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Facebook, which just announced that it had reached the 250m user mark, continues in its quest to build a sustainable business. Currently, Facebook's self-serve PPC ad platform accounts for the largest share of the company's revenue.

In an effort to grow that chunk of revenue, Facebook is adding on to its self-serve ad platform to meet the needs of developers and I think this could open up a potential arbitrage opportunity for savvy developers.

Yesterday, Facebook announced on its blog that its PPC ad platform now supports targeting options designed specifically for developers. The targeting options give Facebook application developers who are promoting their applications via Facebook's ad platform to target users who have never visited their applications or to target users who have.

In reading Facebook's announcement, it occurred to me that an interesting arbitrage opportunity may exist for developers. Here's why:

  • Many of the companies focusing on helping developers monetize their applications are delivering significant eCPMs. CPA-based programs in particular, are being used with quite a bit of success on many popular Facebook apps.
  • Although many report abysmal CTRs on Facebook ads, there are some logical reasons ads for Facebook applications might fare better when well-crafted as the call to action can be Facebook-related.
  • With improved targeting that enables developers to avoid Facebook users who have or haven't already been exposed to their applications, developers may be able to reduce wasted clicks. They can also segment different ads to reach new potential app users who they'd like to pitch on an installation and existing app users who have already installed the app and need a subtle reminder to use it.

If everything that needs to be in place is in place (an attractive application, optimized application ad integration, campaign monitoring, etc.), I think it's possible that Facebook app developers may be able to use Facebook's ad platform as a means to grow their apps at less cost than the revenue they have the potential to generate. A form of PPC arbitrage, Facebook-style.

Something else to keep an eye on: if and when Facebook opens up its Facebook Credits system, which is currently in alpha testing, the opportunities for this sort of arbitrage could proliferate further.

Photo credit: Duane_Brown via Flickr.

Patricio Robles

Published 16 July, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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