Is $7.5 the average cost of install from Facebook mobile app ads?

Posted May 2, 2013 by jussilaakkonen
Categories: business

Quick back of the envelope math:

Facebook results Q3/2012 (before mobile app install ads launch)

Facebook results Q1/2013 (investor call highlights success of mobile app install ads = big growth & revenue driver)

Assuming other mobile ads grow at the same rate as the size of mobile audience: $150M * (751/604) = $186.5 million, or 50% of mobile ad revenue. Update: to be clear, this is an assumption. Non-install mobile ads could be growing a lot faster, say 30% faster than MAU, that is, grow a total 67% from Q3/2012 to Q1/2013 ($150M to $242M).

Keeping the original assumption mobile install ads grossed $187 million.

FB mobile ad CPI high end estimate = $187 million / 25 million installs = $7.5 / install

If we assume non-install ads grew 30% faster than mobile MAUs, then mobile install ads grossed $131 million.

FB mobile ad CPI low end estimate = $131 million / 25 million installs = $5.2 / install

To put this into perspective, mobile CPI from video ads (nearest in quality to FB ads) go for about $3 at volume.

Updated above: the key assumption here is the growth rate of the other mobile ads. It is possible that my estimate of 67% growth of non-install mobile ad revenue in 6 months is low, but that would mean that brand advertisers suddenly decided to really get on board with mobile ads. Facebook itself has really only been vocal about the how good results mobile app install ads are providing, which leads me to believe that the growth on non-install ads is not as strong as the takeup of install ads.

World changing entrepreneurs & companies start small

Posted September 13, 2011 by jussilaakkonen
Categories: business

Tags: ,

(not really back to blogging, but had a spare moment and thought to blog after a long time).

I was reading up today how Dustin Moskovitz (Facebook co-founder, now Asana founder), Peter Thiel & Max Levchin of Paypal fame et al were lamenting at Techcrunch Disrupt how the startups in the valley don’t do enough to “change the world”. I found myself nodding as well as shaking my head.

Sure, we’ve got enough of people trying to solve photo sharing. Like films (Deep Impact, Armageddon) there seems to be trends that follow-on entrepreneurs pile on. Cloning and iteration do benefit the industry, but you also want folks to working on something new and innovative. Agreed with these gentlemen there.

At the same time it boggles my mind that these awesome entrepreneurs are pooh-poohing companies that start small. Facebook started out as a hot-or-not clone called Facemash. Mark Zuckerberg gave an interview in 2005 that there probably wouldn’t be much more to be done outside of college & university audiences. Peter & Max started Paypal with a relatively small concept of beaming money from a Palm Pilot to another.

I believe world changing companies and entrepreneurs start small by necessity. When you find traction, you scale both as the company and as the entrepreneur. Dustin, Peter and Max have scaled and so have their ambitions and their point of view. I’m sure they remember exactly where they come from and how they started small, but they see “wider” now. I don’t think they are dishing the best kind of advice though. Yes, you need a vision for a big company that at best times will change the world for better, but you absolutely need to start small. Unless you already co-founded Facebook, Paypal, Genentech, AdMob, Google, … and can afford to short circuit the process (of scaling yourself as an entrepreneur & resources for your company).

Start small. Scale when you can. Work towards a big vision.

On Friends, Family and Funding

Posted February 2, 2011 by jussilaakkonen
Categories: business

Tags: ,

It’s hard to believe it’s been only just over 9 months from the launch of Applifier on April 25th 2010. I haven’t blogged at all during that time as I simply haven’t had the time or energy for it.

Mark Suster recently wrote an excellent article on the rollercoaster ride of entrepreneurship. I’ve been through that rollercoaster ride amped up with a few jet engines strapped to my back in those nine months. When we launched Applifier together with fellow social game publishers, I had no idea that the idea would grow to became a successful service reaching over tens of millions monthly active users. I was only trying to survive.

Everyplay (as our company was known then) was at the brink of death with a only a few months of cashflow left. Out of that desperation came the idea to try cross-promotion across small and medium sized publishers. It was the opportune time and we executed. But it would have not worked without the trust and support of our launch members. I’m incredibly thankful for their support, guidance and help.

Thank you Nabeel, Daniel, Raph, Jason, Keith, James, Stan, Moo, Luke, Rex, Magnus and Johan.

Applifier was founded to work for publishers. It is a privilege to work for so many great companies and see their games succeed.

Come mid-summer 2010 we were running on fumes. Money was nearly gone. Applifier was taking off like a rocket. Kamu Town, our game, languished. I had an obvious, but a very difficult decision to make. The vision I had crafted and promised to our team had not realized. We weren’t going to make it with games. The hardest day arrived when I had to face the facts, stop all game development and layoff good friends from the company. We ended up drinking and being merry the same night and parted ways with a ton of respect for everybody. I didn’t stop working for my former employees until I found them new employment at great companies like Rovio and Digital Chocolate. Personally one of the coolest things that Applifier has made possible is that I was able recruit back one of the guys I had had to lay off. Makes me smile.

Thank you Matti, Jussi and Pekka for believing in my vision and going the extra mile. It was a privilege to work on Kamu Town with you.

At the same time Applifier was growing explosively, but were a total nobody. An unknown, obscure Finnish startup trying to raise money in the Valley and not even knowing who to talk to. I had some ideas of investors I should try and reach, but I didn’t know them. Fortunately many great friends believed in us and put their reputation on the line to introduce us to the right people.

Thank you Paul, Wili, Jyri, Brett, Frank, Pekka, Josh, Taneli, Jukka.

Those warm intros opened the doors and our traction kept the doors open. We were up to around 30M MAU in reach in just a few months, but at the same also nearly out of cash. Applifier was delivering great results to its publishers, so our graphs continued to go up and to the right. If anything, that moves things forward in a funding round. It sounds cliché, but it is absolutely true.

The saying is that a Valley investor won’t invest into a company to whose office he can’t drive to. To my surprise I found that to be untrue. We pitched nearly 40 seed investors and only one outright turned us down because we aren’t a Delaware corporation. Everybody else was ok as long as the legal & tax impact of investing into Finland were known and the CEO would move over to the valley. (yes, that’s were I’m headed)

Traction was definitely the thing that helped investor to get over the “Where in the world is Finland?” issue. The cross-promo model worked and our publishers got great results from using Applifier. The technology worked extremely well too, but only because Matti and Jalmari, our technical co-founders, totally outdelivered re-writing Applifier’s systems several times over and working days and nights to keep up with the amazing load.

Thank you Matti and Jalmari. I couldn’t have found more competent and outstanding technical co-founders.

We were fortunate to meet several great investors, many of whom went out of their way to help us. The decision who to bring on board was not a trivial one. We were “getting married”, but unlike a marriage, there would be no option for a divorce. In the end our decision came down to choosing investors who were entrepreneurs themselves and whose own investors were entrepreneurs.

It’s great to have MHS CapitalPROfounders and Lifeline on board. These seed funds’ own investors are all successful entrepreneurs. It’s been an absolute privilege for me to talk with Ali Partovi (who backs MHS Capital), one of the founders of Link Exchange, who were the true pioneers of the cross-promotion model in the pre-Google days. So much in common with the businesses even if they are separated by over 15 years. Jyri, David and Lars are all successful entrepreneurs with huge domain expertise. Mark at MHS Capital, Sean & Rogan at PROfounders, Petteri, Timo, Jarkko and Ilkka at Lifeline all think and act like entrepreneurs.

Tekes, the Finnish funding agency for technology and innovation, has supported our R&D efforts since day 1. We are thrilled to join their Young Innovative Companies and show that fast growth, international startups can be created in Finland just as well as anywhere in the world.

Thank you Mark, Sean, Rogan, Jyri, David, Lars and Pauli for backing our vision.

While I was galloping around the world and obsessing over Applifier’s offering, the one person that kept things going at Applifier HQ and provided a steady hand to everything was Pekka, our fourth co-founder. Pekka and I go ways back as we’ve together run ASSEMBLY the largest Finnish computer festival since early 1990s.

Thank you Pekka, for being a friend and a co-founder for close to 20 years now.

During the fall of 2010 we’ve built up our team and have had incredible success in recruiting awesome folks whose work is now starting show through our feature launches like retargeting, our new network for web games and several cool things that will launch in the near future.

Thank you Teemu, AT, Antti, Garo, Pekka, Tuomas, Mika, Eemu, Juho and Reina.

This rollercoaster ride has been a thrill, but combining it with a family of two young kids makes for a busier life than I could have ever imagined. The understanding, support and love my wife Eija has given me over these months is beyond words. That she would resign her own job and relocate to a foreign country that she has never been to is simply amazing and humbling to me.

Thank you Eija for your love and support.

I’m privileged to be on this journey and work with so many talented people, work for awesome publishers and have the advice and support of people I respect.

Applifier is the creation of everybody involved. Thank you.

Applifier – cross-promo for social games

Posted May 7, 2010 by jussilaakkonen
Categories: games

Tags: ,

Applifier logo

Just over a month ago I was really struck by the lack of good options to help us grow Kamu Town in addition to pure virality. I decided to do something about it instead of just accepting the worsening status quo.

We started building what was to become Applifier and talked with a bunch of other independent social game developers. It was painfully obvious that a lot of high quality games had the same challenges we have, so encouraged by the early validation we pushed on. We really hit off with Nabeel of Conduit Labs, who had on his own been working towards the very same goals.

So the rebel alliance was born and you can read all about it on Inside Social Games.

Kamu Town live

Posted March 20, 2010 by jussilaakkonen
Categories: games

Tags: , ,

Kamu Town logoKamu Town, our latest social game on Facebook, is starting to take off on Facebook. Thanks to @fbindie for pointingout, that I had neglected to write about it on my blog (gasp!), so here goes!

We started working on Kamu Town late last year. We wanted to create an “easy fun” game with a distinctive personality and we most definitely wanted to include our beloved Kamus in it. Back then there were no town/city building games on Facebook, so naturally we thought we should have our game in a different genre instead of doing one of crowded farming/pet/cafe genres. Ah, the irony of finding yourself launching into one of the most crowded of the emerging genres on Facebook =).

Not to worry though, Kamu Town is pretty distinctive and we are bringing some pretty unique features to it in the near future that you won’t find any other town/city game (then again, don’t take my word for it, just re-read the paragraph above about my forecasting skills =)).

Have a go and do give us feedback on the Discussions page on Facebook.

Kamu Town screenshotJust building myself a Science Park. That’ll keep my techie Kamus happy!

Facebook: the biggest boost for gaming’s positive image ever

Posted January 18, 2010 by jussilaakkonen
Categories: games

Tags: ,

Dirty Hands (CC) Bah Humbug on Flickr

Gaming is a dirty thing.

There. I said it. It’s 2010 and still the mainstream press continues to treat games as curiosity for kids, or smear players with sensationalist headlines. Game development as a serious career choice? I’m sure your parent’s and career counselor will tell you to rather become a doctor, lawyer or an engineer.

Could you possibly consider trying to pick up a girl / boy at the bar by asking her / him to come to your place to  play some video games? Just contrast this to let’s watch a movie together, or listen to some good music. (Yeah, kids, don’t try the video games pickup line =)).

But what happens when all your normal friends and family members start broadcasting their gaming? Surely your 45 year old aunt didn’t just ice you in Mafia Wars? What’s with your younger sister hosting a barn raising in FarmVille? Is that a flirting cupcake from your loved one in Pet Society?

Facebook and social games have done more than anything ever for the positive image of gaming and games. By making our gameplay visible to everybody in social graph and making it part of the the stream of your life (baby photos, Country Story achievements, your FML moments, latest movie trailers, helping friends to retaliate in Mobsters, birthday congratulations, …), Facebook has made gaming OK.

(CC) Sean Dreilinger, on Flickr


Gaming is was a dirty thing.

Thank you Facebook.

P.S. Though you can’t pick up (yet!) somebody at bar by “Let’s play Pet Society together”, I’m pretty sure it’ll be a nice touch to send some virtual roses once you start going steady! ;-)

Facebook policy changes are a tectonic shift for social game developers

Posted October 29, 2009 by jussilaakkonen
Categories: games, Uncategorized

Tags: ,

Facebook Platform is under going major changes, which I believe are great for the smaller social game developers and everybody who makes quality applications. This great news, because Facebook is cracking down on questionable practices and spam.

Communication features change

On one front Facebook is revamping the communication mediums available for developers. This includes notifications going away, lot of stuff being moved to the inbox, the algorithmic stream change of last week and the new games dashboard to name a few. The best summary of these changes for any developer is the Facebook Platform roadmap.

I was originally concerned that Facebook would totally nerf application growth thru these changes, but after reading thru the changes, the functionality change isn’t really that drastic. The Stream will continue to be the main mass communication tool, and the Inbox based communication together with the new Dashboard are a great replacement for notifications. The game developers will go thru a round of iteration with these new features, but as we saw a year ago with the removal of profile boxes (then the most prominent application virality feature), the developers are quick to adapt.

The second change is much more important.

Facebook’s platform policies have gotten a lot stricter

(CC) Paul Keleher

Most of the blog coverage of yesterday’s Facebook Developer Garage focuses on the above functionality changes and is missing the real beef of what’s going on. The changes in the Facebook Platform Policy are much more important than the functionality changes.

Zynga is the master of viral distribution and many others copy their best practices (one notable exception being Playfish, who is quite reserved on their viral features). If I were to exaggerate, Facebook has taken a long hard look at what Zynga and its copycats do and decided to forbid many of their most successful practices:

Popup Stream prompt

Apps can no longer popup “Publish to stream” forms. This is done currently extensively at e.g. level ups, achievements. Now stream publishing can only be prompted after a player specifically clicks on such button.

 

Misleading the player

Apps can no longer mislead players by making the default button e.g. a invite friends function. I can’t count how many times I’ve clicked on the friendly looking green button in Cafe World’s login report screen only to end up at the invite friends screen when I just wanted to proceed to the game. This action button now must have a “skip” button next to it in a similar size & style.

 

Mafia size

Apps can no longer gate content or reward players based on the number of friends playing. Mafia Wars and its clones are completely built upon this mechanic with mob size based powerups and limitations built-in. It will be very painful to change these game mechanics as it means that every single players’ in-game standing & resources will change.

 

Get the bonus

Apps can no longer incentivize players to e.g. invite or message friends or publish to stream. This has been pretty much the rule already, but Facebook has been somewhat lax in enforcing it. It remains to be seen if this will be used against features such as “Share the wealth” mechanic popularized by Zynga in FarmVille to incentivize posting to the stream (clicking on Get the Special bonus link shown above gives a bonus to you as well as to the player who posted to the stream).

There are more e.g. a rule that forbids Apps from no longer publishing Stream stories that invite a player to a game or include calls to action “e.g. beat her score”.

If Facebook is really serious about enforcing these policies, this will mean a tectonic shift on how games can grow on the platform. Will Facebook enforce these rules against Zynga,  who is apparently contributing $50 million to Facebook’s revenues thru buying Facebook ads?

I’m sure there will be in a grace period during which developers are expected to change their practices and games. How long that period is, is still unclear. Facebook representatives themselves didn’t go into much detail about the policy changes at yesterday’s event.

To be clear: Zynga has operated according to the existing rules of the platform and has been wildly successful. It takes a lot more than just virality to become the TOP1 company on Facebook. The above is not to dig on Zynga – it is just that many of their most copied approaches are being invalidated. And to be honest, if the rules wouldn’t have been changed, we’d most likely would have also adapted many of Zynga’s approaches – that’s how successful they’ve been.

Why is this great news for smaller developers?

(CC) Richkidsunite

These are great changes for smaller developers because

  • virality is compounded growth: with a high user base, the forbidden practices were useful to getting higher absolute number of new users into those apps. If these new rules are enforced, the bigger apps’ growth will likely slow down and leave room for smaller players
  • game quality matters: with less spam it will take better quality games to succeed. This should also benefit Playfish.
  • originality matters: it will be a bit harder to copy a new original game and grow it rapidly. However, the big players have the marketing spend to boost any new game they want
  • players will be more in charge: with less spam, new players are likely to react more positively to friend’s inviting them to games
  • discoverability improves: the games dashboard should help also new apps surface
  • the playing field is more even – if just for a while: everybody needs to find the new best practices

It is good to note that this is just the roadmap for the next few months for the Facebook Platform. There will definitely more changes ahead.

More coverage about Facebook Platform changes


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