Summary of advice on developing successful Facebook applications. The below summary is compiled from interviews with well known app developers, VC firms and other various knowledgeable sources. I've been asked to keep everyones personal information confidential, sorry.
Full Summary
- Successful consumer app teams are metrics-driven product freaks
- Extremely rapid dev cycles with a direct marketing approach to measurement
- Releasing multiple app's per week on Facebook and seeing what works
- Constant iteration: test app names; change text on invite emails, button placement – extensive A/B and multivariate testing – can take months of experimenting
- All about optimizing virality coefficient – product can be crappy but must be viral
- 0% of people sending invitations x% who accept must be >1 to go viral
- If one user brings in .9 other users, the app dies; if 1.1 it goes viral
- Define user life cycle from awareness a invite and optimize each step: - How my user comes in initially – what's the call to action - Do they sign up - Do they navigate to the invite page - # of friends they invite - # of sent invitations clicked on
- Retention also critical. Traffic & value will be function of virality and retention
- Become masters of Google analytics and build internal measurement tools
- If trying to drive traffic externally, better off buying ads on FB vs building app
- If your service is inherently social, FB is ideal ecosystem and acquisition method
INTERVIEWS
Founder/CEO of a top facebook apps companies
-You need to understand what makes your application viral
-There are 4 channels on FB and you need to use each of them well: - Request - Notification - Minifeed - Email
-Predict and then analyze what actions people take on your app and how often. What's important to other people and makes them do the invite?
-You have to experiment – release new stuff every 2 days. Try a lot of things bc most of it wont work.
-They started with 2-3 developers releasing 2-3 things each week, now release 10-20 things each week. We have very very quick dev cycles.
-The most imp thing is to get things out quickly and iterate them, you probably wont get it right on the first shot.
-They get 200k-300k daily active users, and 3.5M monthly actives.
CEO/Founder of consumer service with destination site & Facebook app
- They focus on their destination site more than FB bc it's been more successful
- But they share offices w a company that has been massively successful on FB and much less so on their Destination Site
- Facebook apps are all about the virality coefficient – it has to be >1.
- If one user brings in .9 other users, the app dies
- If one user brings in 1.1 other users, the app goes viral
- You need to set up a pipeline and measure the lifecycle of a user up to the point of inviting other users, and optimize that pipeline
- Virus is a good metaphor
- The extended lifecycle includes following – you need to measure and optimize each step independently:
* How my user comes in initially
* Do they sign up
* Do they navigate to the invite page
* # of friends they invite # of sent invitations clicked on
* This matters *a lot*
- Every detail matters – you can change the copy on the invite message and double the virality
- You'll have the easiest time if the app is naturally viral
- Take the time to understand how other apps do this – install the top 30 apps on FB and play w them. They all have a strong viral mechanism. They're crappy, not great products – they're just viral. They have natural hooks that make users send them to friends.
- This is a big change from a standard photo sharing site, which is based on features
- FB is all about viral coefficient – it's not even really user-aligned because it's all about getting the user to do what they don't want to do
- Their app was more viral off of FB than on it even though they had to get people to put in friends' email addresses from scratch and people are always hesitant to do this. But their response rate off FB was much higher.
- They offered the feature where you type in your gmail address or whatever, and the product offers to spam your whole address book. They couldn't believe how many people actually do this. It really works.
- But then you start getting blocked by email providers as spam – that is something you will have to contend with. Most consumer app companies have a f/t person dealing w just making sure the emails get thru to people. That's one good thing about FB – you don't have to deal w being classed as spam.
- Also with FB, don't be afraid to keep changing the name of your app, that really matters too. You could even try putting out 8 fake apps w different names just to see the click thru rates. If you look at the top apps, they all have really simple names that describe what they do.
- Also, you need to get good at google analytics. They developed internal tools for measuring and optimizing but are masters of google – setting up funnels etc.
- One thing that surprised them was the amount of customer support needed for the consumer app. Maybe bc of the personal nature of their app, they get 1000s of emails per day.
- Their Destination site is 1-2x bigger than FB traffic. They've sort of abandoned their FB app. It's a lot of work to keep it updated and you have less control over the user experience. The FB redesign was really frustrating, they had to rebuild everything.
- On their D site they still use FB hooks thru FB Connect – you can log into their app and import your FB info – they pull the friend data in etc to make it easier.
- In terms of initial launch, even if you're viral you might grow slowly, it's not necessarily a bad sign. If your app is viral it will work and it will spread over time. They had a 'hot or not' thing that really spread without much effort, other things didn't work no matter what they did. Just do a soft launch, get some basic press. Even with press hits, WSJ or Slate or whatever, you get that temporary spike, 100k users that day or whatever, but it doesn't generate enough traffic to really matter and the quality of traffic, the retention, is low, so it's usually not profitable traffic. The real growth always comes from user referrals.
- Retention is incredibly important.
- They found the ad model didn't work bc it's hard to know what ads to target to what users. Their CPM was bad both on and off FB.
- They are looking at moving to a subscription model.
- As far as traffic goes or what the initial growth curve might look like, it's hard to predict. It's really an outcome of good virality and retention – just focus on those. Traffic will always spike for random reasons but you can look at virality/retention to predict traffic and build long term value.
NYC-based VC who invests in consumer plays
- The companies that do distributed content well are intense consumer products shops – extremely analytical – a mix of direct marketing and products expertise.
- Main monetization of facebook apps/widgets is currently through ad model – it's not that lucrative at this point. The biggest companies, with 200M+ consumer footprints, barely breaking the $10M mark annually.
- Need 1M uniques/month to generate any kind of ad revenue stream
- One challenge is as a vendor you have a delicate relationship w facebook – lots of tensions there.
- In terms of exits, envisions future mergers of the platforms and widget companies to form the next great media and entertainment companies
- Investors have traditionally been looking at products and user growth – way more important than revenues – but that could change with current economic environment.
- You need really good products that can scale
Valley-based VC
- He is still skeptical - despite big valuations - that apps that are just apps are dubious – wants to see something that can scale to be an independent and valuable property beyond FB – rockyou and slide haven't really answered this question.
- If it's ad-supported within Fb how big can it really get?
- The valuable use of FB would be if we could somehow use it as an easy on-ramp to people wanting to use our destination site bc it would provide more interesting value or features.
- But no one has figured this out – how to lure you off of the platform that you started on.
- There's no question that it's a great user acquisition method.
- How to market a destination site? An app still has to be viral as a destination site, which if it goes well, will answer itself.
- You need to understand what drives your product to be adopted.
- What threshold of adoption do they consider a success? They don't have an absolute threshold, depends entirely on the app or the site. They always throw around the inflection point of 100k users, but it's meaningless. The cadence of your growth is something that also really matters – how long it takes you to get to whatever number, the slope of the curve.
- Importance of rev model vs adoption? There are only 3 revenue models: ad, subscription, and e-commerce, with virtual goods as a new subset of e-commerce. Try all of them and see what works. It's not that you need to actually show the revenues but it needs to appear that one or more of those models could be applied.
- Remember that you can't go from free to paid, but you can go from paid to free.
CEO/Founder of a company to help brands market on FB
- FB apps are not good at driving traffic to a destination site. If you want to do that, buy banners on FB or do some kind of marketing scheme, thru brand placement in virtual gifts or whatever.
- It's hard enough to populate your apps much less drive people to an outside app.
- If you're building something that takes advantage of the social graph and has a viral component, then build a fb app – it will be way easier to have users share w each other through FB than outside of it.
- The question to ask yourself is 'is what we're doing inherently social?' and if the answer is yes – then do it through facebook.
- How to grow adoption of app? Has to be spammy, but the new fb design has really limited that ability. So either pay FB for banners or use a service to market it
CEO/Founder of FB app and destination site
- They initially launched with a facebook-only application. in the early days, it was easy to get viral growth, but things have changed pretty significantly since the FB redesign, and you can't really use the same viral methods
- FB email communications are locked down tightly
- News feed is stricter still a great way to grow because all user's friends are at his/her fingertips. does not require re-entry of data, email, names.
- Still a growth source for them, but not the primary.
- They ended up building a destination site. and now when you install the FB app, it does a dual registration.
- The app is much more of a shell, de-featured mechanism
- Spent much more time multivariate testing their website vs. the app as a matter of resource allocation
- Abandoning the notion that FB will cause an explosive growth
- Their destination site is too "high engagement" for the casual FB user, so they have gone about developing really lightweight, stupid apps that drive traffic to the D-site.
Boston VC
- Conversation was centered more around investment in the consumer area rather than FB specific.
- Doesn't place much value on stand-alone FB apps because hard to monetize and don't own customer
- Fears the symbiotic relationship between FB and app developers because developers are at the mercy of the platform.
- Their investment thesis in consumer apps has changed from large checks to small $100-$300k checks. Simply doesn't believe it takes that much to build a consumer app nowadays. Should build quickly and test quickly.
- Likes short burst experiments.
Head of Products & Marketing for stand-alone gaming company w FB apps
- When FB first launched, everyone was really pumped about it. We had already been in business for a while and felt this was something we should really take advantage of.
- I'm still bullish on the platform in the long run, but less bullish after having launched several apps.
- It can be good, but you shouldn't expect to just throw up app's and have viral growth without any marketing. Maybe you could do that in the early days when you would get seen just by being in the apps directory. But getting lots of traction with little effort has become much rarer.
- The marketing effort typically involves marketing on Facebook, using FB ad products, or marketing on other app's that have a lot of traffic – like on the RockYou apps. The ad models include CPI – click per install – which RockYou offers. Or CPC/CPM for FB-delivered ads.
- These are still pretty cost-effective options compared to advertising on Google or normal banner ads or SEM. You could test effectiveness of FB ads or RockYou etc with a $500-1000 budget, and the cost per acquired user is pretty low – significantly cheaper than non-FB options. You are also counting on the viral mechanisms of FB to kick in and deliver more users so that the effective cost goes down even more.
- In terms of which is better – FB ads or RockYou, there are tradeoffs. FB gives you much better targeting – we do a lot of sports-based stuff, so being able to target something to a user who specifically says they like the Dallas Cowboys in their interests list, is very effective for us. You can target ads based on a lot of user-specific information and it ends up in much higher quality clicks. But not necessarily a high volume.
- RockYou is nice because they have a pay-per-install model – it's a flat fee, and you're guaranteed installs. But they also have some games that incentives people to click on ads – like they get more points for a game if they click an ad – so we've found that the quality of clicks is very low. Lots of unqualified traffic.
- Some people have also taken the approach of advertising outside of FB to get people into their facebook apps, and that's hard to because a lot of the people you are advertising to don't have FB accounts and there's a huge drop-off rate at the account creation step.
- In terms of building the apps themselves, we started off just trying to replicate our stand-alone apps, but we've ended up with a very different set of products for FB that are basically just much simpler than our stand-alones.
- We iterate the apps as much as we can, but not as much as we'd like to, since we outsource the development and it costs us every time we want to iterate. Slide and those guys might iterate too much – you can end up with broken product links, it gets kind of sloppy.
- The design change of FB really hurt things. It deprecated the feed, so it's not a very effective viral channel. It sort of leaves you with the 'invite' mechanism, which works better than it does outside of FB – the invite and accept rates are higher in FB than not. But still not as effective as when the feed could really work for you. Hopefully FB will swing the pendulum back a bit once they shake all the true spammers out of the system.
- We have not been able to monetize any facebook users or cross-promote stand-alone products to them.
- Our vision has always been let's just accumulate users and assume we can cross-promote to them and monetize them down the road, and get them to our stand-alone products.
- We're also expecting that FB will launch microgoods/commerce within the next 6-12 months so we are hoping to be able to monetize thru those capabilities.
- We're also not convinced there is any near-term value in the FB stuff. We listen in on the ongoing sites vs services debate in the industry and are skeptical when we hear Slide and RockYou arguing that times have changed, that all that matters is users, and just getting your services to work and thrive wherever the users are.
- The good thing though about FB apps is that you can test it with very little investment – put something out on the cheap and see how it does.
- If I had to summarize current value we are getting out of FB apps – it would be low. We are hoping that the FB users will cross over to be stand-alone users, but that has not materialized. There's really not much value beyond this hope.
- Our most popular app has 500-1,000 active monthly users. We launched it recently so expecting it to grow, but even with virality, it will take a long time to get to 100k users. You have to seed an initial user base with ads, and you have to have good invite and acceptance rates – but even then, it will take a while to grow. Would help to have an outside partner that had some traffic to feed off of. But then again, why not just feed that traffic to your destination site, why push it into FB? You would really have to think that the viral capabilities inherent to FB would deliver.
- Laughed at my question of whether they had any apps that out of the gate got 100k users – just doesn't think that happens much at all. 90% of FB app traffic goes to the top 10-20 apps. It's that skewed – and most of those launched early and caught on before things got too crowded, and definitely before the redesign. Plus many of those had FB itself as a partner.
- Also think about if you can take advantage of FB Connect – importing the FB friends and data into an external app as a faster on-ramp for a new user...
CEO of vertical social networking site that also has FB apps
- Their FB app has about 55k active users and a viral coefficient of .85 – he described it as "close to viral but not quite there." Shared their experiences + assumptions on what's lead to their failure.
- Be really consumed with who the core customer is.
- Nail the simplicity of inviting/sharing/permissioning friends to get the app
- Give the user/recipient a clear, simple, actionable way to add the app and quickly get activated
- Re: using FB for acquisition on destination site. They originally tried to do a double registration where people who add the app are then prompted to register with their core site - but they realized they were asking too much of people. There was a huge drop-off in people who would add the FB app and not register for the destination site separately. Suggestion – use "facebook connect" which allows you to push data back and forth between your destination site and facebook accounts. People can use your site by logging in with their facebook username and password. He mentioned checking out flixster.com – a movie site – which does the integration between fb and the destination site really well. (Movies you recommend on the dest site also appear in your fb profile; and vice versa as well.)
- Mentioned using adonomics (formerly appaholic) to project the dropoff in adds/registered users. Good to download the top 15-20 and see how they manage adds and their different viral components.
- Beware over-featuring. Put something out there with 1-2 features and that's all. Watch how it is embraced - test, tweak and add features from there.
- Minimize the steps to participate too. 2-3 steps max. There is dropoff at every step.
- Treat the app as a new line of business. It needs a dedicated, daily monitoring of activity and well thought out test strategy. You tweak daily. Launch is the first day, not the last day. If the app is critical to your goals then you need someone focused on the reporting/analysis and reaction every day. [Speaking from their experience, they didn't give enough thought to dedicating to this activity.]
- Just like you need to focus on the viral strategy to drive adds, be as focused on the customer's life/ interaction with the product after the add. How will they interact with the product after it is added? What will they do? What will keep them coming back?
- They outsourced the app development. From concept through launch and analytics they spent $26K, and felt that the project was very "bare bones". The tracking is key, however, because it allows you to track adds (and from what source it was added), then invites, clicks, then accepted invites.
- They use videoegg to serve ads both on destination site and fb app – finds them reasonably well plugged in to big name advertisers. www.videoegg.com
- Developing the backend was less difficult then arriving at a front end they were happy with. Front end required lots of tweaking (copy, buttons, orientation, colors, links, box look, appearance @ different screen resolutions.) Every one of those factors impacted virality.
- Attend FB developer "garages" – drinks/networking events – to link up with dev people who can handle the gig.
- Bring an advisory or board member on with social media experience – they wish they had done this earlier.
- Watch the spam factor. Decide what actions carry the most importance and assign notifications to these – not necessarily everything your visitors do is worthy. That way, people won't start disregarding you.
- Net take: The window has closed significantly for a successful FB app thanks to the redesign. Don't bank on fb. Focus heavily on the destination site and potentially an iphone app – view the fb app as nothing more than a channel that can drive excitement about you.
Please post your comments and let the pros know what you think...
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