We are not in a bubble but the social networking space is getting more competitive. Just on a side note I have noticed that many people who had very successful apps in the beginning are no longer building apps and have moved on to doing other things.
There are many ways to monetize an app: cpn, cpc, cpi, incetives, cpa, survey (like peanut labs), and cpe, transactions, gifts and subscriptions. The banner model is broken and does not work. So we need new and innovative ways to monetize the apps.
Videoegg just launched a new product called ad frames. Basically there is a small preview on the page and when the mouse is placed over the ad a larger video frame comes up with the real video ad. Advertisers only pay for actual views of the video. Lookery now has a guarenteed CPM of $1.25 for app developers.
Direct response is driving most of the money on social networks. Branding dollars are starting to come as social networks grow. The big brands don’t have a choice but to pay to get involved. Most large brands need to do many things like sponsoring apps, buying ads and participating in anyway they can. Most brands spend 6x more on TV than on online spending. This will shift to more online spending over the next few years. We are monetizing new kinds of user experiences. It doesnt matter knowing what a user buys if you know who the user actually is. This is what most large companies are having trouble understanding.
How effective is the current monetization methods? Many apps are making money with virtual currency. Ads are not working as well. VideoEgg obviously says that ads that are engaging user better and are making app developers more money.
From an advertiser perspective all the ad companies are very much about branding and selling CPMs and no one is talking about actual trackable performance. The good think about AdWords is that it is based on results and tracking ROI. It is conserning that the ad networks on social networks don’t speak to this. I am sure this means that CPM is the only way to monetize social media. There is still a lot to figure out in this area.
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