Inside Facebook

Back in October, Hi5 became one of the first social networks after Facebook to announce platform plans. While initially the company planned to use its own set of APIs, in November Hi5 announced it would adopt the OpenSocial standard. Last week, Hi5 announced support for the first OpenSocial applications for the Hi5 Platform from social music services iLike and Qloud.

Last week I sat down with Ramu Yalamanchi, CEO of Hi5, and Anil Dharni, Hi5’s Director of Products, to talk about Hi5’s platform plans.

IF: This week, Hi5 announced that the first Hi5 Platform apps have been launched - iLike and Qloud - using the OpenSocial standard.  Why did you decide to go that route, and what is your platform approach in general?

Ramu: Initially, we had plans to build our own platform. When Google came to us to talk about OpenSocial, we thought it was interesting because it would allow us to accelerate what we are trying to do. So we became an OpenSocial launch partner. Of course, there are some Hi5-specific platform features that we’ll be rolling out on top of OpenSocial.

IF: Are you planning on supporting Facebook’s platform APIs as well?

Anil: We want to support the platforms that support open standards.  We haven’t made an absolute decision about supporting the Facebook Platform, but ideally we would like to see a common set of APIs across platforms.

IF: Why did you decide to launch with music apps from iLike and Qloud?

Ramu: Music is something that our users request frequently but that we thought would best be done by partners.

Anil: We looked at application developers that we felt were providing a unique, compelling experience. Speed to market was also important to us (OpenSocial provided us with the glue for that to happen as quickly as possible). We wanted to learn how quickly application developers can move onto OpenSocial, and how it would all work for us. We did everything quickly, within 3 weeks - it’s a testament to their developers, our developers, and the simplicity of OpenSocial.

IF: What do developers need to know about Hi5 in order to build successful applications?

Ramu: Well, we’ve had a pretty high influx of developers asking to get into our beta program.  We look at a number of things - a compelling user experience, speed to market, scale. We really want to provide our users with compelling applications.

Anil: Right now, we’re still in beta since OpenSocial is still in beta.  In the future, we’re going to launch a self-service model. Also, we’re very strong internationally.  We have a very unique audience, and we are looking for applications that will bring a localized experience.

IF: How important is it for developers to localize apps to the specific markets where Hi5 has a significant presence?

Ramu: For some apps, there will be cultural subtleties (for example, localizing avatars).  That will provide some unqiue opportunities.  For example, we’re the #2 site in Thailand.  It’s not impossible to learn the cultural nuances of that part of the world, but it is a unique opportunity for those that are culturally aware.

IF: Both iLike and Qloud are launching Spanish language versions of your apps. What portion of your users are Spanish speaking?

Ramu: 25% of our users speak Spanish (we’re the top social network in Mexico, and top among Spanish speaking countries overall), while 50% of our users are English speaking. Both iLike and Qloud will be launching Spanish versions of their apps soon, and both have chosen a subset of songs in Spanish and Portuguese to feature within their apps.

To learn more, check out the Hi5 Developer Center.

This morning Facebook launched a new “Friend Lists” feature that will make the problem of organizing your hundreds of Facebook friends a little easier.

Facebook wants their “social graph” (your friend list) to represent the real-world as accurately as possible. However, previously there had been no robust way to distinguish between your best friend and someone you just met at a conference (except for listing “how you know this person”). While this is a complex problem, users are clamoring for more efficient ways to set different boundaries with different types of “friends.”

Currently, Friend Lists lets you 1) organize people into lists (but only for the sake of your own management - these lists don’t show up anywhere on your profile page), and 2) bulk message everyone on a Friend List easily. As I speculated when hints of this feature first showed up back in August, I would expect Facebook to add privacy controls to Friend Lists as well. This is a major challenge, but helping users organize their Friend Lists over time will make Facebook more usable to those with hundreds or thousands of Facebook friends every day.

After much speculation, Facebook is about to start closed beta testing its payment system for application developers.

This is big news for developers seeking to monetize their apps through transactions. Transaction-based applications that use virtual currencies or kick users out to Paypal could soon start accepting payments from users directly in their apps.

A Platform payment system could also be a significant revenue generator for Facebook. While Facebook is not making money directly from application use (developers keep 100% of ad sales), developers would be happy to pay a commission for the service.

Developers who are interested in participating in the beta test can go to the Developer Forums and email the Facebook Platform team. You will be required to sign an NDA to participate.

To say it’s been an eventful year in the world of Facebook and the Platform would be quite an understatement. 2007 saw the birth of a new way of building and distributing software on the web that spurned on the imagination of entrepreneurs and awoke industry giants. In the future, we may look back on this year as a time of “social networking frenzy” that turns out to be more hype than substance. Or, we may look back on it as a time when the way the people use the Internet changed.

Here’s a look at the top 10 Facebook stories of 2007, as told through the eyes of a product manager in Silicon Valley:

1. Facebook launches Platform, intends to become “social operating system”

On May 25, Facebook unveiled the “Facebook Platform” at f8 in San Francisco. Dozens of apps were showcased from several launch partners. Breaking from the command-and-control approach to third party widgets employed by others at the time, the Platform allowed deeper integration points than any other API, and allowed anyone to sign up and start developing–and keep all the revenue. Hundreds of developers gathered for an all-day hack-a-thon to kick the tires on the new Platform, and by the end of the year, over 10,000 applications had been launched.

2. Facebook Platform becomes the most viral software distribution system ever

Within two weeks, music application iLike added 1.7 million users, making it one of the fastest growing applications on any platform ever. Within three weeks, an astounding 10 applications added over 1 million users each. Software developer Craig Ulliott, creator of the then-side-project Where I’ve Been application, asked, “I have 250,000 users, now what?” as his servers crash under the traffic load. 65 million applications were installed in the first month - an average of 2.5 per user. By December, that number had risen to over 700 million.

3. Facebook user base, traffic numbers soar

After the Platform launched, traffic and new users to Facebook soared: after three weeks, page views increased by a third. The post-college crowd helped Facebook’s reach double from 2006 to 2007. Facebook’s total userbase grew from about 15 million in January to 30 million in July. In December, it stood at about 58 million. Facebook added an average of 250,000 new users per day in 2007.

4. Facebook’s News Feed offers a new paradigm for sharing information (and marketing)

When the Mini Feed and News Feed launched in September 2006, users were concerned by what it meant for privacy. Since then, the News Feed has come to be accepted as one of the most important advances in social networking technology. Facebook filters an average of 30,000 story candidates into a customized stream of 60 stories for each user every day. For social networking marketers, getting into the News Feed has become just as important as getting into the first page of Google’s search results.

5. Facebook Platform creates an application economy

When Facebook announced the Platform, it announced that application developers could keep 100% of the revenues their apps generate. This, in turn, led to a frenzy of early acquisitions and investments. Just a month after the Platform launched, SideStep acquired Extended Info. Shortly thereafter, Slide bought Favorite Peeps for $60,000, the first publicly reported transaction price. Lee Lorenzen started a trend by making Altura Ventures “the first Facebook-only VC.” In July, Bay Partners launched AppFactory to invest in Facebook application developers. Over the course of the summer, several ad networks were started to sell Facebook application inventory. In September, Mark Zuckerberg announced the formation of the fbFund, a Facebook-affiliated fund specifically set up to deploy grants to innovative application creators.

6. Google organizes OpenSocial, Facebook opens Platform architecture

After failing in its bid to partner with or invest in Facebook, Google announced the OpenSocial API, an open API that would allow application developers to build apps to run on multiple social networks. However, manged by a consortium of companies, OpenSocial has failed to get off the ground due to an incomplete spec, and the first social networks supporting it are not expected to be ready until early next year. Meanwhile, in December, Facebook announced it was opening its Platform architecture for adoption by other social networks, and Bebo launched its platform by announcing it was completely adopting Facebook’s architecture from the start.

7. Microsoft invests $240 million in Facebook at $15 billion valuation

In a major strategic coup over Google, Microsoft won a minority stake and an expanded advertising relationship with Facebook in October. The price? A mere $15 billion valuation - or about 100x TTM revenues. (Facebook execs allegedly played the two off each other masterfully, driving the valuation way up.) Rumors that Facebook also took $500 million from two hedge funds proved to be false, but the company did take $60 million from Chinese billionaire Ling Ka-Shing in December.

8. Facebook backtracks on Beacon

With a splashy launch in New York, Facebook announced several new advertising products for businesses in November. One of them, Beacon, was particularly aggressive: it allowed partner sites to send information about a user’s off-Facebook activity to Facebook for sharing in that user’s News Feed. After privacy advocates spooked advertisers by complaining that the program was opt-out instead of opt-in, Facebook reversed course.

9. Facebook lures top talent

Planning to increase head count to over 700 by the end of 2008, Facebook was able to hire top talent (before its massive valuation increase) in 2007, including some top engineers from Google. Former Googler Justin Rosenstein called Facebook “the Google of yesterday, the Microsoft of long ago,” adding, “I have drunk from the Kool-aid, and it is delicious.” Benjamin Ling, a former Director of Product Management at Google, left for Facebook in October.

10. Facebook courts businesses with Pages and Social Ads

In an attempt to monetize its “social graph” more effectively, Facebook allowed businesses to create a presence inside Facebook for the first time (except for expensive sponsorships) in November with the launch of Pages. At the same time, Facebook launched Pages, a souped-up version of its old Flyers program, which together offer advertisers unprecedented levels of targeting and analytics inside a social network.

I’m here at the Bebo Platform launch event at the Metreon in San Francisco. Bebo CEO is Michael Birch is presenting the Platform details:

• We’ve always wanted to be open, but when Facebook launched their Platform earlier this year, it was quite comprehensive and similar to what we wanted to do. We don’t want to launch another platform, it just becomes a format war and a pain in the butt for everyone. The Bebo Platform is almost totally compatible with the Facebook Platform: the APIs, markup language, and query language are all the same.
• The Platform is launching tonight with 40 application developer partners.
• There is an application directory under the Explore menu. Users can rate apps there, unlike elsewhere.
• Justin’s note: the My Applications menu sits across the top of the site in the form of thumbnail icons. Very prominent.
• We’re adding a new viral channel for app developers - app profile pages can be skinned by users.
• We have partnerships with media companies to let users get content. We’re going to let application developers use that content too. It’s important to us that application developers and media companies make money off of social networks.

Bebo is bringing up a few application developers to demo their apps:

• Sap from NBC Universal: “We want to extend users’ experiences outside the show. We are fans of social networks like Bebo. We have a couple of applications that are new for the Bebo Platform.”
• Craig Sherman from Gaia Online: “We are excited to work with Bebo. Our app creates a virtual room on every user’s profile page. We’ll host thousands of simultaneous profile page virtual spaces.”
• Joe Greenstein from Flixster: “Prior to today we’ve had 2 products: our destination site Flixster.com and our Facebook application Flixster. Like on Facebook, we can build a really full movie website within Bebo.”

Bebo CEO Michael Birch is going to take questions:

• “What about OpenSocial?” Clearly the Facebook Platform is different than Open Social. We attend the Open Social meetings. We’ll start development early next year. We want to give developers the choice to develop on the Facebook Platform or OpenSocial on Bebo.
• “How big are you in the US?” We’re the third largest network in the US. We need to narrow the gap with Facebook and MySpace. We’re trying to combine the best of them.
• “Are you working with Facebook?” Yes, they know what we’re doing. We want to remain compatible with them and be in conversations with them so that we launch features at the same time. We’re where they were about six weeks ago right now.
• “What about Beacon?” We’re not planning on doing Beacon at the moment. We’ll wait until they figure it out and do whatever they do

Update 1: I just spoke with Jessica Alter, who manages BD for the Bebo Platform. She has some important details for Facebook app developers:

• Bebo and Facebook are working together. We’re going to do our best to keep things as compatible as possible for developers. However, it will be an 80/20 thing. We want to do most of the same things with our platforms.
• We will have invitations, notifications, and an activity stream. All the important viral channels on Facebook will exist on Bebo.
• In addition, we’re going to add auto-play on profile pages, which we hope will help with virality.
• We want to build a community around our app directory and app ratings. We want to help you find apps that your friends like.
• We don’t think about our content efforts and platform efforts as totally distinct. We want to do more to bring them together over the coming year.

Update 2: I also just spoke with Ami Vora, Facebook’s Platform product manager. She just posted on Facebook’s blog that Facebook is opening up the Facebook Platform architecture:

We’ve seen a great response from both our developers and our users [since launching the Facebook Platform in May 2007], and we’ve certainly learned a lot as we’ve worked on our platform over the past year and a half.

Now we also want to share the benefits of our work by enabling other social sites to use our platform architecture as a model. In fact, we’ll even license the Facebook Platform methods and tags to other platforms. Of course, Facebook Platform will continue to evolve, but by enabling other social sites to use what we’ve learned, everyone wins — users get a better experience around the web, developers get access to new audiences, and social sites get more applications.

This is just another step toward the vision of easy, open sharing of information. We look forward to supporting other social sites as they release their own platforms, and look forward most of all to the added benefit for developers and users.

Ami said Facebook is working with Bebo to make things as simple as possible for developers. As always, the devil is in the details…

Update 3: While the Bebo Open Application Platform is now live, Bebo says the sandbox will open to all developers next week.

By Justin Smith [justin at insidefacebook dot com]

Purchase this report The Facebook Marketing Bible - Current Edition Buy PDF: $49 USD OR Buy PDF + 3 Months of Free Updates: $59 USD

Introduction

A large and growing portion of some of the most valuable demographics are spending more of their time and attention on Facebook and less on other channels and media. Not only are US college students and teenagers fully engaged in Facebook, but adults, professionals, and people from around the world now constitute a substantial portion of the Facebook userbase as well.

However, most marketers lack a comprehensive understanding of the vast array of explicit and implicit marketing channels Facebook offers - most of which are viral. My goal here is to provide an introduction to what’s possible on Facebook to the spectrum of marketers from brand advertisers to volunteer grassroots evangelists.

Facebook offers many ways to get the word out and bring the people in. Here’s how to get started.

Contents

I. Tools for Guerilla Marketers

1. Profile Page
2. Groups
3. Pages
4. Events
5. Notes and Photos
6. Messages
7. Marketplace
8. Share / Posted Items
9. Networks
10. Mini Feed and News Feed

II. Tools for Advertisers

11. Social Ads
12. Integrated Opportunities
13. Beacon
14. Polls
15. Facebook Platform Ad Networks
16. Facebook Platform Application Sponsorships
17. Sponsored Facebook Groups

III. Tools for Application Developers

18. Profile Box
19. Mini Feed
20. News Feed
21. Invitations
22. Facebook Notifications
23. Email Notifications
24. Application Directory

I. Tools for Guerilla Marketers

For the aggressive guerilla marketer, Facebook offers a bevy of viral channels to get the word out to your friends and creatively reach your target audience. The best part about these guerilla tactics is their cost: $free. Everyone on Facebook can use these strategies to recruit and evangelize their causes.

1. Profile Page

The starting point for your presence on Facebook is your profile page. Your profile page is basically a landing page that you design in order to convert your friends to engage with certain parts of your identity.

Not only is your profile the page that you have the most control over, it’s the place where you can most deeply and authentically express your passion for the brand, company, or product you want to promote. Your profile page is an opportunity to craft a credible real-world story around the reasons your products or services are so valuable. Take advantage of Personal Info, Work Info, Photos, and applications to tell bits and pieces of your narrative as it relates to your brand. If you’re not buying your own stuff, why should anyone else?

If you don’t want to associate your personal identity with the product or service you’re trying to promote, Facebook is not for you. Inherent in the current state of Facebook is a culture of transparency that devalues and ignores inauthenticity. If you’re afraid to show the real people behind your campaign, that’s okay–but save your time and money and go somewhere beside Facebook.

Finally, most people don’t realize how many page views profile pages generate. One of the most common habits of Facebook users is browsing the profile pages of friends and stalking the profile pages of people they want to learn more about. By connecting to hundreds of parters, customers, associates, and friends on Facebook, you’ll drive a TON of traffic to your profile page. Take advantage of that huge opportunity.

2. Facebook Groups

Groups are oldest and simplest way to build community around your brand or company on Facebook. By starting a group, you create a central place for customers, partners, and friends to participate in conversations around your brand. Facebook groups come with boards for posting discussion topics, photos, videos, and links right out of the box. You can also easily send news and updates to your group members as often as you like - messages arrive in their Facebook Inbox. And the best part about Groups is you can create as many as you like for free.

Groups are one of the simplest ways to do viral marketing on Facebook. Once members have joined your group, they can easily invite their friends to join the group via a built-in Invite feature. If your members are excited about your group, it can grow really quickly. (1,000,000 Strong for Stephen Colbert grew from zero to one million members in 9 days!) Additionally, your group name will usually appear on your members’ personal profile pages until they leave the group. Many people view groups as “Bumper Stickers” for their profile page in this regard. Because profile pages are highly trafficked, these links can generate a lot of clicks to your group page.

Of course, groups do have their problems. First and foremost, Facebook removes your ability to blast messages to your group once it surpasses a certain size. While Facebook is working on removing this limit, group owners are still currently experiencing this restriction at 1000-1500 members. Second, if your group becomes popular, it can become a target for spammers. If you want to keep your group clean, be prepared to spend time deleting spam wall posts and reporting users that spam your group to Facebook. This can take a lot of time. Finally, while Groups do offer a reasonably robust feature set with no setup, you’re not able to extend their functionality with Facebook applications. In order to use those, you’ll need to get a Facebook Page.

3. Facebook Pages

Pages were launched by Facebook in November 2007 as a way for businesses of many types to easily establish a brand presence on Facebook. Pages are a lot like groups, with some important differences:

• Pages are more customizable than groups. You can add HTML, Flash, or even Facebook applications to your pages to extend their functionality and the depth of experience users can have with your brand.
• Pages get more prominent “Bumper Stickers” real estate than groups on the profile pages of your fans.
• There is no limitation to the number of fans in your group that you can message.
• “Fans” who join your group are NOT able to invite their friends to be fans of your Page. Fans must either “Share” your page with their friends, or their friends must observe that they “are a fan” of your Page either via their profile page or News Feed.
• Facebook has taken an active role in cracking down on Pages not created by authorized agents.

Pages are a good option for small or local businesses that want to establish a presence on Facebook. Like groups, they’re another free and easy way to do viral marketing.

4. Facebook Events

Facebook Events is a free application developed by Facebook that anyone can use to promote marketing events, sponsored parties, or even product launches, transactions, or company milestones.

When you create an event, it gets a fully-featured page, much like a group, that includes a wall, discussion, photos, videos, and links. You can invite all of your friends to the event; friends you invite will receive a special notification requesting their RSVP. You can also add admins to the event, who can also invite all of their friends.

Facebook Events makes it easy to get the word out to hundreds of people, manage your guest list, and build community around your upcoming event.

5. Facebook Notes and Photos

Notes and Photos are two Facebook applications that allow you to share blog posts and pictures with your friends. You can use these features to post content about your brand, but be careful to always do it authentically - don’t be spammy. If your photo albums are all company logos, for example, you’ll lose a lot of credibility.

One feature that often goes overlooked within Facebook Notes and Photos is “tagging.” When you publish a note or post a photo, Facebook allows you to “tag” that note or photo with the names of your friends who are “included” in it. When you “tag” a friend in your photo or note, he/she gets a special notification. However, you don’t have to use “tagging” only to tag people that are actually “included” in the note or photo–you can also use it to selectively choose certain people whose attention you want to bring to the content you’ve created. When they view your note or photo, they’ll see the other people you tagged in it - so make sure it’s a group of people they’d be complimented to be included in.

6. Facebook Messages

The rise of Facebook Messages as a popular alternative to email has confused many “old” people. Nevertheless, Messages can be a powerful vehicle for targeted marketing on Facebook.

Messages are like email, except a lot less fully featured - Facebook offers no way to search, sort, filter, categorize, or star messages. While Facebook’s default privacy settings prevent you from seeing the full profile page of most Facebook users, Facebook allows you to send messages to users you have no connection with.

However, Facebook has invested heavily in message spam prevention. If you use your Facebook account to message users you have no connection with in high volume, Facebook’s automated systems will shut down your account. While they do offer a direct line to a hard to find sales lead or potential job candidate, it is not smart to try to spam people using Facebook messages.

7. Facebook Marketplace

Marketplace is Facebook’s classifieds listing service. You can post a for-sale ad or wanted ad in any of your networks for free. However, if you want to post your ad in multiple networks, you have to pay $1 per network per listing.

Like with messages, spamming up the Marketplace will get your account deleted and your ads removed. It’s most likely not worth your time to try to evade their systems.

Unlike other Facebook-developed applications, Marketplace does not get heavily used by most members. My Marketplace ads have only yielded a few leads. However, unlike Craigslist, which is anonymous, all Marketplace responses are tied to real Facebook accounts. When you receive a response to your Marketplace listing, you can see the respondent’s profile page even if they’re not your friend.

8. Facebook Share / Posted Items

Facebook Share is a Facebook application that lets you promote any Group, Event, Photo, Link, or Application you come across by a) giving it real estate in your “Posted Items” list on your profile page, or b) sending it directly to your friends’ Inbox.

By posting it on your profile page, you can direct some clicks to the shared item. However, while this is an effective promotional tactic, it’s not as targeted as sending it directly to friends’ Inboxes. Those messages are more likely to convert into valuable clicks.

9. Facebook Networks

Facebook Networks are like group pages for everyone who’s a member of an Educational, Work, or Geographical network. While no Facebook members “own” any pieces of network pages, network pages offer 1) another way for users to discover events, posted items, and marketplace listings, and 2) discussion forums and walls which any members can post to.

Network pages are probably the most commonly accepted places to spam in Facebook. While you can post there, keep in mind that your messages may be considered spammy even if they’re real and relevant.

10. Mini Feed and News Feed

While all the channels I’ve described above are useful for grassroots marketing on Facebook, the wind that blows your marketing seeds is Facebook’s News Feed. While you’re not able to publish directly to the feeds (unless you’re willing to pay or build an application), Facebook’s Mini Feed and News Feed archive your users’ engagement with your brand and syndicate it to their friends, networks, and beyond, amplifying the reach of your campaign by orders of magnitude.

When Facebook users join your group, RSVP to your event, become fans of your page, share your photos, or further engage with your brand in any of these channels, Facebook automatically adds a feed item to their Mini Feed. That feed item exists for all to see, and is often in a prominent location on Facebook profile pages. Facebook’s News Feed, which occupies most of the login landing page, then amalgamates each user’s friends’ Mini Feeds into one unified stream of “recent news”. It’s possible that one Mini Feed item generated by a Facebook user could be seen in hundreds of their friends’ News Feeds.

The News Feed has revolutionized the way information is shared between friends on Facebook. This can mean great things for your campaign and your brand.

II. Tools for Advertisers

For marketers with a budget, Facebook offers both integrated and self-serve solutions to reach broader slices of the Facebook audience. Depending on your budget, you can get started as an advertiser on Facebook with as little as a few dollars for a short-run flyer or as much as several hundred thousand dollars for a customized “sponsored group” destination inside Facebook.

11. Social Ads

Social Ads replaced Facebook Flyers in November 2007 at the same time Facebook launched Pages. With Social Ads, Facebook offers advertisers the option to pay on a CPC or CPM basis, whichever they prefer. Social Ads offers very powerful targeting capabilities: when you create your ad, you have the option to limit who sees your ad by age, sex, location, keywords, education level, workplaces, political views, and relationship status.

Social Ads is completely self-serve and provides real time feedback on the size of your target audience and the suggested bid range to achieve impressions. While Facebook doesn’t guarantee your budget will be reached, I can’t imagine they’re anywhere close to filling their inventory.

Social Ads also offers placements in the News Feed which get much better click through. You can also target Social Ads to friends of users who have recently engaged with your brand via your Facebook Page or Facebook Beacon (for more details on Beacon, see below). These units convert at a much better rate.

12. Integrated Opportunities

If you represent a large account, Facebook has partnered with Microsoft to serve advertisers with higher campaign budgets (above around $50,000). Just contact Facebook, and a sales rep will work with you to explore more integrated advertising opportunities than are available via the self-serve Social Ads service.

13. Beacon

Beacon is Facebook’s new program (launched in November 2007) that allows partners to send Facebook information about the activities Facebook users do on partner websites, in order to be published inside Facebook via the Mini Feed and News Feed. For example, Amazon might use Beacon to send a feed item to Facebook about a book you just bought.

Initially, Beacon launched as an opt-out program that required users to explicitly prevent their Beacon feed items from being distributed to their friends on Facebook. However, after complaints by privacy advocates, Facebook modified Beacon to become an opt-in program. While the potential for Beacon to increase the flow of information valuable to marketers within Facebook is tremendous, it largely remains untested.

14. Polls

Polls offer an easy way for marketers to quickly conduct research within their targeted audience. Results are streamed in real time to a dashboard that allows marketers to break down results by gender and age. Based on your targeting preferences, you can get hundreds of responses within an hour.

15. Facebook Platform Ad Networks

When Facebook launched the Facebook Platform in May 2007, they also made a promise to allow application developers to monetize their applications however they like and keep 100% of the revenue. This market green-field led to the birth of a new niche of ad networks dedicated to serving the inventory created by Facebook Platform applications.

While the quality of these networks can be inconsistent, together they offer an important way to reach the Facebook audience often engaged in a particular vertical. Inventory is sold on a CPM, CPC, CPA, and CPI (cost per installation of YOUR application) basis. Leading firms include SocialMedia (disclosure: SocialMedia is a sponsor of this blog), RockYou, Lookery, and others.

16. Facebook Platform Application Sponsorships

Advertisers looking for more integrated opportunities inside Facebook applications can consider approaching application developers and negotiating a sponsorship directly. For example, beverage companies have sponsored “drink-sharing” applications, while contact lens companies have sponsored “winking” applications.

17. Sponsored Facebook Groups

Before Facebook Pages launched, the only option available to advertisers wanting to establish a certified presence on Facebook was through the Sponsored Group program. Sponsored Groups are Facebook Groups with the ability to customize the HTML of certain regions on the page.

Surprisingly, the cost to rent a Sponsored Group on Facebook starts at US $100,000 a month. Not surprisingly, the number of Sponsored Groups purchased over the years has remained small. I expect Facebook to phase out Sponsored Groups as they seek to bolster Social Ads and Pages.

III. Tools for Application Developers

For marketers who can harness technical resources, the Facebook Platform offers the most powerful way to create engaging connections with your target audience on Facebook. Thousands of third-party applications have already been built on the Platform APIs–many of which have allowed for new kinds of deep brand experiences, and many of which turned out to be transient ad delivery vehicles that failed to take user experience into account. While I can’t tell you how to dream up a good app for your business here, I will explain the channels that your applications must absolutely take advantage of in order to achieve maximum success.

18. Profile Box

Surprisingly, the most common way new users find applications is through application profile boxes on their friends’ profile pages. The challenge of profile box design is making it both compelling for an existing user to keep it on his/her profile, and appealing enough to a new user to click on and install the application. If your profile box doesn’t provide the profile owner sufficient value to merit its presence on the profile page, your user will hide your profile box, or worse, uninstall your application. Simultaneously, if your profile box is too spammy, your user will get rid of it instantly.

19. Mini Feed

The Mini Feed is a powerful part of the Facebook Platform API that allows developers to publish news about a user’s engagement with their applications. Like the profile box, your feed items must be compelling to the profile owner while not being spammy, AND attract your user’s friends to click on the feed item and explore the app. If you mess up in either direction, users will hide your feed item, and thanks to a recent new feature from Facebook, uninstall it in-line.

20. News Feed

As I mentioned earlier, the Facebook News Feed offers immense value by syndicating your feed items to thousands of users’ home pages inside Facebook. In a previous post, I examined some of the tactics application developers can employ to optimize their feed items for News Feed performance.

Recently, Facebook enabled a new way of increasing the selection frequency and distribution breadth of feed items called Feed Templates. By registering feed templates in your Developer Settings, your feed items can now be a) lumped together and shown more often, and b) shown to friends of your app’s users who don’t have the app installed (previously, only friends who had the app could see your app’s feed items in their News Feeds).

Testing, tracking, and optimizing your feed items is a worthwhile investment for any application developer.

21. Invitations

One of the most powerful viral channels available to Facebook Platform application developers is invitations. The invitations API allows users of your application to invite up to 20 of their friends per day to install your app. When maximized, invitations can lead to very quick growth.

However, encouraging your users to invite their friends to install your application is not as easy as you think. The scenario must be compelling enough for your users to send invitations on your behalf, and the invitation itself must be compelling enough for the recipient to convert.

22. Facebook Notifications

Notifications get less press than feed items and invitations because they’re not as effective at spreading your app. Because Facebook mysteriously assigns your apps a spamminess rating based on the number of notifications your apps send out, many developers choose to use notifications sparingly to prevent having their notification channel shut down by Facebook. However, notifications have been proven to be an effective tool for retaining existing users of your app.

23. Email Notifications

Email notifications are just like Facebook Notifications, except they are delivered directly to your users’ email address INSTEAD of to their Facebook Notifications inbox. While originally scheduled to be deprecated by Facebook, Facebook recently enabled a new API method for email notifications that allows developers to send users up to 5 email notifications per day.

24. Application Directory

Although hard to find, a surprising number of application installations come directly from the Application Directory. When submitting your application for inclusion in the directory, be sure to create compelling art and copy for the listing, as well as your application’s About page. Doing this up front will create a meaningful difference in the number of users that add your application from the directory in the long run!

Conclusion

Never before has a social platform emerged that combines the authenticity of Facebook’s culture with the raw power of Facebook’s multitude of viral channels to offer such an unprecedented marketing opportunity.

Purchase this report The Facebook Marketing Bible - Current Edition Buy PDF: $49 USD OR Buy PDF + 3 Months of Free Updates: $59 USD

While some remain pessimistic about the potential of social networks to become viable direct marketing channels, I believe that direct marketers who craft intelligent strategies for the Facebook environment–which will require much more creativity than SEM campaigns–will find success. At the same time, Facebook offers brand marketers entirely new paradigms for designing immersive and persuasive brand experiences.

At the same time, we are still early in the game, and we have a lot left to learn. Only when marketers learn how to capture new kinds of value available for the first time ever inside Facebook will the markets realize just how valuable Facebook is.

Facebook just pushed a feature that will be welcomed by heavy users of Facebook messaging:  actually being able to view the message contents in the notification email Facebook sends to let you know that a new message has arrived.

(Annoying, however, is that while you can see the message body in the email, you still can’t see the message subject - that remains “XXX sent you a message on Facebook…”)

This means that Facebook message management just got a little easier… while you still can’t star, file, search, or label your Facebook messages in Facebook, at least you can now do it a little more easily in Gmail!

This morning, in response to the complaints from privacy advocates that have been well-documented in recent weeks, Facebook added a Beacon preference to allow users to universally opt-out of Beacon. Now, if users globally opt-out, no information sent to Facebook from Beacon partners will be retained. This means that those most concerned with their privacy will be able to control whether Facebook knows anything about what they do on the rest of the web.

This morning’s announcement was the first time Facebook CEO Mark Zuckerberg personally responded to the Beacon press disaster. He’s owning the way Facebook handled things, which is a good move:

About a month ago, we released a new feature called Beacon to try to help people share information with their friends about things they do on the web. We’ve made a lot of mistakes building this feature, but we’ve made even more with how we’ve handled them. We simply did a bad job with this release, and I apologize for it. While I am disappointed with our mistakes, we appreciate all the feedback we have received from our users. I’d like to discuss what we have learned and how we have improved Beacon.

… It took us too long after people started contacting us to change the product so that users had to explicitly approve what they wanted to share. Instead of acting quickly, we took too long to decide on the right solution. I’m not proud of the way we’ve handled this situation and I know we can do better.

Facebook has succeeded so far in part because it gives people control over what and how they share information. This is what makes Facebook a good utility, and in order to be a good feature, Beacon also needs to do the same. People need to be able to explicitly choose what they share, and they need to be able to turn Beacon off completely if they don’t want to use it…

Personally, I still believe that very few people outside the Techmeme Radius are likely to ever have any significant level of concern about Beacon. As Jay Meattle notes, traffic to Facebook’s privacy page hasn’t grown meaningfully at all since the PR melee started.

Facebook could have probably gotten away with just creating a universal opt-out instead of making Beacon opt-in. That change made Beacon a lot less powerful for partners: now there are going to be much, much fewer Beacon-generated News Feed items. It’s a lot safer, but it’s also pretty neutered.

Whether or not Alexa is accurate (Compete disagrees), RockYou and Slide have been battling it out for top spot among Facebook application developers. Tonight, RockYou announced that it is currently #1 across several major application types:

• Wall: Super Wall  vs. FunWall
• Messaging: X Me vs. SuperPoke
• Quizzes: Likeness vs. My Questions

Super Wall is also the most active app on Facebook, with over 3.1 million daily active users (its 18% daily retention rate is pretty impressive). With over 22 million installations (almost 40% of the entire Facebook population), Top Friends from Slide is still the most installed app on Facebook.

Together, RockYou and Slide continue to lead other application developers in reach and retention. The companies produce 7 of the top 10 most popular applications on Facebook.

First of all, thanks to BJ Fogg and Dave McClure for inviting me to speak at last Thursday’s meeting of Creating Apps for Facebook at Stanford. Being in the room reminded me of why Silicon Valley and Stanford (sorry to toot our own horn) are so awesome - the class’ energy and passion to learn, experiment, and build innovative new services was palpable.

I think Chris Mocko said it well when he stated that the class was basically a comprehensive crash course in entrepreneurship - with the combination of persuasive design and metrics-driven development stressed in the class, any company would be well served to hire a CS 377W alumni!

This week, I’m heading up to Seattle for Web Community Forum: Community Building in the Age of Facebook.  I’m excited to hear what everyone is working on in the Pacific Northwest!

The keynotes during this two day event, which is focused on building and marketing applications on Facebook, will be given by:

• Jeremiah Owyang, now of Forrester Research on Your Facebook Strategy: Opportunities of a Ready Made Platform
• Lee Lorenzen, of Altura Ventures on Why Facebook is Worth $100 Billion

Look forward to seeing you there!