Your VP just ran to you in a panic after reading that Facebook had hit 200 million users “We NEED to develop an application and get on Facebook”! As a good employee and student of the Social Media world, you went out, hired someone to develop the application. The application is launched and everyone is happy. You send the application to your boss on Facebook, he shares it with his friends, and everyone is happy, right?
Well, sort of. After a few weeks your boss asks you “how’s the application doing? You say “what do you mean”? The application is…well the application right? We followed the rules; we’re interacting with our consumers on Facebook. We GET Social Media….WRONG.
Relevant actions that your consumer can take within your application to gage success:
- Contest/Sweeps Entries – Perfect for companies like Bluefly, Coke (my coke rewards), Publishers Clearing house etc.
- Coupons Downloaded/redeemed
- Games played
- Videos Viewed
- Uploads (e.g. images, videos)
- Poll Votes
- Messages sent (*e.g bulletins, Updates, Emails, Alerts)
- Invites sent
- Newsfeed items posted
- Comments Posted
- Friends Reached
- Topics/forums created
- Number of Group Members or Fans
- Reposts *”Shares”
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Christopher Dessi 
Hey I like the ways you mentioned to gauge the success of an application on Facebook. Good stuff! If you don’t mind, I just wanted to let you know about an exciting program that’s set to launch in 3 days. There are a bunch of special offers, giveaways and bonuses to be had in the pre-launch stage. Check it out and let me know what you think. Thanks!
Hey Chris,
First, I love reading your blog. Your background sounds like you’re predominately in sales, yet you consistently mention brands in your blog. Is this your side interest? I say this, because it often appears that you equate the two with each other which is rather misleading.
How does having an application on Facebook make revenue? How does social media make revenue? Can a business be entirely supported by ads? (Ask the newspapers and I think we’ll all know the answer.)
Is Facebook making money? No. Is Twitter making money? No. Do they have any plans to make money in the foreseeable future? No. A lot of hype and a lot of buzz doesn’t equate to revenue.
Could the best Facebook and Twitter applications save the auto industry? Could they save any company? Tell me one major company that has been saved or seen a significant rise in profits due to social media. Even easier, have they revived any brand? No.
Your postings present Facebook and Twitter as a panacea for all businesses. And the adage, “You don’t get it.” to me means “You’re not following the hype.” Question what’s popular. Don’t let Web 2.0 turn into the Dot Com Bubble 2.0.
John, I’m not so sure I agree with you. The travel channel launched an app a few months ago and to date has over 2 million active users. Part of the game is to find clues in cities on their actual site. This translates into a ton of traffic that supports their advertisers. Seems like good ROI to me. Paid search clicks would cost a fortune from all that traffic.
Glad you brought up ROI. What was the Travel Channel’s investment on this app? A rough estimate factoring in product management, developers, QA, IT support, marketing, and sales to roll a small product out in ~3 months would be about $250K. From this they acquired roughly 2 million users who probably have a questionable attrition rate (once the game is over, what keeps customers around? if the game continues indefinitely, this will add to the overall investment). Either way, how much revenue would advertising generate over a quarter? $1MM? $2MM? Let’s say their ROI is then $1.5MM (which is unlikely). Not bad, right? Travel Channel’s parent company, Cox, earned approximately $7 billion in 2005. $1.5MM vs. roughly $2 billion in quarterly profits. Behold the power of social media! It added 0.075% to Cox’s quarterly revenues!
Further, this doesn’t take into account the opportunity costs of assigning all these resources to deploy and support this application. If you subscribe to the Jack Welch school of business, just because a business turns a profit doesn’t mean you want to keep it in your portfolio. If it’s not a line item in your quarterly earnings, then it’s just additional risk you’re amassing.
I recognize these are all extremely rough estimates and this is just one example. My point being though is social media has not significantly changed the firm’s bottom line. However, Jeff, I’m fascinated to hear of a successful deployment. I’ll have to look into Travel Channel’s campaign a bit more. Thanks for the share and the lively discussion!