Inside Facebook

Web metrics firm Compete today released new data showing interesting trends in user migration/adoption of the “new” Facebook. Most Facebook users in Compete’s panel are using the new version, and increasingly fewer of them are going back to the old version.

1) % Users viewing the new site vs. those viewing only the old site

2) % Users going back to the old site in the same session vs those only using the new site

While there are some vocal users dissatisfied with the new design (check out the comments on our last post), the transition seems to be going relatively smoothly overall.

Well, it didn’t take long after Facebook’s change of stance on alcohol sales for brewers and distillers to launch applications on the Facebook Platform. This week, Miller, Absolut, and tech behemoth Microsoft launched new applications aimed at engaging the Facebook audience with app firm Context Optional:

1. Today I’m Toasting - Miller

“Miller was looking to engage young people online in an interactive and social way.  To meet their goals, Miller and Digitas worked with us to design and build a toasting application that celebrates everyday with fun random holidays,” says Kevin Barenblat, Context CEO.  The application is one of the first branded alcohol apps to use Facebook’s newly launched demographic restrictions; interaction with the app is limited to those who say they are over 21.

2. Absolut Top Bartender - Absolut

3. Got Pies - Microsoft

Every Facebook application developer faces a big choice early on in their design: whether to build the bulk of their apps’ canvas pages in FBML or iframes. While there are advantages and disadvantages to each approach, those that choose FBML often get support for platform features well before those that choose iframes.

Tonight, Facebook is adding support for some platform features for apps with iframe-based canvas pages. Specifically, Facebook is adding:

• XFBML support, which allows iframe-based apps to use FBML tags
• Cached friend lists and preload FQL data support in the JavaScript client library
• Support for preloading FQL queries

XFBML support is particularly important because it allows many FBML tags not previously available in iframes to now be run directly in the iframe:

You can now use FBML tags on iframe canvas pages with XFBML. Many tags, like fb:name and fb:profile-pic, you can incorporate directly into your iframe’s HTML. Other important tags, like fb:request-form, you can use within the fb:serverfbml tag, letting you incorporate multi-friend selectors and request forms right into your iframe.

Developers can find the updated PHP client library here.

Facebook has been pushing its virtual gifts prominently on the home page over the last year. Why? Because it’s becoming a nice secondary revenue stream for the company, doing somewhere around $3 million/month in sales these days.

That’s the conclusion Jeremy Liew over at Lightspeed VP came to after logging inventory levels in Facebook’s virtual goods store in recent months. Compared to the $15 million/year run rate he estimated earlier this year, Facebook’s digital goods business has appeared to double to between $30-40 million/year at the current rate.

While the assumptions Liew makes in running the data leave significant margin for error (data is only available for a small percentage of store items, seasonality, etc.), the fundamental trend shows a large growth in Facebook’s in-house digital goods business. With about 100 million active users, Facebook is doing $0.03 per user per month in virtual gifts transactional revenue.

The trend also bodes well for those application developers hoping to make a living on virtual goods transactions on the Facebook Platform. Like Facebook itself, many application developers are turning to virtual goods as an important secondary revenue stream to advertising - and many social game developers are creating sophisticated economies almost entirely based on virtual goods transactions.

Despite the existence of free alternatives, Facebook is showing that there is significant demand and payment infrastructure in place for its premium gifts. The company could become an even more important player in digital goods by providing virtual goods sales infrastructure for developers whenever its application payment platform is ready.

Related Inside Facebook and Inside Social Games Resources:

• What ARPU Can MMOs Hope For?
• Virtual Goods are a Major Source of Revenue for Social Game Developers
• Offerpal Media Monetizing Virtual Currency Apps on Facebook
• Meet the Godfather Behind Mob Wars’ (Real) Money: Super Rewards

Metrics and monetization models are still being developed in the social gaming world. Who’s building a transaction business inside Facebook? What’s the difference between “portfolio summed DAU” and “network DAU”? Check out the latest details in this week’s edition of highlights from Inside Social Games:

• “Network DAU”: A New Metric for Social Gaming 2.0
• Playfish Eyes Transaction Success with Social Brain Training
• Facebook Games Make Money, According to Developer Analytics
• Battle Tanks is an Addictive Turn-Based Game of Geometry
• Word Cube is a Beautiful Social Puzzle Game

New Inside Facebook Top Jobs for August 29:

• Senior Application Developer (Familybuilder / New York, NY)

Facebook continued tweaking the News Feed in the redesigned Facebook this morning with 2 interesting changes:

• Status Updates now always occupy the top three story spots
• “All Stories” has been renamed to the more exciting “Live Feed”

The first three status updates also do not have the “show me more/less about this person” feedback options. It appears that Facebook is simply taking the three most recent updates without trying to prioritise.

Many users have missed the Status Updates panel on the right side of the old profile, and will be glad to see it being given more prominence in the new design. Whether this is a permanent change or just an experiment remains to be seen.

Popular Facebook game Mob Wars has recently been rumored to be the most profitable app on Facebook. While that will never be known for sure, one thing is clear: Mob Wars is making a lot of cash. Probably in the tens of thousands of US dollars per day. How?

One large reason: Mob Wars has baked incentivized CPA offers from Super Rewards directly into the game, and expertly tuned its virtual economy to drive offer conversions without significantly imbalancing the economy or damaging game play. (Mob Wars also works closely with CPA monetization firm Offerpal Media.)

Super Rewards has largely remained quiet on the PR front to date, but the company is working with many of the top developers on Facebook to monetize their games. Super Rewards partners include Mob Wars, Knighthood, Premier Football, and several of the top apps in Zynga’s family of games, including Texas HoldEm Poker and YoVille. The company has built a 14 person team across its Vancouver headquarters, New York office, and soon to be opened San Francisco office.

We recently spent some time with Super Rewards CEO and Co-founder Jason Bailey and President Adam Caplan to learn more about how the company is working with Mob Wars and other leading apps and social games to make real money.

Jason, how does Super Rewards help social app and game developers make money?

What we do exceptionally well is understanding the nuances of all the games we work with. We work closely with developers to tweak and balance their game play and economies around their virtual currencies. Developers come in making $100 a day and we can take them up to $1000 a day in short order.

How detailed do you get?

We provide a broad range of services, everything from pricing specific items to consulting. Some developers have experience with their economies in current or past apps and want our help putting offers in front of their users. Others come to us while their game is still in alpha and really value our input.

What’s the most important thing developers need to do to make money with CPA offers?

The most important thing is balancing your economy properly. You should support all kinds of players well, while remembering that your hardcore users will generate 90% of your revenue.

You want to make sure users want to obtain and spend points, while preserving the quality of the game play. For example, in Mob Wars, in order to replenish your health you can either wait for the system to revitalize you or you can “go to the Godfather” and earn some “favor points.” (see right)

So how do you measure performance?

The core metric we use is dollars per click. We hope our developers can get 25% of their daily active users through a Super Rewards page at some point. Of those, if the economy is balanced correctly, you should see a 40-50% click through rate, and ultimately a net 8-10% conversion rate. Developers get about $1.00-$1.50/conversion for US users, but less for international users. We’re lucky to get $0.06/conversion in China, but we have games operating in Europe and other parts of Asia at $0.25 and up.

So assuming all of a developer’s traffic is US traffic, the developer could see up to $83 per day per thousand DAUs. However, on an average basis across all geographies, we are about half that number. It goes without saying that there is a wide distribution around the average based on quality of app and balance of virtual currency economy.

What kind of apps are doing the best?

Games! Gifting and poking apps don’t do as well. Games that do the best are ones in which the players want to be on top of the leaderboard, collect items, or play games of chance.

Also, keep in mind at that a majority of the revenue generated per user is generated early in the lifetime of the users’ interaction with the games. People spend money developing their characters, climbing the leader board, and unlocking new elements of the game. Once their character is strong, they have many prizes, and have unlocked all the levels - naturally there is less desire to complete offers and pay. It is those top guys though that motivate the little guys to climb and thus spend.

As another example, there is one app that has about 200,000 MONTHLY active users (4-50k DAU). Yesterday, about 14,000 users hit the Super Rewards page (about 30%). The users were about 35% USA, 55% CA, AU, and UK, the remaining 10% all over the world. 5,500 clicks were generated (40% CTR). Revenues were about $4,500 for the day for an EPC of about $0.80. This is a newer app so its earnings per 1,000 DAU is a touch higher than average. Also it is an engaging game with a virtual currency so it is a great fit for us. It is a fairly international app, but nothing unusual. If it had more US users it would earning higher aver EPCs.

So those numbers scale well at the smaller DAUs, but when apps have 500k DAU the formula gets more complicated. That being said, there are PLENTY of apps making $6,000 a day on various platforms. But no single app that I know of making $60,000 a day consistently.

However, we’re just in the beginning. We’re starting to see bigger players move in to the space with higher quality apps. I expect to see some very high quality games released in the next few months.

And some people think our stuff looks hokey, but we purposely make it match the look and feel of the game, like in Mob Wars. That is just how Facebook games look.

Right. So, how much does the social network context affect monetization potential?

The social factor is definitely important in driving games where there is pride or ego involved in being on the top of the list. However, the main reason our partner apps are doing well is entertainment. Casual MMO’s outside of social networks would do just as well. Social networks are just a great way to grow quickly, and play against real friends and family instead of random people you meet in the lobby.

Thanks Jason. Any final thoughts?

We are very bullish on the space. We’ll be moving into other areas like casual games and web games soon.

Our 200 developers love Super Rewards, but they don’t want us to talk about it. But we’ve been optimizing our system over the last year, and are now ready for prime time.

Facebook will be holding its first Developer Garage “Connect Edition” next week in Palo Alto. Developers will be able to learn more about how Facebook Connect can be used to let users connect their Facebook identity to a third party site, find friends there, and share info back to Facebook.

While Connect is still in beta, this will be one of the first chances developers have to see early versions of Facebook Connect implementations. Here are the details:

• When: Wednesday, September 3rd
• Time: 6:30 PM- Midnight
• Where: Blue Chalk Café - 630 Ramona St, Palo Alto, CA

For more, check out the event page.

New Inside Facebook Top Jobs for August 27:

• Product Manager / Senior Product Manager (Viximo / Boston, MA)