While the Facebook platform economy is probably worth less than $100 million annually currently, Facebook developers currently have plenty of options to monetize their applications. Developers can choose to serve video ads with VideoEgg, fill out user surveys with Peanut Labs or use one of the many cost-per-click and cost-per-install models offered by Social Media, RockYou and many others.
According to CNet, AdBrite is preparing to launch a Facebook ad network as well. While there are few details on the new ad network, other large web based advertising networks are also preparing to launch solutions for Facebook developers. Even with all of the hype surrounding Facebook advertising, existing solutions are still not making Facebook developers rich. At SNAP Summit last week, Todd Sawicki, the Vice President of Marketing at Lookery, was saying that most Facebook developers are receiving a 10 to 20 cent CPM.
While the top applications may pay for a nice house or car for a single developer, it is nowhere near a sufficient revenue model for multi-million dollar VC backed companies. Another downfall to the current advertising ecosystem on Facebook is that most of the internal ads are coming from other Facebook applications. Not only are they coming from other applications but many of the current advertising networks are having serious problems with filling inventory. There just aren’t enough advertisers out there that are willing to advertise on third-party applications. These types of revenues are hardly sustainable and are only a short-term play.
Conversely, for those that are willing to take high risks, there are potentially high rewards. The large players can afford to take these sorts of risks and are jumping into the market one after the other. There is no end in site to craziness that is the Facebook advertising market. It is the new gold rush in Silicon Valley.