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Social and mobile gaming company Zynga (NASDAQ:ZNGA) has taken a page out of Facebook’s (NASDAQ:FB) strategy manual and is developing its own advertising platform that it hopes will not only generate revenue, but also help attract more big-ticket game developers.
Sources close to the company – which has been hurting as of late to find the next hit game – say the ad network is still under construction, but parts of it could be up and running by the end of the year.
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The initiative is a bold foray into third-party advertising for Zynga, which has heretofore remained relatively quiet on the advertisement front, gathering the majority of its revenue from the sale of virtual goods. However, such virtual goods sales come with a hefty price – that is, a mandatory 30 percent kickback to Facebook – and Zynga appears eager to create a revenue stream for itself that would eliminate the middleman.
Building its own advertising network is one way to do that, and Zynga has placed longtime Chief Technology Officer Cadir Lee in charge of the operation that is expected to significantly boost ad revenues, which currently account for 12 percent of the company’s overall revenue.
In addition to boosting ad sales, Zynga hopes the platform will offer a more “complete package” to mobile game developers that are looking to bring new games to the market. Winning the business of those developers is a key to Zynga’s success, and these recent plans to unveil its very own ad platform signal Zynga’s willingness to do whatever it takes to lock up those developer relationships in the future.
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