test out your economy without a large up-front commitment
• Promote your virtual goods and virtual currency heavily and in a way that makes sense contextually
• Merchandise your virtual goods like a traditional retailer
• Tap into your user base to design virtual goods for you and create a capitalistic economy

With more than $1 million in monthly revenue — 90% of which comes from the direct sale of virtual credits used to purchase digital products — IMVU is giving the rest of the social publishing industry an excellent model to follow.