It is quite late, but I just read Nick O-Neill's article MySpace Begins Charging for Application Promotion and felt the need to blog. Instead of taking the approach that most are taking by simply declaring it outrageous, I decided to take a mathematical approach and look at the ROI. I have made many assumptions and obviously every app is very different. I have tried to take an average or an educated guess in some cases - PLEASE let me know if you have any reason to believe they are far off.
MySpace has ~15 Million unique visitors / week. Let's say of those 15 million, 1% check out the application directory - 150,000 people. Assume a conversion rate (people who see your promotion click on in and add your application) of 30% (It is quite the prominent display) so 45,000 people add your application. Also assume that each person has an average of 3 friends who also add the application, so you are looking at a total of 180,000 Installations from your $75,000 Investment!
Now, Assume each person that adds your application will visit your canvas page 5 times a week.
Showing ads on your canvas page, an ad network like AdParlor has an ~eCPM of $2/1000 impressions, let's be conservative and use an eCPM of $1/1000 impressions so each person who adds your application will earn you about 0.5 cents / week. Earning 0.5 cents/week from each of these 180,000 people = $900/week. That translates to about 83 weeks (~1.5 years) to earn back your $75,000.
I will leave it up to you now to decide if it is worth the investment?
Thursday, May 1, 2008
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3 comments:
Wow, then its definitely not worth it to advertise on MySpace.
For a guy who is doing math, you forgot to leave out base^exponential factor.
When viral API is implemented your base will drive your exponential value. Notably MySpace is shipping out with viral API soon hence Slide's business move to drive a bigger base, gain momentum, and drive it home for a winner. You need shave it off to at most 6 months to get it back--which is not too shabby.
Tech Rant, Thanks for the comment. I was trying to figure out how I could factor in the exponential growth when I wrote the post. In the end I decided to increase the number of friends who would add the application to 3. You probably won't have that average of 3 within that first week - so it represents in some ways the growth over time. Perhaps that number should be higher?
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