{"id":546,"date":"2008-03-05T14:23:47","date_gmt":"2008-03-05T06:23:47","guid":{"rendered":"http:\/\/www.whoisandrewwee.com\/internet-marketing\/monetization-options-for-facebook-application-developers\/"},"modified":"2008-03-05T14:36:47","modified_gmt":"2008-03-05T06:36:47","slug":"monetization-options-for-facebook-application-developers","status":"publish","type":"post","link":"http:\/\/whoisandrewwee.com\/internet-marketing\/monetization-options-for-facebook-application-developers\/","title":{"rendered":"Monetization Options For Facebook Application Developers"},"content":{"rendered":"

In 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?<\/a>”<\/p>\n

The session moderator Bernard Leong has posted a kickoff post: Marketing and Monetization of Facebook: Prologue<\/a><\/p>\n

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”.<\/p>\n

Talking to Jason Bailey, whom I’m helping to launch his $uperRewards FB monetization system<\/a>, I’ve seen the applications and case studies of successful FB applications which are making $100,000 – $200,000 a month.<\/p>\n

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<\/strong> 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…<\/p>\n

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.<\/p>\n

Let’s break this down for a moment…<\/p>\n

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.<\/p>\n

$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<\/em>…<\/p>\n

–<\/p>\n

Instead, if you want to go big with Facebook Applications, you need to define your goal and reverse engineer the process.<\/p>\n

I think $100,000 per month <\/strong>is a decent benchmark. (as a starting point…)<\/p>\n

With an average of 100,000 daily active users that’s an average revenue per user (ARPU) of $1 per user per month.<\/p>\n

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.<\/p>\n

Some of Jason’s findings:<\/p>\n

\"facebook<\/p>\n

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.<\/p>\n

Adsense and other CPC measures could perform even worse with a $0.05 pay per click payout (with a clickthrough rate of sub-1%).<\/p>\n

Here’re 4 other “traditional” monetization systems:<\/p>\n

\"facebook<\/p>\n

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.<\/p>\n

Among the reasons why it doesn’t work…<\/p>\n