Zynga 2011 Annual Report Download - page 8

Table of Contents
Advertising
Our advertising services offer creative ways for marketers and advertisers to reach and engage with our players. The goal of our
engagement-based advertising is to enhance the player experience while delivering real value to advertisers. Our advertising offerings include:
Our Technology Stack
We have invested extensively in developing our proprietary technology stack, which has the ability to handle sudden bursts of activity for
millions of players over a short period of time with high levels of performance and reliability, to support the growth of our business. Our
proprietary technology stack includes datacenter and cloud computing management, a shared code base, network and cross-
promotional features,
proprietary data analytics, monetization and internationalization. Our technology stack also supports the growth of our 2D and 3D game engines
across the mobile business on both Flash and HTML5 in addition to supporting high-level security and anti-fraud infrastructure. We believe that
our technology stack is a competitive advantage and we will continue to innovate and optimize our stack to extend our technology leadership.
Marketing
We acquire most of our players through unpaid channels. We have been able to build a large community of players through the viral and
sharing features provided by social networks, the social innovations in our games and the network effects of our games.
We are committed to connecting with our players. We have fan pages, generally on Facebook, for each of our games to connect with our
players; and we leverage various other forms of social media, including Twitter, to communicate with them. We periodically host live and online
player events. We also use traditional advertising activities, primarily online advertising spending on Facebook.
Addendum with Facebook
To date, we have derived substantially all of our revenue and acquired substantially all of our players through Facebook. We expect to
continue to derive a substantial portion of our revenue and to acquire a substantial portion of our players from the Facebook platform for the
foreseeable future. We have an addendum with Facebook that modifies Facebook’s standard terms and conditions for game developers as they
apply to us and that governs the promotion, distribution and operation of our games through the Facebook platform. This addendum requires the
use by us of Facebook Credits as the primary payment method for our games on the Facebook platform and requires Facebook to remit to us an
amount equal to 70% of the face value of Facebook Credits purchased by our players for use in our games. This addendum with Facebook
expires in May 2015.
Intellectual Property
Our business is significantly based on the creation, acquisition, use and protection of intellectual property. Some of this intellectual
property is in the form of software code, patented technology and trade secrets that we use to develop our games and to enable them to run
properly on multiple platforms. Other intellectual property we create includes audio-visual elements, including graphics, music, story lines and
interface design.
4
•
Branded Virtual Goods and Sponsorships
that integrate advertising within game play;
•
Engagement Ads and Offers
in which players can answer certain questions or sign up for third party services to receive virtual
currency;
•
Mobile Ads
through ad
-
supported free versions of our mobile games such as
Words with Friends
; and
•
Display Ads
in our online web games that include banner advertisements.