How is Facebook Going to Monetize the Open Stream API?

Currently, all of Facebook’s monetization efforts happen on Facebook.com, whether engagement ads sold directly to large clients, performance ads sold through Facebook’s self-serve tools, or Facebook credits sold directly to users.

With Facebook Connect, Facebook has opened the door for possible future monetization efforts through advertising, virtual currency transactions, or other forms of social commerce. However, now that Facebook has opened up the stream API for developers to create new kinds of applications that can run outside any Facebook-operated websites or interface altogether, how might Facebook be planning to one day monetize that engagement?

For now, Facebook isn’t prioritizing monetization of the stream API. Rather, it simply wants to get stream-based applications developed and distributed as quickly as possible so as to permeate the variety of platforms and devices on which consumers are increasingly monitoring real-time information.

However, while for the time being Facebook’s ad sales team may not be getting new inventory it can sell directly, here are a few ways Facebook might make money off the stream API in the future:

1. Selling targeting data. Much like has been imagined with Facebook Connect, Facebook could provide user profile or behavioral data which developers and publishers could then use for their own ad targeting purposes. Developers and publishers would then be able to provide the most compelling advertising experience according to their particular product, and Facebook could be paid either a flat fee or on a revenue sharing basis. While there are privacy questions that would need to be addressed, the basic model has worked well before.

2. In-stream virtual currency transactions. While Facebook is still only experimenting with virtual currency gifting, it shows that the company is actively engaged in thinking about ways to enable currency transactions directly in the stream. Were Facebook to expand on this kind of functionality, it could enable developers to build new kinds of games and applications that could drive high volumes of currency exchange in the stream, no matter where the stream is being consumed.

3. Selling tools and reports. Twitter’s Biz Stone claimed recently that the company wasn’t even planning on pursuing advertising sales for now, but rather is focused on providing premium analytics and tools to marketers. If Facebook is able to achieve significant distribution of its stream through the Open Stream API, that could create similar opportunities for Facebook as well.

It’s possible that Facebook won’t actively pursue any of these options for a while. However, there will come a time when Facebook needs to figure out how to monetize all of the engagement that will happen off properties it runs, and any of these three models could be tenable starts in that direction.

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2 Responses to “How is Facebook Going to Monetize the Open Stream API?”

  1. Don’t Expect a Facebook IPO for a Few Years | Sponorship Portal says:

    [...] other things that we’ve considered.” Speaking of monetization, Justin Smith at Inside Facebook has an interesting post up about how Facebook might one day monetize the open stream API, which was opened up to developers [...]

  2. Don’t Expect a Facebook IPO for a Few Years | Move with Mind says:

    [...] of monetization, Justin Smith at Inside Facebook has an interesting post up about how Facebook might one day monetize the open stream API, which was opened up to developers [...]

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