Four Ways to Expand your Widget / App Footprint

To date, the best way to make money from your app footprint on Facebook is to sell app installs to other apps.  According to Lance Tokuda of RockYou, the effective CPM of such installs is higher than market driven, CPM ad networks.  Companies are showing themselves willing to pay a premium for  potential  viral growth of their app, and future, as yet undefined revenue that may fall out of this growth.

So how do you take advantage of web publishers’ willingness to pay premium rates to build out their distributed presences?  The easy answer is to grow your own app / widget footprint as big as you can, as fast as you can.  All things related equal, the bigger your own footprint, the more installs you will be able to drive for other publishers.

As other aggregators begin to open themselves up to outside developers and relax their TOS, it’s clear that selling app / widget installs will soon move beyond just Facebook.

To date, we’re seeing a couple of different models for how companies are expanding their footprints to address this market.

Build and Distribute Apps

This strategy would appear to be the early winner.  Companies like RockYou and Slide, through in house development, have amassed giant footprints of both apps and widgets, and on Facebook anyway, are already showing an ability to monetize these footprints.  More than anyone else, these companies understand the recipe for viral distribution, and are seemingly able to blast out just about any app to widespread adoption.

Aggregate Independent Developers

The thinking here is that by providing capital, hosting, shared tools, and services to previously independent developers, the odds of success get raised for everyone.  Naval Ravikant’s Hitforge is perhaps the best example.  According to the Hitforge model, stock is shared between all developers, so if one achieves a successful exit, all benefit.

Unlike RockYou and Slide, apps are not being developed in house.  Rather, technical founders / app developers are being recruited to work under the Hitforge umbrella.

When I first wrote about Social Media, it appeared that they too were pursuing this model.  Since then, it would appear that they’re moving towards a hybrid in-house, ad network model.

Sign Up Apps and Run Ads on Top – the traditional ad network model

This strategy entails building up a base of advertisers and building up a base of widget / app publishers, then matching the ads with the inventory to maximize value for both sides.

A key differentiator among the players in this bucket will be how much the ad networks can learn about consumer behavior and interaction with apps and widgets.  Understanding the types of ads that convert in a social media environment, and how to pick up demographic and behavioral clues about the pages and profiles that house the widgets / apps will go a long way towards maximizing return for both advertisers and publishers.

Social Media seems to be working hard to nail the behavioral piece.  Not only do they have a few popular apps of their own, but they have also partnered with Facebook Analytics App Appsaholic.  Social Media owned apps like Happy Hour and Trakzor with their millions of data points, provide a window into consumer behavior that can be applied across their network.

Lookery and Peanut Labs are also looking to carve out niches within this general strategy.

Provide Tools to Publishers

Building or partnering with apps is not the only way to build out an ad footprint.  Companies like Clearspring, Widgetbox, and Gigya are focused on providing tools to developers like analytics, distribution buttons, and app containers for Facebook.

These tools get the tool providers’ code on the page, providing opportunities for the tool provider to overlay ads / install invitations.

To date, these companies have achieved more traction with widgets than they have with Facebook apps.  This could be problematic from an ad serving perspective because of widget specific obstacles to conversion such as a lack of control over where the widget shows up on the page, limited real estate, and host site TOS.

There is an opportunity, however, for the tool providers to move beyond the body of the widget / app, and get on the pages of the widget developer sites themselves.  By decoupling tools like one click widget distribution buttons from the rest of their tools, service providers like Gigya have made their distribution tools a mainstay on the widget embed pages of a number of high traffic sites.  This sort of footprint could end up being more valuable than a widget only footprint, because of the increased real estate and placement control afforded by an embed page versus a widget.

Conclusion

Eventually, those buying installs from companies with big app / widget footprints will need to see some ROI, or they will presumably stop buying (or at least, stop getting funded).  Until that moment comes, there is a ton of cash to be made from those eager to build out their distributed presence. 

Building apps, aggregating apps, signing up app publishers, and providing tools to apps are just four ways to put yourself in a position to capitalize.

Comments

[Scott Rafer]

Thanks for the mention.

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Hopefully you benefited from the last JS I was affiliated with --- MyBlogLog.

[Asabailey]

Great read, thanks, you have a new reader.

Me.
Asa Bailey.

[Jeff Paul Internet Millions]

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