Posts Tagged ‘facebook’

Direct Payments Are Just The Beginning

Tuesday, June 29th, 2010

The social developer summit, hosted by the Inside Facebook network, is in full swing in San Francisco today. The constant events and news around social applications underline the importance and future of the industry. Social applications are leading the charge and are driving the evolution of online technology and digital commerce. However, they are still new and correspondingly, the ways in which they monetizeare all over the map. Matters are further complicated by the impending restrictions on the social platforms – the most prominent example being Facebook Credits. This makes it tough for developers to optimize or simplify their business models as they’re constantly scrambling to stay in sync with Facebook.

For a developer to bring an app to market and successfully monetize, several things must occur.

  1. Find a market
  2. Deliver value
  3. Charge for value provided
  4. Analyze & iterate product to meet demands
  5. Reinforce customer relationships

Facebook credits simplify the ability to charge users as they offload all of the operational logistics of processing payments and storing customer’s payment information. However, they are more expensive than they first appear. In addition to the hidden costs, they also hamper the ability to control the customer relationship, analyze customer trends and choose the right business models.

The trend that we are seeing in response to Facebook’s moves is for developers to hedge their bets by developing external sites and their own relationship with users. Also, several networks are aiming to be the alternative platform and focusing on segments like social gaming. This trend should only accelerate as the industry matures and the platforms move to take even more control. In the meantime, feel free to ping us with monetization ideas – we’d be happy to give our outlook and suggest best practices. In fact, if you’re heading up to Seattle in a few weeks for Casual Connect, we’d be happy to sit down and talk through any payment or billing issues.

Jeremy NusserTags: , , ,
Posted by Jeremy Nusser in Events, Industry News, Marketing Fury, Payments 101.201.301, gaming | No Comments »

Facebook Platform Trends

Friday, March 5th, 2010

Facebook is wildly popular, the latest comScore report shows that it currently has 38.3% reach across all internet users and they have doubled their unique visitors (111%) over 2009. Facebook’s success has led to a massive economy of third party applications built around their 400 million strong (and growing) user base.

Most of those applications make money through advertising or virtual goods and currency. Regardless of the mechanism, the underlying success factor is attracting a large number of users. That either creates an attractive demographic for advertisers, or creates a user base that will convert at some percentage into paying customers. Over the last few months Facebook made several changes that change the playing field for application developers monetizing on their platform.

1) The biggest of these changes is Facebook Payments. They’ve spent a lot of time working on building a payment infrastructure and it won’t be long before the only method of payment for applications will be Facebook Credits (at a 30% cut to Facebook ala Apple’s iTunes)- http://news.cnet.com/8301-13577_3-10460201-36.html

2) Secondly, there is an increasing shift towards limiting communication between applications and users, this has been ongoing for quite a while as Facebook balances notification spam and the major source of customer acquisition for many apps –  http://www.readwriteweb.com/archives/facebook_silences_app_notification_spam.php

3)   Facebook has been shifting more and more burden onto developers. This is a good thing overall for the community and encouraging developers to contribute value for the community. They are basically forcing their developers to shift from being a dev shop into providing a full customer experience including customer service, policies and monitoring. http://wiki.developers.facebook.com/index.php/Policy_Examples_and_Explanations

These trends will continue as Facebook continues to grow – it will be harder and harder to create a profitable business on their platform. The outstanding question now is will developers re-evaluate their relationship with Facebook and develop their own stand-alone portals?  The difference between offering an application on Facebook and offering it on a stand-alone site used to be quite large, but that gap is narrowing quickly. The freedom to control the customer experience is compelling, as is the ability to control customer billing and put more revenue in your bank account.

Will Facebook work with developers and entice them to stay on the platform? Or will it become a marketing channel for users to get acquainted with off-platform brands? Either way, it’s going to be an interesting year for social apps!

For more on the tradeoffs associated with “on or off” platform applications – Susan Wu of ohai! has a great post on her blog.

Jeremy NusserTags: , , ,
Posted by Jeremy Nusser in Data Geek, Marketing Fury | No Comments »