Hooman Radfar: Terms of Service agreements are made to be broken.
(Credit: Brian Solis)On Monday at the Graphing Social Patterns conference, I moderated a panel about making money from Facebook apps, with Giles Goodwin of Widgetbox, Hooman Radfar of Clearspring, and Jeff Nolan of Newsgator. It's a complicated question, especially for companies that have existing Web-based businesses. When do you start work on a Facebook app? Will a Facebook product cannibalize your other Web products? Can an online business survive on Facebook exclusively?
The panel agreed on just about nothing, which is indicative of a market in a very early stage of development. My favorite issue came from an audience question. John Furrier asked, Is the Facebook Terms of Service (TOS) an inhibitor to innovation, or a useful framework? Radfar said that smart businesses will always push, or even violate, a platform's TOS when building new products. "It's open to negotiation," he said. Nolan extended the thought: Companies don't own their terms of service, he said. "Users dictate" the TOS that they will support.
Brian Solis wrote a summary of the panel discussion on his site, Bub.blicio.us.
Let's say you've got a great new Facebook app or widget. Good for you! Too bad no one is going to see it.
Narendra Rocherolle (and a few other entrepreneurs) are trying to rescue your app. Rocherolle launched fbExchange a few months ago with the goal of making the "long tail" of apps work for developers. The idea is that you put a little ad banner on your page, which other apps are pitched on. In exchange, your app gets advertised on other Facebook apps.
fbExchange tucks ads into a little bar at the top of the site.
You can buy clicks if you have no traffic to feed into the network. You can also sell your advertising space outright if you don't want to participate in the click-for-click exchange.
All ads are single-line text blurbs that run at the top of Facebook app pages. Coming soon (possibly this week), fbExchange will be adding new advertising units.
I like this model. You can pay if you need traffic. You can charge if you have it. Or you can go freebie if you have some and need a bit more.
Other startups are working on Facebook advertising networks. Apps developer Hungry Machine is launching its ad network this week; the founders just showed me a demo of the analytics engine, which looks very strong. Lookery is also in the process of launching, and although the site is live, it wins my new Webware Mud Award--you can't really tell what the site does until you log in (and not much then, either). But trust me: It's an ad network. See also Social Media, which works across social networks; RockYou, which operates several successful Facebook apps; and Cubics.
Rocherolle is up to more with fBExchange than just ads, though. He's hoping to create a data exchange, where one site can grab social network information from another, to build mashups. The data Rocherolle is hoping to help companies expose even Facebook doesn't have. For example, if you subscribe to a recipe app on Facebook, Facebook's servers will know that you use the app and which of your friends use it, but Facebook won't know which recipes you like, since that data is store on the app's servers, not Facebook's. Rocherolle wants to help create an exchange for this data. Hungry Machine's execs also pitched me on a similar vision; they said they hope to use cross-app data to more effectively target their ads.
There is a chance that Facebook itself might launch an ad program that competes with these companies, but in the meantime, Facebook developers looking to make a few bucks--or get the traffic they need--might want to experiment with these new networks. Advertisers should get onboard soon, too. Getting experience with Facebook advertising is cheap right now. Rates are sure to go up as the platform matures.
Lance Tokuda is the CEO of RockYou, a social network app building company. RockYou makes music and photo sharing apps on Facebook, as well as a very popular "wall" replacement, SuperWall. The app I'm most familiar with, though is Zombies, which I've heard derided as the "multi-level marketing social app" (although, really, isn't that the point?). I tried it for a while but recently uninstalled it since I couldn't get my wife to stop biting my zombie. And not in a good way.
What is the secret of Zombie's success? Lance spelled it out during a talk at the "Graphing Social Patterns" conference in San Jose today. His first point: Forget MySpace. Use Facebook. Its API lets you access the friend network and grow apps virally. Good apps, he says, grow seven times more quickly on Facebook than MySpace.
The Zombie app for Facebook has 197,846 daily active users.
(Credit: Facebook)These are his tricks for taking advantage of the platform:
1. Promotion. No matter how good your app, you can't really expect it to go from zero to a million users on its own. You have to seed it. RockYou advertises to about 100,000 key people when it launches a new app. Once that happens, if the app is good, it can grow to a million users in literally just a few weeks. (A previous speaker, Forrester Research analyst Charlene Li, reminded the audience that you can target advertisements easily to specific groups and geographies.)
2. "Tweak the virality." Ok, really, this is obvious, and I wanted more advice. Lance said there were about 50 things you could do to improve the pass-along signup of an app. The only little actualy tidbit he dropped was to use the ">" character in text to drive people forward to sign-up pages. Tomorrow, he said, the technical sessions at this conference will cover more of the tweaks.
3. Bundle. If you have a large app, you can bundle functionality of a new or smaller app in it to get it growing. If you don't, you can partner with other apps. MySpace used to kick apps off if they did this. Facebook does not have these restrictions. Look for partners who will sell you their coattails.
4. Scaling. Apps on Facebook can grow so fast they can melt down traditional ISPs. Lance recommends Amazon Web Services, which are built to serve growing and bursty traffic without requiring you to pay for capacity you don't use.
Dan Farber at ZDNet covered LinkedIn founder Reid Hoffman's keynote.
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