The Wall Street Journal had a nice article yesterday about the rush to build apps in the Facebook space, in which they were kind enough to mention Hungry Machine. One of the points Riva touched on was around the different rationales for building an app. I wanted to elaborate a bit more on a few of the biggest reasons some of our partners seem to be entering the space.
- Drive traffic to existing properties: Probably far and away the biggest reason most businesses are building apps – a traffic driving distribution play from Facebook to an existing entity is something that could drive traffic at a considerably lower CPA than many sites are currently spending
- Create brand awareness: Facebook is a whole new space and many of the concepts that came to fruition in the mid-late 90’s are being replicated within the FB platform. Companies that are in a particular vertical and have not been successful in penetrating that market against established players are on a level playing field. Building a successful app that does nothing more (at least initially) than providing users with a great experience within the Facebook platform is enough to build some serious brand equity to be leveraged at a later point in time.
- Creating a new revenue stream: This is generally the primary consideration for the single-man shops, or the smallest of the small companies. Facebook apps have evolving monetization concepts that can be shaped by the early innovators, but are a bit risky for a more established company to bank on and plug into revenue forecasts. Ad networks are springing up left and right, so if you can create an even moderately successful app (50k daily PVs), it can generally be worth your while.
- Playing the me-too: Facebook is hot and if you don’t have an app on your product plan or roadmap, well, you’re probably behind some of your competitors already. If you believe Facebook will continue to become THE social platform (as the market basically indicates), chances are you or your boss are trying to figure out the best way to get something out, and you’ll figure out how it best helps your business later.
With our own apps, we’re pretty excited about helping to shape the revenue model for apps on Facebook. Figuring out what ads work and what don’t. What levers can you pull that will bring a higher click through rate? How can you best partner with folks to leverage more users for better rates? All things we’re working on and hope to continue to innovate on for our own purposes and for our partners.
