More Facebook debate.

There’s an interesting conversation thread going on at publishing2 regarding Facebook apps. This quote from Dave McClure, who I know from the days when my job search engine used to compete with his job search engine [and who I have the greatest respect for].

Interesting use of one data point to provide the proof for a wide-ranging empirical assertion.

i guess as a comparison, i can give you 90 other data points from students in the Facebook Apps class i’m teaching at Stanford this fall who would offer a contrary perspective. they have formed 30 teams of 3 to build apps and learn about using Facebook as an launchpad for startup entrepreneurship. i doubt any of them feel like they’re wasting their time, as you suggest.

I’d love to know the assumptions behind Dave’s course.

10 Million profiles have your app installed (See the graph on my recent blog entry)

Each of them gets 3 hits per day on average.

A CTR of 0.04% to your own website (based on FB’s ad CTR)

= 12,000 pageviews per day or

360,000 pageviews per month.

At $10 CPM (adsense is more like $3) you earn a grand total of:

$3600 per month with 10 Million Facebook users using your app.

Just for fun, increase that to 30 hits per day per profile and you’re still only earning $36,000 per month. Hardly a VC worthy investment.

But what really bugs me is the strategic implications of being a remora to the great white shark that is Facebook.

To me, building a business around a Facebook app feels more like being an eBayer both in terms of the hard ceiling on your businesses scale and the total reliance on the facilitator you’ve hitched yourself to.

What am I missing?

One thought on “More Facebook debate.

  1. hey mark –

    thanks for the link love :)

    re: ad rates on FB, you’re certainly right there’s a lot to be figured out there, and currently the CTRs / CPMs suck ass.

    that said, i don’t think the only monetization angle is CPM or CPC, i think there are plenty of other models that could work as well. whether it’s thru feed optimization, user profile data, or other ways to engage with people, the one thing that’s undeniable is the amount of stickiness & usage the platform is getting (at least for the top 100 apps).

    it’s still early in this game, and i think slapping previous ad models onto FB isn’t likely to be the best strategy. it’s unclear what the right one is, but i wouldn’t sound the death-knell for the entire ecosystem just yet.

    lastly, i think there are at least 2 interesting ideas that might change the game for FB:
    1) if/when they introduce a payment system
    2) if/when they acquire or build more search engine assets

    i’ll leave the thoughts behind any of those possibilities to the imagination, but it certainly makes the apps environment more interesting if those optinos are available.

    i’m sure there are others as well.


    – dave mcclure

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