Facebook to Launch Application Ad Network
Published by Rodney Rumford January 28th, 2008 in Facebook, Facebook Applications, Facebook News.
Facebook to Launch Application Ad Network: There are many reasons for facebook to launch an application advertising network. The number of page views and time spent on application pages is enough to boggle ones mind. While applications might appear meaningless and trivial to many; the fact remains that people use them to a very large degree. Throwing food is pointless? Debatable.
When will Facebook will be launching this application advertising network? Well… Soon, but not just yet. I have to believe that this is coming in the very near future from facebook for the following 10 reasons.
1. Application owner are looking to monetize at a higher rate.
2. Application owners are looking for consistent high end advertising inventory to share with their app users.
3. Applications can target specific demographics; with facebook acting as the back end intelligence targeting engine.
4. Advertisers will pay a premium to hit very specific geo & user demographic.
5. There is currently a lacking of a robust advertising platform that application owners can use to monetize applications at anywhere above 5 per CPM consistently.
6. Facebook is establishing relationships with ad agencies and high end consumer brands that want targeted advertising and have money to spend.
7. More than 40% of engagement time on facebook is within application canvas pages.
8. Application owners would be happy to do a revenue share with facebook for consistent ad quality and inventory.
9. Facebook is improving analytics and thus will be able to offer complete tracking to advertisers.
10. There is a HUGE CRY FOR THIS. The need is there. The money is there from advertisers.
Facebook is a product driven company. They are very smart. There is a huge void in the huge advertising marketplace that they have created with the facebook application platform. No third party advertising platform has nailed it yet (socialads, lookery, cubics, rockyou, slide, appsaholic, etc.) with inventory. Candidly, I am surprised that Federated Media has not made a play in this space.
Bottom line here is that you can lay money that there will be a facebook advertising platform for applications. Applications will be worth a specific amount based on page views or performance. Some applications are much better suited for Branding (pageviews) versus Performance (click thru). The possibilities are very exciting for both advertisers and application owners. I know from personal experience and conversations with many many facebook app developers that some are making great money and some are struggling. The challenges for monetization are great for some app owners and facebook needs to help them along the path to success. I am sure they will provide some tool sets (products) to facilitate this very soon.
I would also suspect that video ads might be coming as well. This would be a great leap into premium advertising if they can pull it off. Mashable has an interesting article about Video Egg and how app owners are not making money. They are only looking at a tiny part of a giant picture and are missing the point.
The monetization of the application and it’s value to advertisers lies more in the demographic than raw number of users (but this is still very important). There is too much money on the table for facebook not to be doing this. It only takes one killer advertising product to skyrocket a company to revenue heaven. Remember that Google was essentially a no revenue company before the advent of Adwords. 
Technorati Tags: facebook, facebook advertising
rodney - where did you get this number from?
More than 40% of engagement time on facebook is within application canvas pages.
I haven’t seen this metric posted anywhere so would love to see where you pulled this from.
Nolan,
I was referencing a post from Compete analytics in August of 2007. http://blog.compete.com/2007/09/14/facebook-activity-breakdown-application
I hope this helps.
Misleading title. Interesting post.
“monetize applications at anywhere above 5 per CPM consistently.”
We pay more than without fail, and will be offering guarantees before long.
Applications have changed lot in terms of engagement since August. Those compete numbers aren’t usable any longer.
Scott,
Thanks for the update on Lookery.com Those numbers for CPM are much better than I was aware of. The guaranteed $5 CPM is going to be attractive to many app owners. I encourage application owners to check out what Scott and his team are doing.
Do you have any engagement stats that are more current that you could share?
$5? Try $0.05 Rodney, please don’t mislead people. Nobody pays $5 for more than a couple % of app traffic. VideoEgg, et al, pay $5 for a tiny fraction of an app’s traffic. The other 98% goes for pennies per thousand. That’s the problem. Our guarantee is for ALL of people’s traffic, not just a couple percent of it.
Scott. Sorry. I guess i misunderstood. I stand corrected. Thanks!
NP, there’s just a ton of misinformation out there, which I’m touchy about. The difference between CPM and effective CPM (aka eCPM) confuses people.
What’s important is that you maximize revenue across all traffic, not just make a lot of money on a few pages. We paid out an average of $0.22 across 170M pages in December. January will come in a little lower due to our move this week from OpenAds to Atlas and seasonality.
@Rodney, here’s the Guaranteed Payment program that I was referring to.
http://www.techcrunch.com/2008/01/31/how-much-is-a-facebook-ad-worth-lookery-guarantees-drum-roll-125-cent-cpms/