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VentureBeat has a great article today that discusses how virtual goods are starting to pan out for Facebook game application developers.
According to the article, popular Facebook application (fluff)friends is making an estimated $1.00 per month per daily active user and Mob Wars is making an estimated $2.60 per month per daily active user. At those levels, (fluff)friends is expected to make $1.3 million annually on a base of 112,229 daily active users and Mob Wars is expected to make $15 million on a base of 483,824 daily active users.
All of this is very encouraging in light of the fact that the value of Facebook ads continues to fall. Advertising on Facebook applications is valued at between 7.5 cents and 50 cents per thousand ad impressions (CPM). Each daily active user would need to generate thousands to tens of thousands of advertising impressions per month in order to generate revenue on the same level as virtual goods based businesses.
We’ve seen the same thing since we launched Viximo’s virtual gifting system on the Birthday Calendar application on Facebook. In order to compare virtual gifting with social network advertising, we look at total virtual gifting revenue divided by impressions of the virtual gifting offering. This gives us a metric which is roughly comparable to CPM. To date, we’ve been generating an equivalent CPM with virtual gifting that is about 10 times higher than the typical CPM for social network advertising.
Its been a long time since I posted to the blog. Launching our product, growing Viximo, and lots of summer activities have conspired against me. My goal is to get shorter posts up on the blog at least once a week. Wish me luck, and please stay tuned!