After Facebook Bans FishVille, Zynga Pulls Plug On All Performance-Based Ads

More fallout from the media backlash surrounding the performance-based ads that social gaming companies like Zynga have been using to monetize their games. Zynga CEO Mark Pincus said that the company will be removing “all CPA [cost-per-action] offers” from its games until further notice. This comes after Facebook banned Fishville — one of Zynga’s newest games — after finding that it was serving users ads that violated the social net’s terms and conditions.

TechCrunch reports that FishVille’s ads were deceptive because they don’t clearly explain that to “complete” the offer (and get virtual coins in the game), users need to subscribe to a $10-$20 monthly mobile service; the ads also don’t ask users to opt-in to supplying their personal information. While MySpace formally updated its ad policies with regards to these kinds of in-game ads, Facebook kept mum. The FishVille ban seems to be a more definitive response to all the negative press.

For Zynga, the Facebook ban is a big problem — the company can’t monetize FishVille as long as its offline — but it also makes Pincus’ (pictured) previous blog post about Zynga’s efforts to clean up its ads seem farcical. So now the damage control comes in the form of a more definitive statement about pulling the plug on all of the offer-based ads, though Pincus still shifts much of the responsibility to social media ad network doubleding, which he says the company helped fund:

“i want to be clear that zynga had no control over the pages being shown … with regards to yesterday’s incident, the offer provider, doubleding, told us this was the result of their failure to remove an optimization queue which was still showing these ads to 10% of pageviews” (The lack of capitalization is his). Moving forward, Pincus says Zynga won’t user offer-based ads unless it controls their “inclusion and presentation” to users.

This shift by Zynga away from using companies like Offerpal and doubleding to serve its ads will likely be mimicked by some of the other social gaming firms (expect a flood of “we don’t use scammy ads” press releases); this will stunt the growth of those companies and the CPA ad business for social networks overall. But Zynga and its rivals have also maintained that the majority of their revenues come directly from users — not performance or display ads — so the switch will likely only incrementally impact their own performance in the long run.