Loading ...If you’re thinking of building Facebook application, and using the application as a direct means of generating an income (i.e. it’s not just another channel for advertising your core business), then you’ll definitely want to know exactly how much a Facebook user is worth ($0.30, $0.50, $10, $12 a day per 1000 users?), the number of Facebook users within your target demographic (10, 20,000, 6 million?), and the possibility of another application already offering, or an upcoming application intending to offer, the same functionality. Where do you go to find this information?
It may feel like old hat to savvy Web technologists, but the Facebook platform, and the potential for money making on this platform, are hardly well documented. Take a visit to the Facebook developer discussion forum, and you’re more than likely to find a query on the Google Adsense TOS, and a developer eager to know whether or not their account will be banned for integrating Adsense JavaScript into their brand new Facebook app. You’ll be glad to hear that many other developers have acknowledged that they themselves are successully using Adsense in apps, and that the Google support team have even given them the official go ahead (although, at the same time they’re also saying that Adsense cannot function contextually in FB - not good). However, the fact that these questions are still being raised really indicates how far the F8 platform can go towards being a stable and effective monetization platform.
Finding the information
In my own search for the facts on making money from Facebook apps (and I’m still searching), I’ve found several resources which might be useful to anyone considering the financial feasibility of their Facebook project. So if you’re in the market, you’ll want to make sure that you’ve read through these first;
- Developer Forum: A search for ‘money’
- Dave McClure: Measuring user engagement
- TechCrunch: How much is a Facebook user worth?
- Inside Facebook: Modelling app growth
- All Facebook: The ROI for Facebook Advertising
- J-Squared: The whole blog is worth reading
(If you happen to know of any other resources, please add them in the comments.)
Make it Relevant
Now that you’ve gathered the latest facts from across the Web, how to you put these in to the context of your own project? Putting aside the initial teething problems that some have encountered in midst of monetizing their app, and the fact that Facebook themselves haven’t released any of the promised revenue sharing features yet, there are some steps that could help determine the financial feasibility;
1. How many people on Facebook would want to use your application? Try to determine the age, location, personal interests, existing application preferences, and overall Facebook habits of your target user. And if you want this project to be a success, you yourself really should be part of the target user-base. You wouldn’t open a guitar shop without being a guitarist first.
2. Figure out a realistic value for a Facebook user, based on suitable research from across the forums and blogs included above. Bear in mind that some of the commentary will be wildly optimistic, and some of the stats will cover the revenue generated from adnetworks that you don’t intend on using.
3. Determine the potential take-up rate of your new application, bearing in mind that the Facebook application directory is becoming increasingly crowded, and that users are now even less receptive to trying out new apps than they ever were. Depending on how long it will take to get your app to market, you’re going to need to calculate a much slower growth rate than the team at iLike have experienced. If you’re planning months in advance, what’s to say that the FB app network will be any more effective for your business than the wider Internet will be? A dotcom is a clean sheet - all the screen resolution is yours. A facebook app, on the otherhand, is contained within a whole load of attention grabbing entities - the facebook header and container, other apps, users, inbox, news feed, notifications - the list goes on. Consider the difference between a Facebook application and a dotcom as a direct comparison to the difference between explaining your business in a packed-out conference, in contrast to explaining your business in Starbucks. They’re wildly different environments.
4. Attempt to predict the future by calculating your revenue. Intelligently apply all the data that you’ve sourced in parts 1 - 3, and make a decision on whether or not to build your app as a money-making venture. You could go into all kinds of detail here, including the use of ‘multi criteria decision modelling’, ‘decision support systems’ with three or four alternative financial scenarios for your project.
5. Get all of the above done asap, and get on with building an engaging application. Ultimately, though, you just need to know that your app will work. If you reached step one, you knew your app was a good idea anyway - doing the financial analysis just helped to justify your idea. Functionality and virality will determine how successful your app is, not the detailed financial analysis. Financials need to be done, but the fun-factor is king.
