In the middle of the Facebook App frenzy (was that a whole 4 months ago?!) I wrote “Delusions of Facebook” to try to dissuade as many startups as possible from going down that path. I hate to say it, but man — I was right.
The fact is, Facebook Applications simply have not become great businesses. The few who have made any revenue are also taking almost all of the available revenue, and it is the startups who focused on things like cross-application advertising that made the most.
Facebook Applications are an unmitigated disaster from any perspective
The most glaring example of this comes straight out of Toronto, the TD Canada Trust “Split the bill” application, which I have to admit seemed like a decent idea to me when I first heard about it. I mean, it seems like the perfect app for the Facebook demographic right? Apparently not. The application, which sports 6 Daily Active Users is a failure. If this were Uncov, I would be saying much meaner things.
“$plit It” is, in case you are wondering, beaten squarly by the the “Which millionaire should you sleep with?” application, which has 32 times the number of users and presumably has significantly less grand goals. There are examples of underperforming Facebook applications everywhere however, it isn’t just TD Bank that has struggled with the concept.
The last stand, unstood(tm)
One argument could be that Facebook Applications might attract fewer active users than a valuable Web Application, but they are more valuable users because Facebook let’s you leverage the “Social Graph” and the network effects of Facebook exposure. While I thought I debunked that idea in my last post, I still hear the argument sometimes.
Sadly, the numbers don’t seem to add up there either. The best example out there is the Causes Application.
| Cause | Users | Donations |
| Cancer Research | 3,005,750 | $58,520 |
| Stop Global Warming | 1,681,907 | $20,908 |
| Animal Rights | 1,232,162 | $19,423 |
| Against Child Abuse | 927,120 | $7,685 |
| Save Darfur | 800,674 | $12,528 |
Read/Write Web recently broke down the numbers for the top-5 Causes applications (Causes lets anyone create and application to support a particular charity). As you can see, even with over 3million users (more than you will ever get signing up for your application by the way), the Causes application still only managed to raise $58,520. If I remember correctly, my elementary school was regularly raising similar amounts of money by selling things like chocolate bars and pens.
Junk Food for your Business Plan
Building Facebook Applications is not a business plan, unless you are a web developer who does freelance Facebook application development (now, there is a place you can make money on Facebook Applications). It is the McDonalds equivalent of a business plan. Quick, cheap, greasy and ultimately unfulfilling.
I am glad that the hype is dying down, but even as FacebookCamp Toronto continues to draw a crowd of easily over 400 (and was a lot of fun, I admit), I worry that there are some bright startup-ready developers out there who still have Delusions of Facebook. Snap out of it, and get on with business.
Moving On
It is time for you to take your bright ideas and to put your energy in to things that can give you a return on your investment. I think even Omar saw the light, as he and his team never did venture in to the Facebook Application line of business.
The web is the most powerful platform we have, and just because someone comes along and says “hey, we made it as easy as a Big Mac” doesn’t mean you need to give them all the upside. Focus on the value you are creating, find a market that wants your product and then start building.
Eat your vegetables, you will be rewarded greatly.
Good Article. I was thinking about this topic the other day when I read about a site Caring.com that raised 6.75mil in VC:: http://www.bizjournals.com/business_resources/tech_and_innovation/stories/2008/02/22/story2.html
In the last line it says “Iluri says the company plans to create a Facebook application to expand their reach.”
I couldn’t help but shake my head.
Good Article. I was thinking about this topic the other day when I read about a site Caring.com that raised 6.75mil in VC:: http://www.bizjournals.com/business_resources/tech_and_innovation/stories/2008/02/22/story2.html
In the last line it says “Iluri says the company plans to create a Facebook application to expand their reach.”
I couldn’t help but shake my head.
imho, facebook apps are great for promoting a business/a product or for social games.
otherwise, as a stand-alone business, with the current figures, it doesnt make sense
imho, facebook apps are great for promoting a business/a product or for social games.
otherwise, as a stand-alone business, with the current figures, it doesnt make sense
Amen Jevon. As part of a marketing strategy, a Facebook app makes sense. But not if it is your only marketing pony or you are focusing your entire biz on it. Facebook is only one “small world” of the “social graph” and you are bound to only obtain a group within that. Interesting though that philanthropy reasonates, achieving millions and millions of users over all. A marketing strategy that leveraged that dynamic to bring folks into a new service would be smart. Squidoo has one attempt at this.
Amen Jevon. As part of a marketing strategy, a Facebook app makes sense. But not if it is your only marketing pony or you are focusing your entire biz on it. Facebook is only one “small world” of the “social graph” and you are bound to only obtain a group within that. Interesting though that philanthropy reasonates, achieving millions and millions of users over all. A marketing strategy that leveraged that dynamic to bring folks into a new service would be smart. Squidoo has one attempt at this.
A personal call out, sweet!
The PROMISE and POTENTIAL of Facebook as an app platform and leveraging the social graph remains. However, the bar was set too low. Any user goodwill that us independents could ever leverage has been totally stripmined and laid to waste by the hundreds and thousands of useless spam applications.
Unfortunately “app fatigue” has caused legitimately useful applications to fall by the wayside as the baby gets thrown out with the bathwater. This is really a microcosm of “Web 2.0” in general as so many new sites were created at such a rapid pace, people became cynical pretty quickly. Whereas that process took a couple of years, the hyperactivity of Facebook accelerated the hype->hangover phase to a few months.
As with all new markets we’ll go from the hangover->settling phase where the spam gets eliminated, the good gets better, and people are willing to try again. At that point the companies that use Facebook in an intelligent way will gain traction.
To reiterate a little bit about the overall point. You can point to ten thousand failed Facebook apps and say the whole thing stinks. I can point you to cases such as iLike and StyleFeeder which leveraged Facebook into powerful brands and websites. Same with the web in general. I can point you to fifty thousand failed websites and say Web20 doesn’t work. And you’ll just point me to successful sites like YouTube, Flickr and ProductWiki :)
A personal call out, sweet!
The PROMISE and POTENTIAL of Facebook as an app platform and leveraging the social graph remains. However, the bar was set too low. Any user goodwill that us independents could ever leverage has been totally stripmined and laid to waste by the hundreds and thousands of useless spam applications.
Unfortunately “app fatigue” has caused legitimately useful applications to fall by the wayside as the baby gets thrown out with the bathwater. This is really a microcosm of “Web 2.0” in general as so many new sites were created at such a rapid pace, people became cynical pretty quickly. Whereas that process took a couple of years, the hyperactivity of Facebook accelerated the hype->hangover phase to a few months.
As with all new markets we’ll go from the hangover->settling phase where the spam gets eliminated, the good gets better, and people are willing to try again. At that point the companies that use Facebook in an intelligent way will gain traction.
To reiterate a little bit about the overall point. You can point to ten thousand failed Facebook apps and say the whole thing stinks. I can point you to cases such as iLike and StyleFeeder which leveraged Facebook into powerful brands and websites. Same with the web in general. I can point you to fifty thousand failed websites and say Web20 doesn’t work. And you’ll just point me to successful sites like YouTube, Flickr and ProductWiki :)
I agree with Omar that the overall point is off, and that it’s too early to be calling apps “an unmitigated disaster from any perspective”.
I think there are different ways to evaluate success in Facebook beyond the idea that something needs to have runaway numbers. Moreover, what are the expectations of the app creators? I’m sure they scale from “what happens if” to “take over the world,” but assuming that everyone just wants quantity and that only quantity or only sales and donations can spell success oversimplifies.
Take the charity apps, for example. Why, exactly, does this ratio of people showing support by installing the app to people actually making contributions spell out failure? It doesn’t compare the ratio of exposure to donation is in other fundraising channels, like tv advertising or sidewalk canvassing. It also doesn’t address that every time a profile with a charity app installed is viewed would otherwise count as an ad-impression for that charity. How does that not have value, or to turn it around, can we not think of other valuable outcomes for the app-maker than donations? If those charities were asked, I wonder if they’d see those numbers as failures. Maybe, but maybe they’re happy with the free advertising.
This is a new game for almost everyone playing. These apps are largely experimental and first-cuts by different people and organizations trying something new, and just short-sighted to take the “I told you so” position so quickly. I think people get misled into thinking that the sum total of Facebook is the potential oyster of any single app that isn’t made by Facebook. It’s not. Facebook works very well with the personal and the local, and as such there are many internal boundaries to jump, and proving relevancy to each of those clusters just isn’t going to happen with most subject matter. Facebook is a large, uneven and uncertain territory for a type of application development that is, for all its problems and benefits, becoming prevalent. Large service providers like Amazon, Facebook, Microsoft, and of course Google, are becoming platforms that take over much of the redundant infrastructure work, allowing smaller apps with high focus to be made and maintained by third parties. It marks part of a significant shift in computing and as such people are going to try lots of little things that won’t work. This moment of Facebook apps is like chapter 2 of many, not the end of the story, by far.
I agree with Omar that the overall point is off, and that it’s too early to be calling apps “an unmitigated disaster from any perspective”.
I think there are different ways to evaluate success in Facebook beyond the idea that something needs to have runaway numbers. Moreover, what are the expectations of the app creators? I’m sure they scale from “what happens if” to “take over the world,” but assuming that everyone just wants quantity and that only quantity or only sales and donations can spell success oversimplifies.
Take the charity apps, for example. Why, exactly, does this ratio of people showing support by installing the app to people actually making contributions spell out failure? It doesn’t compare the ratio of exposure to donation is in other fundraising channels, like tv advertising or sidewalk canvassing. It also doesn’t address that every time a profile with a charity app installed is viewed would otherwise count as an ad-impression for that charity. How does that not have value, or to turn it around, can we not think of other valuable outcomes for the app-maker than donations? If those charities were asked, I wonder if they’d see those numbers as failures. Maybe, but maybe they’re happy with the free advertising.
This is a new game for almost everyone playing. These apps are largely experimental and first-cuts by different people and organizations trying something new, and just short-sighted to take the “I told you so” position so quickly. I think people get misled into thinking that the sum total of Facebook is the potential oyster of any single app that isn’t made by Facebook. It’s not. Facebook works very well with the personal and the local, and as such there are many internal boundaries to jump, and proving relevancy to each of those clusters just isn’t going to happen with most subject matter. Facebook is a large, uneven and uncertain territory for a type of application development that is, for all its problems and benefits, becoming prevalent. Large service providers like Amazon, Facebook, Microsoft, and of course Google, are becoming platforms that take over much of the redundant infrastructure work, allowing smaller apps with high focus to be made and maintained by third parties. It marks part of a significant shift in computing and as such people are going to try lots of little things that won’t work. This moment of Facebook apps is like chapter 2 of many, not the end of the story, by far.
Hehehe. I just laugh every time I look at a website with the big money behind the small minds and think to myself, how in the world do these guys get funded. You are completely right. Most people don’t understand and lose their ass when they cannot figure out that it is not the product, the target market, how you use it, or what it does….it is the execution of the marketing that makes all the difference. You have to be willing to open you mind, look at your concept, visualize and feel what it does, then ask yourself, “How do I get this into the hands, minds, and PCs of as many people as I can without spending alot of money. You have to stop thinking, “how can I raise the money” and start thinking…”how can I raise the awareness” Start looking for other ‘funded’ startups that compliment what you have and start forming partnerships, you may attract attention from the VC or Angel that funded that particular business. And you may not. I created a concept, applied for patents, completely strategized my entire plan, developed strategic marketing and technology partners, and attracted 5 VC groups, all in under 2 months, but they are all VERY interested in funding my later rounds, which means, “we know you can get up the initial funds, now do it. Unfortunately, I don’t have much time and customers desperately want what I have. But, I’ll just keep plugging away. If you need marketing advice, I am willing to give it for free at samhyatt76@hotmail.com. In starting my company, my current employer told me that if this doesnt work out that he would like to hire me back in a marketing/R&D role…hehe…Have a great day ladies and gentlemen.
Sam Hyatt
Founder
BluCast
214.264.2809
Hehehe. I just laugh every time I look at a website with the big money behind the small minds and think to myself, how in the world do these guys get funded. You are completely right. Most people don’t understand and lose their ass when they cannot figure out that it is not the product, the target market, how you use it, or what it does….it is the execution of the marketing that makes all the difference. You have to be willing to open you mind, look at your concept, visualize and feel what it does, then ask yourself, “How do I get this into the hands, minds, and PCs of as many people as I can without spending alot of money. You have to stop thinking, “how can I raise the money” and start thinking…”how can I raise the awareness” Start looking for other ‘funded’ startups that compliment what you have and start forming partnerships, you may attract attention from the VC or Angel that funded that particular business. And you may not. I created a concept, applied for patents, completely strategized my entire plan, developed strategic marketing and technology partners, and attracted 5 VC groups, all in under 2 months, but they are all VERY interested in funding my later rounds, which means, “we know you can get up the initial funds, now do it. Unfortunately, I don’t have much time and customers desperately want what I have. But, I’ll just keep plugging away. If you need marketing advice, I am willing to give it for free at samhyatt76@hotmail.com. In starting my company, my current employer told me that if this doesnt work out that he would like to hire me back in a marketing/R&D role…hehe…Have a great day ladies and gentlemen.
Sam Hyatt
Founder
BluCast
214.264.2809
Late to the game I admit, but I attended FaceBook Camp in Toronto, and I thought, “I don’t get it”. I thought I was just behind. FaceBook can be a good nugget in your goldmine, but my get says don’t sell the picks and shovels when you find it.
Late to the game I admit, but I attended FaceBook Camp in Toronto, and I thought, “I don’t get it”. I thought I was just behind. FaceBook can be a good nugget in your goldmine, but my get says don’t sell the picks and shovels when you find it.
Sane strategy has always been the same, moreso in the age of networks : multiple outputs. Facebook is awesome as one of your outputs and a potential user input. But this is the open web, you can’t really dream of a simple one size-fits-all garden, for all the wishful thinking you might want to do. Atomization is the name of the (not-so-new) game!
Sane strategy has always been the same, moreso in the age of networks : multiple outputs. Facebook is awesome as one of your outputs and a potential user input. But this is the open web, you can’t really dream of a simple one size-fits-all garden, for all the wishful thinking you might want to do. Atomization is the name of the (not-so-new) game!
My first point is developping a facebook app is relatively cheap and the upside potential is really high.
If it fails… ok not so much lost.
If it works it’s gonna be huge.
Me second point is most big companies (and even startups) have no clue about how to make an app viral, they just make fancy app with (sometimes) nice ui and features. Facebook is new and complex market and without proper knowledge you won’t go that far.
By the way we can build your facebook app ;)
My first point is developping a facebook app is relatively cheap and the upside potential is really high.
If it fails… ok not so much lost.
If it works it’s gonna be huge.
Me second point is most big companies (and even startups) have no clue about how to make an app viral, they just make fancy app with (sometimes) nice ui and features. Facebook is new and complex market and without proper knowledge you won’t go that far.
By the way we can build your facebook app ;)
Although I’m a proponent of the long-term possibilities of Facebook Applications, I love this article. I think a lot needs to be demystified before any real progress can be made.
Specifically, you mentioned the social graph. Once Facebook cleans up the application directory (which it seems like they’re going to with the next generation of tabbed user profiles), we’re going to see far fewer popular applications. I imagine this will lead to a few applications becoming as indispensable as say, Photos or Video. Then we’ll see a golden application and hopefully something other than “How many vampires kissed my top friends”.
Although I’m a proponent of the long-term possibilities of Facebook Applications, I love this article. I think a lot needs to be demystified before any real progress can be made.
Specifically, you mentioned the social graph. Once Facebook cleans up the application directory (which it seems like they’re going to with the next generation of tabbed user profiles), we’re going to see far fewer popular applications. I imagine this will lead to a few applications becoming as indispensable as say, Photos or Video. Then we’ll see a golden application and hopefully something other than “How many vampires kissed my top friends”.
Spot on !
I think the Facebook platform craze is dwindling now, and the reason probably has to do with the enormous clutter and annoyance these apps were causing. The upcoming Facebook profile page tabs are perhaps a bit too late.
And I’m surpised the TD Canada Trust app has only 6 active users despite being demo-ed at the last FacebookCamp Toronto in front of a few hundred people..
Spot on !
I think the Facebook platform craze is dwindling now, and the reason probably has to do with the enormous clutter and annoyance these apps were causing. The upcoming Facebook profile page tabs are perhaps a bit too late.
And I’m surpised the TD Canada Trust app has only 6 active users despite being demo-ed at the last FacebookCamp Toronto in front of a few hundred people..
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