The $12MM/year Facebook app
There has recently been a lot of news about a single Facebook app generating $12MM in revenue per year, called Mob Wars. Here are some articles from Eric Eldon of VentureBeat, here and here.
Here’s some predicted numbers for some of the other apps as well:
Virtual currency tips inside of Facebook
Justin Smith from Inside Facebook did some more digging on this. They recently had a great interview with the founders of Super Rewards, the company that’s powering much of the virtual currency-based games on Facebook along with Offerpal and others.
There are some great comments related to Facebook-specifc strategies, and also on performance metrics like below:
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.
There are some other comments about how users stop monetizing as well once they are leveled up and aren’t buying as much. All worth reading.
The history of incentivized leads
Note the flow of how money flows into the Facebook ecosystem:
- People install a social gaming app
- They play the game, then want more money
- To get more money, they fill out lead forms for auto insurance, etc.
- The users get the virtual currency
- The social game publisher gets their payout from the lead itself
Now if the leads end up being poor quality – like if the Facebook audience is putting in garbage data, or signing up for things they are going to cancel, ultimately that will affect the value of the lead. The reason is that if the Facebook user has a lower LTV, then the acquisition price that is willing to be paid for that user will be less.
A cycle repeated itself online over the last few years where leadgen companie liked Gratis used a lot of incentivized offers, using offers like below. You can read more about Gratis on their Wikipedia entry here or a Wired article here.
Ultimately, these leads weren’t of terribly high quality, tricked the user, and a bunch of other bad things. So that industry has slowly transitioned itself out as a result.
The question is, are incentivized leads from Facebook any different? How will the quality compare to the now low-value leads generated from companies like Gratis? I suppose it will not take long to find out.
