It was certainly an interesting session, and if you know me, I certainly wouldn’t waste my time if it was “hype”…

More interestingly, I got a chance to meet up with a number of skilled PHP, Ruby-On-Rails and CakePHP programmers and a number of them are pretty skilled developers. Already a number of Singapore-developed applications are making their mark on the social networks, and it’ll be interesting to see what comes up next.

Here’re the presentation slides from the session.

Here’s the video from the session:

The panelists included:

• Bernard Leong (Thymos Capital partner, and session moderator)
• Leonard Lin (TYLER Projects managing partner – developer of Facebook application BattleStations!)
• Kien Lee (Senatus founder – an investment holding company which owns more than 100 Facebook applications)
• and myself (through my work on the $uperRewards monetization system for Facebook applications)

Facebook Application Monetization Panel: Leonard Lin, myself, Bernard Leong, Kien Lee

I had my MP3 recorder capture most of our panel discussion and you can access the recording below.

For more coverage, check out:

• ThinkingNectar’s live blogging post of the panel discussion
• Nicole’s live blogging post of the panel discussion

No matter whether you live in Las Vegas, or Vancouver, BC, New York city or Singapore, the questions are the same – How do you grow your business?

I’m going to outline 3 discrete stages that I see business go through, and I’m going to paint some generalizations here. (generalizations refer to 90-95% of the people in each of these categories out there. So hold off on the flames, especially if you’re part of the 5-10% of “distribution curve busters” out there)

The 3 stages of business ownership:

• Stage 1: Bootstrapper/Solopreneur (Generalized income potential: $1,000 per day or $30,000 a month)

At this stage, you’re building your business and might be the sales guys, the operations guy, the bookkeeper, and coffee maker all rolled into one. Bootstrapping can be a useful tool, especially if you don’t start out with or you’re not willing to pump a lot of working capital into your initial endeavor.

I like this stage because it’s very “hands-on” in nature. I believe to have “business ownership”, you need to have a basic understanding of each function in your business. I am a pretty terrible “details” person, but having a basic understanding of the “nitty gritty” helps you put all the pieces together at the strategic/macro level.

The major constraint here is time, because you’ll have to juggle the various tasks within a 24-hour workday.

But if push comes to shove, remember that marketing and sales are the most important element of your business because that’s what brings home the bacon.

The solopreneur model works regardless of whether you’re playing in the brick-and-mortar space, the online space or the hybrid of the two. The one major advantage of being in the online space is that technology can give you a major advantage, whether it’s managing a PPC campaign with 120,000 keywords or managing an email campaign out to 25,000 subscribers.

It’s a fair simple stage to get up to speed on. But here’s where it gets interesting…

• Stage 2: Employer (Generalized income: $10,000 a day, or $300,000 a month)

So once you’ve maxed yourself out, you’ll probably start hiring people. They could be outsourcers or employees (young kids or work-at-home mums are a great fit here…).

Being an employer means you’ve very much moving from being a “do-er” to a “project manager”. You coordinate your workers, give them daily tasks, weekly tasks, set milestones, motivate them and help them pick up new skills.

A good time to move from bootstrapper to employer is at the $5,000 – $10,000 a month income mark. At that income level, you should be familiar enough with the business operations to delegate out responsibility.

One common issue I hear from bootstrappers is that it takes “too much effort” to train an employee…which might be a valid argument, except that if you don’t get through the initial hurdle of training someone up, there is a tendency for things to bite you in the behind, especially when the projects and contracts starts flooding in (you become a victim of your own success).

One of the worst things that could possibly happen at this stage is not being able to make the transition to becoming an employer, and having to turn work away.

The one major shortfall with being in this stage is that you become the bottleneck. Because your business is reliant on you giving out the orders and being the project overseer, if you go on vacation or fall sick, the business tends to grind to a standstill once your existing orders have been fulfilled.

So it’s worth taking a look at the third stage…

• Stage 3: Business Owner (Generalized income: $100,000 a day, or $3 million a month)

From being a “project manager” (employing employees) during the employer stage, you move on to become an employer of “project managers” – that means the people reporting to you function independently and take on projects, set their own milestones and come back to you when the project is complete, or if they run into a major challenge.

–

So how does the landscape look?

The majority of businesses function mostly like “employers” and have some elements of the “business owner” model.

On the other hand, organizations like Microsoft, General Electric, HP have moved very much into the “business owner” mode of operation.

If you’re an internet marketer capped at the $10,000 per month, or $100,000 per month level of income, the limitations you are facing might not be because you are not working hard enough…it may be a matter of looking at the strategies needed to move up to the next level in your business’ growth and working smarter…

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…

–

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

The event is sponsored by Microsoft and the National University of Singapore.

Here’s a snippet of the panel:

If you didn’t already know, a number of the hottest Facebook Applications are coming out of Singapore, including BattleStations! which I play, developed by Singapore’s TYLER Projects (co-founder Leonard Lin will also be on the panel).

Here’s a screenshot from BattleStations:

In addition to the technical requirements to developing a Facebook application, I think the concept, game logic and game balance are critical to the success of the application. I’ll do a comprehensive follow up post before the event.

If you’re in Singapore and would like to attend the event, you can check out the:

• Facebook Developer Garage RSVP page
• Facebook Developer Garage Wiki

The event is free to participants and dinner is included. Be sure to RSVP soon.

We talked about the criteria a successful FB App MUST incorporate to ensure that it takes on a life of its own through viral distribution.  We also talked about how you get started, especially if you don’t have any programming skills.

If you are already developing a Facebook Application, you will want to know about the free application hosting with programming functions. This is especially critical because successful Facebook applications could have 500,000 or more daily active users a day.

To access this massive 45-minute recording, you should add the $uperRewards application.

After you have added it, you can submit your application to join the $uperRewards Developers group.

The developers group will also contain tips on application design and game mechanics and ideas for incorporating the $uperRewards application into your application and increase your monetization.

Current Facebook Application owners who have added $uperRewards have reported up to a 20 times increase in profit since adding the application.

As we are manually reviewing each application, it may take up to 48 hours to approve your application.

Here are the links:

–> $uperRewards Application

–> $uperRewards Developers Group

Following the post on the launch of Jason “Chickenhole” Bailey’s $uperRewards Facebook monetization service, I have been hearing that a lack of programming skills (PHP especially) seems to be the biggest stumbling block.

It’s actually the least of the issues you will face, because you can easily outsource the programming and API work to a developer in an Eastern European country or to India.

The biggest challenges you will face are:

• Create something that is useful for your visitors AND profitable for yourself
• How to stand out from the crowd

I’m finding that social network applications tend to fall into 2 categories:

• Monetization isn’t planned into the application and tends to be loosely added on

Take a look at this Facebook application – Defense of the Ancients –

There are banners for the AceBucks monetization application at the top and the bottom of the page.

In these instances, it’s very much “interruptive” monetization – like having ads in a TV program.

If you have a Tivo, you can wipe them out.

Similarly, with prolonged exposure to such ad placements outside of the prime real estate (the gameplay area), visitors will develop “banner blindness” after the first or second day, with the result that clickthrough rates plunge below 1% in many cases.

This is not specific to this specific application, but probably affects about 80% of such applications out there.

• Pure monetization applications

On the other hand, you have applications which are solely created to monetize. It just looks like a thinly disguised zip/email submit form. The application’s only sole reason to exist seems to collect your personal information or have you buy something.

There’s little or no content, and in my eyes, they’re the Facebook equivalent of “Made For Adsense” sites.

You might install them because they tend to be in shiny colors, but then they’re removed after the brief thrill wears off.

–

So does that mean “trying to earn an income off a social network is pointless” or is too hard or that the market is saturated, or that Facebook is going to clamp down on all money making attempts?

I don’t think so. Here’s why.

If you create value, you will be sticking around for a long time.

Value is something which adds to the user’s social experience – you might give them some entertainment, some useful information, a tip, a coupon code for something they had been planning to buy, a joke to lighten their day…

The definition is this: If they spent some time on your application and they get more value, compared to the time they spent on it. (eg. reading your information in 2 minutes, save them 30 minutes of trawling through Wikipedia, for example), then you’ve created a value user experience.

They’ll be likely to add your application and if you have an “add friend” capability, they’ll send it to their friends and your community will grow exponentially through the power of viral marketing.

If you build value as the foundation, the traffic and the growth will come.

–

Monetization:

So if direct, in-your-face, interruptive monetization techniques do not work, how do you monetize?

Use the AdSense “ad blending” techniques or product placement strategies you see on TV and movies as an example.

If monetization is a natural part of your application, and has been planned into your application development, it will be less likely to stick out like a sore thumb.

Let’s look at some of the stats Jason Bailey has thrown out – For the regular Facebook apps, it’s not uncommon to see clickthrough rates of less than 1% for the traditional monetization methods. But in cases of applications where the monetization has been integrated into the application, you can expect to see clickthrough rates of 75%.

What does this mean?

Planning has to be an integral part of your monetization process.

The monetization channel is built-in and becomes part of your application.

Seth Godin covers this aspect well in his books.

In a Fast Company article dating back to 1998, Seth Godin talks about Permission Marketing –

The new model, he argues, is built around permission. The challenge for marketers is to persuade consumers to volunteer attention – to “raise their hands” (one of Godin’s favorite phrases) – to agree to learn more about a company and its products. “Permission marketing turns strangers into friends and friends into loyal customers,” he says. “It’s not just about entertainment – it’s about education.”

And if you’re hearing some echoes of free iPods and free Xbox360s as you read this next paragraph, you’re not alone…

You can use lots of techniques to make it worthwhile for people to give you permission to talk to them. We use games because they work. Sweepstakes have been around for 700 years. Game shows were among the first programs on radio and television. Back in 1990, Prodigy asked us to create a game for it. The game’s first run ended late last year, and we’ve started it up again. It’s called Guts. Players get seven trivia questions a week. Each question is worth more points than the one before, and each is harder than the one before. You can stop at any time and keep your current score, and then come back the next week for another round. But if you miss one question, you not only lose the points from that week – you lose all your points for the whole game. So it takes guts to stay in. So far, more than 3 million people have played Guts. It’s the most popular online game in history.

People love games. They’re fun, exciting, engaging. We not only entertain people but also educate them – and we get paid for it! We create promotions in which the game itself involves information about products. People search for ads and read them because they have to find missing pieces of information to get the prizes they want. When’s the last time you searched for a TV commercial?

–

As an example of a social network that has it’s own economy (which translates into a real world dollars-and-sense economy) take a look at Second Life:

The Linden (Second Life’s unit of currency) can be converted into real world currency. And the economy has it’s instruction manuals:

With titles focused on how to get rich in second life, how to do “everything” in second life.

These “make money online” books  are available at Amazon, for real dollars, of course…

So it’s a matter of time before the flood of make money on Facebook books appear.

–

If you are still looking for examples, take a look at free MMPOG Maplestory:

The free MMPOG which is a sideways third-person RPG shooter is free to play, but if you want upgrades, you need to pay for them.

So if you’re paying real world money for virtual items,

Real $$$ -> Virtual weapons/armor.

Wouldn’t the virtual social economy that’s building up on Facebook be something that can be converted into real world currency too?

Virtual rewards points -> Real world prizes and real world cash

For more information, check out:

–> $uper Rewards Facebook Monetization Service

Even better, Facebook applications and their developers are banking big, to the tune of a couple of hundred thousand dollars, and possibly even a million dollars in a week.

Enter the latest entrant, Facebook application $uper Rewards, spearheaded by Jason “Chickenhole” Bailey.

While Jason is one of the owners of CPA network Millnic Media, he has mentioned that $uper Rewards is independent of Millnic Media and will work other networks and merchants to expand it’s business opportunity.

What is $uper Rewards?

$uper Rewards functions as a “Facebook Application monetization widget” that Facebook Application developers can insert in their applications.

It’s based on a PHP architecture and provides access to more than 300 offers from about 12 different affiliate/CPA networks.

The $uper Rewards platform includes features like geo-targeting functions to provide geographically appropriate offers to the application users.

Jason Bailey “Chickenhole”

As Jason describes the service: “$R is a tool for any points/rewards based application which allows developers to easily manage incentivzable offers from dozens of CPA networks. This is a DEAD SIMPLE cut and paste solution that does 95% of the work associated with monetizing such an app for you.”

Among the key features of $uper Rewards:

• Incentivizable Offers to cover EVERY COUNTRY on the planet
• Over 30 Canada Specific offers
• Over 25 UK specific offers

Some of the other features, include:

• Geo Targeting management
• Managing all of the creative
• Maximizing revenue from each user, including customer support

Some of the Facebook Applications already incorporating $R include:

• Hockey Pool Pro
• Scratch and Win
• Plane Crazy
• SexyPoke!

Some feedback from an early adopter: “$uperRewards rocks. We tried the main CPA networks – offerpal, cpalead etc etc. Right now $uperRewards is generating exactly 20 times the revenue per daily active user of the next best network we used.”

Compared to other comparable services, $R offers the highest payouts:

myOfferPal 60/40
CPA Storm 50/50
CPA Lead 75/25
$R: 90% to publisher

I’m currently helping Jason with the business development and application developer side of the business.

If you’d like to find out more about $R and incorporate it into your application, you can join the $uperRewards application group via this tracking link. (be sure to drop me a Facebook PM though.)

Register via the link above and you’ll get access to the $R information/optimization/resource page which once it’s up.

To better explain $uperRewards, here are two videos from Jason’s recent presentation at the Vancouver Facebook Developers Garage.



$uper Rewards Part 1



$uper Rewards Part 2

If you are a Facebook Application developer or are planning to develop one, you can sign up for $uperRewards, and drop me a note via Facebook private message, so your application can be tracked.