Much has been said about the various ways you can monetize your application on
Facebook. For some it's been difficult to turn good ideas into dollars. While it is true that Facebook offers a number of revenue opportunities for applications - many Facebook apps have been adversely impacted by the recent changes in the Facebook design and the impact of replacing applications with the stream as the central cog of the Facebook's social graph.
The key in monetizing any app is active users - if your application cannot attract passionate, active users it is virtually impossible to generate significant revenue. In the early days of Facebook's F8 platform it was relatively easy to acquire users. Even the poorly designed or downright dumb apps gained huge numbers of users. But after the app gold rush of 2007 and 2008 - it's proven to be more and more difficult to acquire and grow an application's user base. Facebook users have a plethora of apps to choose from - over 50,000 apps now on the facebook platform.
Today's users are looking for a more compelling entertainment or engagement
value proposition. While games and quiz apps are the flavor of the day - it's wasn't too long ago that Causes and Mob Wars were the "hot" apps on the block. So as a developer or someone simply looking to build a business and monetize an application on Facebook, the burning question of the day is - Is my app
o Engaging?
o Entertaining?
o Including Gaming Mechanics?
o Adaptable?
o Expressive?
Engaging -
Your app needs to immerse the user in an engaging experience; from answering questions about a friend, to providing tips on losing weight. Identifying the engagement triggering mechanisms for a user is essential.
o Entertaining
Let's face it - Facebook is mainly about entertainment. Your app should have some element of instant gratification entertainment.
o Game Mechanics
Much has been made about Amy Jo Kim's great work on game mechanics on
Social Networking apps. It's a must read for any app developer regardless if you are planning on developing a game app or not.
o Adaptable
Your app should have the ability to be adaptable. Adaptability does not mean the basic structure of the app changes - but it does mean that you should be able to change, add or enhance your app with new themes, messages and content.
o Expressive
Your app needs to allow your users to express themselves in some unique way. This is critical as more and more people are looking for new ways to express themselves when interacting with others.
o Compelling Call to Action
Your app needs a powerful
CTA - Call to Action. Give the user a clear directive of what they should do when they interact with your app.
These are just a few key elements that will maximize the ability of your app to make money. Notice we did not mention actual money in these key attributes That's because once your app embodies some or all of these features - it will be much easier to monetize. Currently applications on Facebook are thriving most around the revenue models of ad-network inventory and virtual currency:
- Ad-network inventory or Display ads
Display ads are the most obvious - as they simply leverage the traffic and eyes that your app attracts on a daily basis.
- Virtual Currency and Gifts
It's no longer a secret the most effective way to monetize a social application is to create within it a virtual economy, in which virtual goods and services can be turned into real-world revenues for the app developer. It may seem obvious, then, that one of the most important things to keep in mind when creating a virtual economy is to give your users something of value on which to spend their virtual currency. Posting on TechCrunch late last year, strategist Dave McClure noted that there are essentially three major types of virtual currency: decorative, functional and behavioral:
Decorative goods are those primarily geared towards self expression.
Functional goods are those that meaningfully alter your user experience. For example, a suit of armor in World of Warcraft that confers a special advantage to you would be a functional virtual good.
Behavioral virtual goods are graphical icons that capture some sort of social interaction. This is the type that is most prevalent on Facebook today. Virtual gifts are the best known example of this category of virtual good.
Implementing both monetization strategy answers the "how": to make money on Facebook, However less obvious is the "what" of providing virtual goods and services –- as in, what is most valuable to them, what will get them to part with their hard-earned currency, and what will make them want to go back and earn more currency?
