Monetization Options For Facebook Application Developers March 5, 2008
Posted by Andrew Wee in : Internet Marketing, facebook , trackbackIn a couple of hours time I’ll be on the panel at the second Singapore Facebook Developers Garage, which features the topic: “Marketing and Monetization of FB Applications: Hype or Goldmine?”
The session moderator Bernard Leong has posted a kickoff post: Marketing and Monetization of Facebook: Prologue
If you’ve spoken to me or exchanged emails, you’ll know that I’m a pragmatist at heart. Having see the rise of the dotcoms and dot-crashes soon after, I’m certainly not in this application if the end result of facebook monetization is mere “hype”.
Talking to Jason Bailey, whom I’m helping to launch his $uperRewards FB monetization system, I’ve seen the applications and case studies of successful FB applications which are making $100,000 – $200,000 a month.
These applications are probably in the top 5% of Facebook applications that turn a profit and a huge profit at that…and the reality of any capitalist society is that you must benchmark yourself against benchmark yourself against the leaders, rather than the other 90% of Facebook developers who are merely scrambling to find two nickels to rub together…
A business must be able to generate positive cashflow and must be able to sustain a comfortable lifestyle for the application creators. Anything less and you’re running a charity.
Let’s break this down for a moment…
An “average” application might generate $10,000 to $15,000 a month, which could be fairly reasonable…until you break that $15,000 by 30 days, or $500 a day.
$15,000 a month or $500 a day, with an assumption of 50,000 daily active users means you are generating 1 cent per daily user…that’s pretty pathetic…
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Instead, if you want to go big with Facebook Applications, you need to define your goal and reverse engineer the process.
I think $100,000 per month is a decent benchmark. (as a starting point…)
With an average of 100,000 daily active users that’s an average revenue per user (ARPU) of $1 per user per month.
Which is going to be hard to achieve if you’re using “traditional monetization” routes like CPM (pay per 1,000 impressions) or CPC/CTR (pay per click) methods like most applications are doing.
Some of Jason’s findings:
Based on the BEST case scenario for a CPM payout of $2 per 1,000 eyeballs, that’s going to take a lot of churning to reach that level.
Adsense and other CPC measures could perform even worse with a $0.05 pay per click payout (with a clickthrough rate of sub-1%).
Here’re 4 other “traditional” monetization systems:
You can pretty much expect all these to underperform because using these website monetization media to try to monetize off a dynamic application is like putting a motorcycle engine into a Ferrari…the $*#&@ thing just won’t fly.
Among the reasons why it doesn’t work…
- Banner Blindness
- Irrelevant ads being served up
- Horrible CTRs
- Zero marketing support
- Low trust
The key factor is that these systems are prime examples of interruptive marketing.
Most application developers will shove these ads and banners at the top or bottom of their app as an afterthought…
So if your clickthrough rate is 0.05%, you’ll know why…
Instead to construct a commercially viable Facebook Application, the monetization systems need to be integrated into the application design. Do the equivalent of product placement where you see the BMW automobile or Omega watch in a James Bond movie. You can’t really do a Tivo timeshift out of that, can you?
Better yet, integrate your monetization system into the heart of your game logic and development process…
If completing an offer is part of the application, you’d be able to see the 75% CTRs that have formed the foundations of $uperRewards payouts…
The above stats for $uperRewards applications $10-50 earnings per 1,000 daily active users. CPM of $50-300. CPC revenue of $0.15 – $0.20 with CTR of 75%.
For more information, visit: $uperRewards
Popularity: 12%
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“anything less and you’re running a charity”…. I think that’s backwards: Here in the states, the Charities are big money, with the CEO making more than they would potentially make in a private sector job.
It’s actually sad, and has resulted in a big change from a giving standpoint.
Thanks for reminding the flaming liberals in our midst that the world is a capitalist place, and the “good stuff” that comes from the system costs money somewhere along the line.
Adolph
I wasn’t so much refering to the “only 10% of your contribution ends up at your chosen beneficiary” type of charity, but the traditional charity.
Having said that, I’m one of the “flaming liberals” you’re alluding to, although I’m well aware that I can’t feed my family “branding”, “traffic” or “mindshare”.
[...] of the panel, you can check out BL’s blog for his thoughts and questions for the panel and Andrew Wee’s thoughts before the panel on monetisation. For the pictures of the event, do check it out in the Singapore PHP User Group’s photo [...]
When you talk of intergrating the monetization system in to your process what do you mean?? 75% CTR I would realy like to see that happen on my application…
[...] and questions for the panel before the event stimulated the minds of the attendees, followed by Andrew Wee’s musings before the panel on monetization. Consisting of 2 other panelists – Kien Lee, a FB app VC, and [...]
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Hi,
We would like to co-operate reg building an application on Facebook.
rgds.
Jolanta
[...] Monetization Options for Facebook Application Developers – Andrew Wee looks at ways to monetize your Facebook applications. [...]
[...] Monetization Options for Facebook Application Developers – Andrew Wee looks at ways to monetize your Facebook applications. [...]