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Facebook apps monetize poorly compared to Facebook

So everyone in the world is reporting that Facebook had an all-hands where they talked about 07 results. 2007 revenue: $150m.

I went on comScore and tried to figure out total page views. According to comScore (frequently cited as under-reporting): ~167b page views.

So the effective RPM of Facebook pages is theoretically: ~$0.89?

In the big scheme of things, that is neither here nor there. What I find really interesting is this other TechCrunch post: Lookery guarantees 12.5 cent CPMs for Facebook apps

That implies that this ad network is doing a much poorer job than Facebook of monetizing relatively similar inventory. Yow! Obviously, the next step is to drill down to the performance of the inventory, but I am bound by a variety of contractual pieces of paper to not discuss my findings here!

Update: More celebrity sightings!  Scott Rafer critiques my critique in the comments and then I agree with everything he says, which don’t deny my earlier points.  Definitely click through your RSS feed and read all about it.  Alas, he didn’t create a Lookery chart on Cogmap, so I had to.

It is always cool when people, whose blog you read, suddenly read yours for a moment.

5 Responses to “Facebook apps monetize poorly compared to Facebook”

  1. Scott Rafer Says:

    Hiya, ping me when you get a chance. Your numbers have some underlying assumptions you may want to revisit.
    1. 12.5 cents is what we’re willing to *guarantee.* On average our network RPM is higher, or else we’d be out of business. We’re not heavily venture-funded. Our price is based on an urge to move to profitability.
    2. Facebook’s brand is strong enough to command a premium in ways that few, if any, of the apps can do.
    3. It’s widely rumored (and very credible) that Microsoft is paying Facebook guaranteed minimums that are disassociated from market conditions and possibly from traffic volume. That’s where a noticeable fraction of FB’s revenue comes from, over and above MS’s investment.
    4. Volume matters. The more people that say yes to our Guarantee, the better it will get for everyone.

  2. brent Says:

    Holy another celebrity sighting on my little blog! I should bad things about web businesses all the time and I will be Scoble overnight!

    I do have some thoughts though:

    1) I agree with this. This is Lookery’s cost of inventory, not revenue. The moral of the story is the same however. As you mention on your blog, in December the CPM was $0.22 (not clear if that is what publishers received or the network RPM, so network RPM could have been $0.24) which is still less than a third.
    2) I agree with this. The point of using an advertising network, if you are a relatively small publisher is the distribution and strength of the network’s sales force. This inventory, on face, seems relatively similar to Facebook ad inventory.
    3) I have heard and agree with this rumor. Despite the letter of the agreement, whatever the terms are, we still all know that at the end of the day this is getting translated to an eRPM used to justify the deal. Interestingly, it is probably safe to assume that while MSFT may have modeled some early loss leading in owning this inventory, over time, they anticipate making money, implying that this cost of inventory is very similar. Also, few know the details of the Facebook agreement with MSFT, but I always imagined that the payout numbers had to grow Y/Y and be tied to impression volume to make sure that the revenue ramps in a way that fits their investor’s models for a business, so maybe the eRPMs are on the high side, but I imagine they probably aren’t crazy.
    4) Hey I love volume. A volume of advertisers creates a stronger marketplace for inventory, allowing higher RPM payouts. 12.5 cents isn’t a lot, implying a weak advertiser marketplace. That is my point. If Lookery signs up a truck-load of publishers, more advertisers will come. It will be interesting to see if such low payouts are enough to attract the volume of inventory required to hit some sort of advertiser inflection point.

    Let’s not overlook my last sentence in my post. I imply that this inventory does in fact, on face, appear pretty similar to Facebook inventory. Should CPA advertisers be arbitraging this like crazy?

  3. Scott Rafer Says:

    Install MyBlogLog and you’ll know every dotcommer who swings by. :)

    1) We effectively paid out 100% in December. This is a whole new game now that we’re on Atlas instead of OpenAds and can manage more aggressively.
    2) Not really. the profiles are a lot less “clean” than the apps. quality is the inverse of brand in this case.
    3) Not actually true ====> “all know that at the end of the day this is getting translated to an eRPM used to justify the deal”
    4) :)

  4. brent Says:


  5. Scott Rafer Says:


    hang out and watch, i’ll prove the rest. ;)