There are several startups gunning to be the top Facebook ad platform: Lookery, FBExchange, RockYou, and Cubics. SocialMedia also became one of the early players when they launched their Appsaholic advertising network soon after F8. Previously only a select group of developers were able to sell ads through the service. However, they’ve now opened it to everyone through a self-service model, and some developers are making some real cash off of the service.
Appsaholic isn’t banner advertising like Lookery offers, or developers can get through traditional ad networks. Instead, Appsaholic sells click-throughs to other Facebook applications across their network of affiliated sites. It’s similar to FB Exchange’s link exchange model, but has more features (reporting) and seems easier to use (FBEx requires separate filings, Appsaholic can use PayPal). They have plans for other models as well, including a advertising that rewards users for engaging in advertisements.
How It Works
Developers become a member of the network by tracking their application on Appsaholic and adding some embed code to their application. The embed code adds an iFrame that serves paid links on their affiliates’ applications. The links go to the highest “AdRanked” advertising developer on their live bidding market. AdRank is determined by multiplying two factors, the offered price per click, and the advertising application’s quality score. The quality score is based on a function of the application’s clickthrough rate and viral growth within the network. The idea is that higher quality applications should be rewarded with cheaper advertising. This dissuades disliked apps from spamming the service.
So, for example, a developer whose application has a quality score of 60 and is willing to bid $.10 per click, has an AdRank of 6. Since ads are served in AdRanked order, the developer could boost his AdRank and position in the queue by bidding a bit higher. Currently PPC rates are 10 to 20 cents. Appsaholic takes 12-30% of that revenue.
How It Pays
While that doesn’t sound like a lot, people are still making some significant cash off the platform. Click through rates vary from 0.2%-3.0%, effectively paying about $0.60-$3.00 for every thousand visitors to your application. SocialMedia’s Seth Goldstein is optimistic and only sees these rates as the beginning.
The company cites Greg Thompson as one of their recent successes. Thompson, a contract programmer from London, Ontario, is known for making the popular Facebook application My Aquarium. The application has about 2.2 million users. Within less than a day of running SocialMedia’s ads Thompson made over $500. While CPM rates on VideoEgg can upwards of $8.50, Thompson found they had less inventory. Over the past three months, Thompson has made around $100,000 in Facebook advertising overall.
SocialMedia has shared their network’s revenue to date viewable to the right.
Going Forward
While Facebook hasn’t clobbered an application yet, they’ve definitely laid out some advertising plans of their own. Facebook has also shifted away from installs to engagement, thereby improving how users can discover applications and perhaps undercutting the need for affiliate linking to get big. There’s no telling if Facebook will directly take on advertising within applications. Playing in Facebook’s garden may be risky business, but Facebook need only look to MySpace’s dwindling approval amongst the developers to see what a heavy hand can ruin.
How long will take before FB starts to adopt more of myspace practices and ban 3rd parties?
Seems like a big gamble on the benevolence of Facebook. I’d focus on making cash quick before the wind changes in the executive offices of Facebook.
Didn’t they clobber the music application awhile back? Can’t think of the name…
I don’t see this scaling. No control, no visibility, no money…
How would this change if there was a change of control of Facebook? If the company was acquired or they decided to take the advertising in-house, then all bets are off. This is only good while it lasts.
Just one more parasite feeding off a pig that may be slaughtered.
Ten years ago a PPC auction was a crazy new idea of Goto/Overture that became the standard — its how we at SocialMedia can start a social application network around this that needs almost no explanation.
In the next few months, we will all try lots of crazy ideas on SOCIAL Ads (all enabled by the incredibly innovative Facebook social application platform), one of which will become the new standard for how social networks get monetized. People do what their friends are doing. So while our social application network is starting out with standard PPC auctions, its unlikely to stay that way for very long as we figure out the new standard for Social Ads.
Message me if you get this, lots of ground breaking ahead!
test
Hey…Im making $$$ on this and yeah maybe Facebook Ill wack em but my bet is Facebook will want em….afterall, what does Facebook know internally about building an ad network? Their DNA is different.
ITWorks
Just one more parasite feeding off a pig that may be slaughtered.
And when it all crashes around you, you will deny having been a part of it.
Useless !
Can someone explain to me the end game of marketing apps? I am looking at all of the ad platforms as an advertiser, and I come away with the same conclusion every time. You create an app, spend money to advertise it, get big and become a publisher, and then make money from another app. So it is a giant recycling of money from unestablished app developers to established app developers.
I am not saying this is a bad thing, but it is hard as an advertiser to figure out if this is a good way to spend precious marketing dollars. I am not comfortable betting on the possibiity of my app becoming so popular that I can start generating money as a publisher; plus my app is not the center of my business - it is an extension of my site. As for general brand advertising, the click-through rates appear to be so dismal that is hard to figure out if I am spending money in the right place.
So I go back to the notion that the FB Ad Networks are great if you have an app that you one day want to be big enough to sell ads on, but beyond that I am just not too sure. Just my opinion.
They can all gun but there are two issues to keep in mind:
1. There is a distinct possibility that advertising will never take off on Facebook and no one will figure it out.
2. If and when someone does figure it out, it’s in Facebook’s best interest to replicate their model and screw them over. This won’t have to be overt like screwing Oodle over and then launching Marketplace after taking an up-front payment from Oodle, but it will be painful to all the silly little entrepreneurs trying to develop an ad platform for Facebook.
Either Facebook will buy them on the cheap or they’ll simply provide less data to the ad network and build their own copy with more data that they only give their own ad network access to.
I’m amazed that all of you can’t see through this. All Mark Zuckerberg wants to do is be the next Myspace. Nothing more, nothing less.
To the Fake Mark Zuckerburg:
You’re just a jealous douchebag!
I’m amazed that all of you can’t see through this. All Mark Zuckerberg wants to do is be the next Myspace. Nothing more, nothing less.
What does that even mean? Facebook is different from MySpace in a lot of ways. Users have to give their real names. Profiles can’t be hacked like MySpace. They have an API instead of threatening little guys. (Maybe that will change, yes, but the same could be said of Google.)
Clearly they’ve made a lot of decisions that are directly counter to MySpace. Could it be that they *don’t* want to be the next MySpace?
I don’t dispute that there are real risks to playing in the Facebook pond, but the same is true of Google, Microsoft, Yahoo etc. Nevertheless a lot of people have made a lot of money (and created a lot of value) in spite of those risks.
Every enterprise makes a “bet the company” decision at some point in their lives, sometimes over and over. Sometimes they pay off and sometimes they don’t, but I think it’s too early to judge whether this was right or wrong.
Just one more parasite feeding off a pig that may be slaughtered.