Facebook’s move to start charging developers $375 to certify applications struck Michael Arrington of TechCrunch as a bid to shore up lagging revenue. It’s not clear how much money we’re talking about — there are currently about 48,000 apps available to Facebook members. Facebook itself estimates that 10% of applications will wind up being certified — meaning Facebook would collect about $1.8 million in fees.
Even if half of the applications submit for certification (Arrington’s optimistic estimate), that would mean $9 million — minus, of course, the cost of the time it takes Facebook developers to QA the apps to make sure they are up to network standards. This is not a huge sum for a company that expects to make $50 million to $60 million selling imaginary shoes, phantom martinis, pixilated birthday cakes and other virtual gifts this year.
So if they’re not in it for the cash, what’s the point of Facebook’s “Verified Apps” scheme?
It’s widely reported that Facebook is more interested right now in member acquisition than in advertising revenue. But for a company where electricity and server space are huge cost centers, unmonetized traffic can be seen as a liability.
It’s also widely reported that News Corp-owned MySpace is cleaning Facebook’s clock in terms of ad revenue — it’s expected to pull in $1 billion in ad revenue in 2008, despite boasting about 40 million fewer members.
But much of the activity on MySpace is driven by its focus on music. Check out Britney Spears MySpace page — her pre-release “leak” of songs from the upcoming album “Circus” have garnered upwards of 90 million plays.
When I visited today, I found a standard 468 banner ad for Wawa’s “Hot Turkey Shorti” dwarfed underneath an oversized publicity shot of scantily-clad Britney. Whether or not this is a good place for Wawa to be, it’s worth remembering that Britney can take her diaphanous negligee and her tracks and post them to her own site — leaving Myspace and Wawa in the lurch. The same is true of Beyonce and her 164 million plays, Kanye West (100 million) and Coldplay (41 million).
These artists are both beneficiaries and drivers of MySpace’s enormous user population — but it’s worth wondering what the network would be like without them. To paraphrase the cliche: 100 million page views here, 100 million page views there, and pretty soon you’re talking about real traffic.
Facebook doesn’t share MySpace’s celebrity obsession. Nor does it let users doll up their pages with frame-breaking graphics and blaring sound files. The strict adherence to the Facebook template makes the site a bit punctilious as compared to the freewheeling MySpace. It also doesn’t leave much room for splashy ads — perhaps a drawback for media buyers looking to capture the attention of users.
But that’s not the plan, apparently. Facebook’s chief monetization officer Tim Kendall told The New York Times, “The classic interruptive model is a pretty uninspired way to really get to a consumer. If we build ad products that really take advantage of how users interact on Facebook with each other, it will be much more effective over time.”
This brings us back to verification. What if, instead of trying to wring out a few dollars from Ramen-eating developers, Facebook is creating a new category of advertising inventory? Let’s say Facebook can isolate about 5,000 applications that reach a substantial subset of the network’s estimated 160 million user population, guarantee that those applications are stable, safe for work and in keeping with the network’s privacy standards and paste them with a kind of Good Housekeeping Seal of Approval. This saves media buyers who are interested in social network advertising the trouble of parsing through the morass of applications in search of a perfect fit. It also puts advertisers squarely in the parts of the network where users are in contact with each other — via games, causes, photo-sharing and other group activities.
Whether the creation of such premium inventory turns out to be effective remains to be seen. But it does sound a lot like what Facebook’s Kendall is talking about when he speaks of helping advertisers “really take advantage of how users interact on Facebook.”
Photo credit, Laughing Squid