And now, the last of my notes from yesterday’s FacebookCamp Toronto 2. If you missed the first two parts, follow the links below:
Monetizing your Facebook Application (Greg Thomson)
- What does he consider a “failed app”? “An app that has less than 10K active users”.
- What does he consider a success? An app with about 250,000 installs. With that, he says he “could go full time”.
- What’s an active user worth per year? “About $3”.
- “You can’t just throw one banner up and hope to make it.”
Case Study: “My Garden” App:
- Each flower was worth a certain number of coins
- Each user has an allotment of coins — extra coins had to be paid with cash
- The scheme to make money through coin sales didn’t work — “In my experience, users will generally not pay for things.”
- Across his apps — the big one being “My Aquarium” — the installed base progression was from 0 to 250,000 to 8 million installs across apps
- Did not add ads until his installed base hit the 250,000 mark, and he regrets that
- Why wait so long before adding advertising? He was worried that they might drive users away.
- This was not the case: users are used to ads
- There is a hidden upside to starting late: he didn’t get discouraged at the beginning when ad revenues would have been small.
- The money he’s making covers costs of servers “definitely starting to mount”
- “You really need large numbers to effectively monetize applications.”
- Some demographics:
- 60% of the users generate of 90% of revenue
- 30% generate zero revenue
- The country breakdown of his users:
- U.K.: 20%
- U.S.: 20% — These users represent the best monetization opportunities — try to increase them!
- Canada: 20%
- Other countries: 40%
- Appsaholic (Social media) — pay per click — average $0.10/click
- Adsense (Google) — pay per click — average $0.07/click
- Adsense worked well with “My Garden”, since its theme tended to result in relevant ads — ads for florists and the like.
- Adsense didn’t work well for “My Aquarium”, since “people don’t really send each other fish” in real life, and the ads weren’t relevant.
- Incentivize your users to complete offers: give them rewards in exchange for their completing surveys, which generate revenue
Create a new want:
- Most of the popular applications are entertainment-based
- Revnues for apps go through a cycle: start / peak / decline / plateau
- One way to avoid or at least forestall plateaus is to cycle through ads — change them up often
- You have to keep putting new stuff up — both content and ads
- Change things! Vary the order of ads, or run slightly different ads — any variation helps!
- Cross-promote other apps in your app to generate new users — he does this
- In his experience — he can deliver 50,000 installs for other apps because of his user base
- If your app is a good fit, you have the opportunity to do custom advertising with large brands — such as the “Zombies” app, which got sponsored by Resident Evil
- Use A/B testing to maximize revenue — show 2 different variations of an ad — see which performs the best
Selling your app
- No major acquisitions just yet
- There was talk of the “Where I’ve Been” app getting bought, but it hasn’t happened yet
- Expect to get $1 per installed user or $10 per daily active user
- You should:
- Have a base of banners
- Build incentivizable offers
- Get surveys through affiliate networks
- Note that a lot of offers are not incentivizable
- Up until a week and a half ago — all users on 1 app server and 1 DB server
- There are 10 rendering servers for Flash and jpegs
- What his time to market? “Keep it to a week. More than a week? The odds of failure go up dramatically.”
- How long to 250,000 users? “2 weeks”.
- How long to 8 million users? “Been doing this for 3 months now.”
- His operating costs? For servers — $2,500 a month
Secrets of PayPal interface used by Gift Cards Facebook Application (Steve Pritchard)
- His “Gift Cards” application was a convergence of business opportunities:
- He had a Toronto business associate with abundance of gift cards to give
- Toronto has a high density of active Facebook users (remember, it’s the #2 Facebook city after London)
- Obvious application fit for his business
- The application cried out for PayPal interface
- Wanted to offer a simple payment scheme
- Wanted to avoid complex HTTPS interactions
- “Challenged by the challenge”
- PayPal data does not fit on Facebook Canvas
- Required pop-up window
- Had to be done with IFRAME; and the canvas and IFRAME cannot communicate
- PayPal pop-up window must have specified dimensions
- Have to update canvas under all PayPal termination conditions
- Had to sync 3 threads on 4 subsystems
- Solution: Get user to click twice:
- First click to start the PayPal/Facebook sync loop
- Second click to open the PayPal pop-up window
- Gift Cards server mediates
- Again, a click-twice user interface:
- First click to start Facebook canvas polling cycle
- The canvas’ PayPal “checkout” button is replaced with an IFRAME version
- Then, the intermediate step of asking user to confirm amount
- Generates 2nd click
Q & A
- How long did it to develop? “I was learning Facebook, I was learning Paypal…so about a week.”