Facebook Gold Rush? Why Developers and Brands Aren’t Connecting

In most stories about Facebook Platform development, there’s a depressing footnote – sure, applications are popular, but very few of them make significant profits. The New York Times famously compared Facebook’s economy to the San Francisco Gold Rush, describing a long line of developers searching for a short supply of gold. Apps on the Facebook Platform may get traffic, but the perception is that developers don’t make money.

That perception may be incorrect.

“Developers want to monetize their applications,” says Chris Cunningham, founder of Appssavvy, a new ad firm representing Facebook application developers to major brands. “Brands do as well.”

If the desire is there, why haven’t big companies jumped on the opportunity while prices are at a premium? Fortunately, the traffic gold rush analogy is flawed. Developers have already figured out how to get huge volumes of traffic, and are just looking for a way to ship it to Madison Avenue.

To some degree, they’ve already succeeded in getting paid without Madison Avenue’s help – vibrant app exchange networks are flourishing on Facebook, and many developers have deployed affiliate and cost-per-action offers with great success. It takes a lot of clicks, but with hundreds of millions of pages served every month, those clicks can amount to real cash.

Most observers, however, are more interested in the investments big brands make. But big brands need a railroad to get to all that gold. That process is just beginning on the Facebook Platform. Countless app developers have traffic, but they don’t have the connections or talent to sell that traffic to advertisers.

According to former ad salesperson Ashkan Karbasfrooshan, ignorance about the ad sales world is a problem on the web at large. There are also issues specific to Facebook – while a search engine thrives on monetizing a user’s intent, it’s been widely circulated that Facebook continues to struggle to monetize its own traffic. “It tries to bypass content creation,” Karbasfrooshan says, “and instead passes off UGC as premium content advertisers want, which is even more foolish.”

Ironically, applications may have a better path to monetization than Facebook itself. Facebook can sell against all the app traffic too, but apps give the social graph more meaning and value to users. That’s when brands get interested.

Already, some companies and applications have taken the leap into partnerships. Many brands have launched their own applications, and others have worked closely with existing ones. Free Gifts, Zombies, and other top apps have all launched campaigns with major brands.

The space is monetizing rapidly – traffic gains experienced by many Facebook app developers have merely outpaced construction of the railroad to Madison Avenue. Ad sales companies will continue to dive into the space and aggregate traffic, focus content, and help brands access traffic gold. John Battelle’s Federated Media has already partnered with Graffiti and Watercooler. Even companies like Videoegg, which sell ads across a vast network, have focused on better serving Facebook application developers specifically.

The future for developers, however, is in young companies like Appssavvy. Founder Chris Cunningham has a background in ad sales as well as widgets, and his relationships with a number of major brands and developers help him sell for individual Facebook apps. “We are selling the applications through a direct sales team. Sharp developers have no way of connecting with big brands at a high level – we want to change that.”

The larger ramifications of brands embracing Facebook? Less “useless” and more meaningful apps. A relatively useless but pageview-maximizing application makes sense when developers are selling on a CPM or CPC basis, but as Cunningham notes, “Brands get excited if they feel like they’re reaching the right audience – they are interested in a relationship.” That relationship means richer applications and, eventually, richer developers.

The Facebook application gold rush is already a success: developers have found traffic in massive amounts, while other websites spend years panning for as many visitors. Now, the railroads are being built to get the traffic to the brands that can use it.

Admittedly, that process moves more slowly than fast-forward Platform watchers are accustomed to. However, these new relationships will endure for a long time – as the arduous process of ad sales begins, the Facebook Platform seems less like a rush and more like an economy.

Phil Edwards is Director of Business Development at Lonely CEO Media

App developers could learn from Facebook’s customer service

Every Facebook developer is familiar with Facebook’s development languages: Facebook Platform runs on FBML, FQL, and FBJS, and developers learn those languages in order to create great apps. But while developers comb Facebook’s Wiki in order to figure out how to use the fb:photo tag, they rarely take the time to build up other parts of their operations critical to their success. Remembering customer service, however, can be just as important as remembering a semi-colon at the end of a line of code.

Facebook has consistently provided strong customer service for its users. While recent conflicts between customer service and advertising options have grabbed headlines (see Facebook’s controversial ad program “Beacon”), Facebook typically responds closely to user interests. A look at former Facebooker Karel Baloun’s book shows that Facebook devoted early manpower and dollars to its customer service team. That meant listening to users in order to improve the product.

This is an issue that frequently affects app developers. Developers expect to release their app, receive acclaim, and then watch the checks roll in. Real maintenance is a lot more difficult and time consuming. Just as Facebook has a customer service team, developers need to dedicate their own resources to monitoring the application directory listings and email support addresses for their apps. It can be the difference between success and failure on Facebook Platform.

The application “About” page is the most important place to monitor what users are thinking. It’s important to closely watch user discussion, and then respond appropriately. Users appreciate active developers. Keeping an eye on the About page can entail everything from answering user questions to deleting spam and competititors’ reviews. It’s not a heavy job, but it is a consistent one – one bad review can be detrimental to an app for a day, so keeping watch is crucial. After spending hours writing code, it makes sense to spend at least a few minutes listening to users.

Recent changes in Facebook’s Application directory have made customer service more important than ever. Developers need to become especially active due to the new compulsory “Reviews” board, which lets users leave any review they like. More positively, Facebook has allowed users to become “Fans” of applications. The ability to update fans on an app could raise daily active user rates and give a boost to applications. More fans means more publicity for an app. Customer Service pays real dividends.

And that’s why Facebook has always put an emphasis on listening to users. Developers should too. Like Facebook, developers face conflicts between service and business: look at the rampant spread of user-abusing forced invitations. However, it’s important for any developer to recognize the role that customer service plays in their app’s success. Code is obviously crucial, but it should definitely be supplemented by a conversation with users, even after the last file has been pushed.

Phil Edwards is Director of Business Development at Lonely CEO Media, a Facebook application development and consulting firm

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