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.

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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…

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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

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.