Making money from Facebook

(by a guest writer, March 31st, 2008)

Facebook has quickly become one of the leaders in the Social Networking space and, some predict, will soon overtake MySpace. It gets 150,000 new users a day. Facebook's success provides plenty of opportunities for canny entrepreneurs to profit, this page is going to point you to these. It's a long page but, think, you've just saved $39.99 on an ebook :-)

Face book Applications

It is possible to make millions with Facebook Applications (or "apps"). No, this is not the usual hype you see on the 'net. No, it's not a pitch for an ebook. Or a "marketing secrets" newsletter. We'll shortly describe a real-life example, complete with names and details, of a canny entrepreneur with a simple idea that's been tried and tested to $1,000,000 per week and could work for anyone who has a bit of imagination and a go-get-'em spirit.  Prepare for a WOW! moment in a moment. 

First, what's a Facebook application and how do you get one? If you aren't already familiar with this, the Facebook Developers' section provides all of the information and tools needed to get going. Quite simply, an app is a program that interacts with the Facebook site and enhances users' experience of Facebook, or provides other functionality.  Users add apps to their profile voluntarily and can always "unsubscribe" at any time.

There's even a fund to pay you to get started building apps! And there are several ways to make money from an app, for example:

Money for selling an app: One needs either the skills to develop an application or the money to hire someone to do it.  That's the downside.  That's the only downside.  Once an application acquires a large number of regular users, developers find there is an established market for buying and selling "apps".  Try AppMrkt, Appbid, Sitepoint even eBay and several smaller players.  Rates range anywhere from $1 to $10 per "active" user (it's not just about signing them up but designing the app to be addictive), but that's a very general rule and many fall outside those prices.

Direct ad sales: There is the option, of course, of direct ad sales. Direct selling on popular applications is definitely an avenue to explore before the exit route "lump sum". It doesn't take a great deal of mental effort or original thinking to come up with the idea of selling ad space. But then it doesn't pay that much either. Rates are pitifully low and ad blindness is high in Facebook; people generally ignore ads.

Money for generating installs: Selling an application and selling ads on it are far from only way of profiting, others are even more profitable. Some of the larger applications charge for installs - pay per click Web 2.0 style! - and a new application can pay established app owners to assist them "acquire customers". This potentially delivers a few hundred thousand user installs of the new app in a matter of days.  Rinsed and repeated Pay Per Install can generate a substantial revenue stream.

With all Facebook App monetising methods what's very much the core is the strategy of getting big first before expecting the big bucks... or any bucks at all. And getting big is not the preserve of multi million dollar companies, as we'll explain.

Some say that not all apps are a quick route to millions. There'll be many who claim that apps are impossibly difficult to monetise, particularly as Facebook doesn't allow the insertion of javascript (like the Adsense code) and you can use only those advertising networks and affiliate programs approved by Facebook. We like to think that the real truth is slightly different:  Not all app owners have worked out a quick way to reap huge profits from their app. Yet.

So what is the best way of monetising an app?

So what's the killer idea? It involves using a little ingenuity and here's an example of an implementation; an example of a company that made a million a week with a really simple strategy.

Impossible? Not at all.

The idea is best demonstrated by the first three minutes of this youtube video. Watch it. Seriously, watch it! (The speaker has this to say about it on his own site)

Here's a summary for those who can't access that video. Note: Spoiler ahead - look away now if you don't want to know what's in the video.

The video explains how a facebook app associated itself with a popular charity and offered to pay the charity $150 for every 1,000 Facebook users who signed up. Sounds very altruistic till you realise there's a toolbar involved and a CPA - cost per action - program, and the company makes $0.80 -$1.00 per download. 1.5 million people downloaded that toolbar in a week. In a week. That's what? $1000-$150 or $850 per thousand users and 1.275 million dollars in a week.

Here are Jason Bailey's other videos.

Not impressed? Want something even simpler? Here's a completely different angle (again involving CPA): Video 2 showing how driving users to fill in a survey can result in a 5% takeup at $1.00-$1.50 per survey form filled. In this example, a campaign on 100,000 users resulted in 5,500 "responding".  At conservative values, that's $5,500 in .... a day! Spot the flaw? Yes, that's gross profit. Driving the 100,000 visitors costs money that the video doesn't mention. However, users can be had for $0.03 each, or less. That takes a big chunk out of the profit but - at $2,500 a day still left - that hands free, self-running, auto-pilot campaign is generating profits at an annualised rate of One Million Dollars.


How can YOU profit from Facebook applications?

what makes for a good app?

What makes for a good Facebook Application? (Image courtesy: O'Reilly RADAR; only part of their report is available free). When the FB platform debuted, the emphasis was on getting a large user base. Since then, the focus has moved to having "active" users, people who engage with the application regularly. Four tips to making your app less of a dice roll and more of a Top App in Facebook:

1. Forget selling. Don't try to sell anything. Think like a social networker. Live in the world, play the game, install other Facebook Apps, get a feel for what FAs get traction and what FAs fall by the wayside. Think about how you can  help users enjoy their Facebook experience more.

2. Get inspired. At the end of the day, it's about the explosive idea, about something that will go viral, something that's exciting, infectious, interesting, novel, social, cool, engaging, addictive ... or buy somebody else's idea. Tip: Post some ads/threads in webmaster and developer forums to attract ideas; great developers aren't always great entrepreneurs and they'd be wise to partner with you.

3. Once you've got/bought an idea or bought an application you can do deals with people who have large installed user bases to attract them to try your app, if not RockYou and Slide, there are smaller firms always looking to do deals.

4. Users were finding a large number of invites to apps spammy (and rightly so). Facebook therefore moved to restrict the number of invites people could send and restrict - in a way - the viral spread of an application. So you need to think outside the box. Network with the Facebook developer community. Explore banner exchanges like FBexchange.

At the time of writing, the number of Facebook Applications listed in Facebook's directory is in the tens of thousands. When will yours be there? More importantly, when will yours be making money there?

Lack the killer idea?

No, you don't. You're just waiting for the right one to come along. Get familiar with the system and keep mulling it over when you're online, when you're offline, when you're in the shower. In the meanwhile you can polish your skills developing applications for others and, more importantly, using a range of apps to get a feel for what makes them tick.

If you're a developer yourself, businesses are looking for good app devs. Various job boards - and Facebook itself - also have adverts for developers.


Facebook Marketplace

Selling unwanted items, or even affiliate products in the Facebook Marketplace

Facebook's marketplace feature is much like Craigslist's, where items are listed and viewed locally. While Craigslist suggests a physical proximity, Facebook's marketplace is a more virtual locality - attracting people of a common interest/group/background rather than a common residence.  Visibility of items can also be restricted to a user group.

Listing items in the marketplace is free of charge and as a benefit, other users can also see what you have for sale right from your profile, so you are kind of running two advertisements for the same product.  If looking to sell affiliate products on a "wall" , "group", "page" or and elsewhere in FB, Clickbank, Commission Junction and other affiliate middlemen offer a choice of products, as do various independent merchants running their own affiliate programs.

If you wish to leverage the marketplace and have others sell products for you on commission, there are applications around geared to that. Example.

Some argue that Facebook won't replace eBay or Craigslist as a trading platform. I disagree but, thought: What if you had something that would be of interest mainly to Facebook users rather than the general public in eBay? What if you had something you could target better in Facebook than elsewhere? Capitalise on Facebook's unique advantages over the others. Get in now, at the beginning. If it does become huge you could become the Facebook equivalent of the eBay pioneer traders who hoovered up millions of dollars just by getting in early and before the competition.


Marketplace Help

100 tools and tips to tap the Facebook userbase - an excellent collection of many great (and some not so great) articles on Facebook.

How to sell yourself on the Facebook Marketplace


Operating a delivery service

...Or advertising an existing business.  Facebook was originally built as a meeting place for college students, and because of this their service is still widely used around college campuses.  College students love nothing more than delivery, if you post a service that you can offer in your local area, add your phone number and offer delivery, you may just have a very lucrative business.  Keep in mind this doesn't have to be a traditional food delivery business, you could deliver beer and cigarettes, or party supplies, or even offer to run around town and pick up whatever they need and deliver it to them. 

You don't have to restrict the service to students, of course. The demographic targeting that Facebook allows is a very powerful tool, particularly as you can fine-tune not just on location but on sex, age, education level, employment and various other criteria.


Using the third party applications designed to make money:

If you are an expert in a particular subject you can sell phone consultancy services where people pay you for your time on the phone talking to them. Install an application like EtherT (homepage) in your profile and you can even set your own rates! Sell your expertise, whatever it happens to be in. Nintendo games? Installing Microsoft Exchange Server? Rustling up a delicious Thai Green Curry? Javascript programming? Potty training a baby? Ripping a DVD? Everyone is an expert in something, why not help someone on the phone, share your knowledge and get paid for it?

There are applications out there to facilitate the acceptance of donations. Get rewarded for all that good karma you've been handing out. 


Providing a proxy service:

Many schools and offices block users from accessing social networking sites like Facebook. Providing a proxy service allowing users to bypass these blocks can generate a lot of traffic and (expensive) bandwidth but can be offset with advertisements and the sale of premium proxy services.

Wordtracker, a popular keyword research tool, shows that "proxy" was the most searched for word in conjunction with Facebook. There are a lot of people looking for "Facebook proxies".

We've got a whole section on proxies coming to this site soon. It covers everything from the creation of proxy sites, to getting cheap bandwidth, to the difficult task of successfully monetising proxies.


Finding a new job on Facebook:

OK, not a money making idea per se, but maybe the new job will make you more than the old one did. Many companies are now accepting resumes from interested employees on the Facebook platform.  The best place to get started looking for work is in the Facebook Marketplace under the jobs category.  There are usually many companies actively recruiting and some even conduct interviews right there on Facebook.

Some of the positions are for work from home jobs.


Advertising on Facebook:

It's amazing how many professional marketers are unaware of Facebook's potential for marketing. Very few other places have so many people you can target so efficiently. Want just men aged 30-35? Or women who studied at UCLA in 2001? Or under 30s who work for IBM? No problem. Whatever you're selling the chances are that you can use Facebook advertising to enormous gain.

Why not explore advertising within applications? Or Facebook social ads? And using Groups to engage with your customers and get your advertising message across.

Facebook and other social networks, with their huge user base, are decimating ad revenue for local papers and magazines (example). Why bother with aggregators of local classifieds when you can demographically target directly within Facebook? It's a no-brainer. There are big bets riding on Facebook advertising being a major player. Microsoft invested a quarter of a billion dollars and the redoubtable CNET has some very convincing arguments why FB is going to take a big chuck out of Adwords et al.

Free ads: Halfway down this page is a list of ways you can get free advertising on Facebook (and here's another nice one). Many involve spending time and building yourself some reputation within Facebook. However, companies are finding they can outsource this work or hire someone to do it in-house.

Other notable places talking about profiting from Facebook:
1 | 2 | 3 | 4

24 ways to market inside Facebook

Even if you don't have an established product and fulfillment network it may be worth starting one now, one that is targeted to this new medium and capitalising on its strengths. And do it while ads are still relatively cheap (Facebook's secret rate card) and while the competitors are still tweaking their Adwords campaigns!

A perfect product would be the rootgear example here -

Facebook beacon, a program where other sites like eBay allow Facebook users to "share" their purchases and other interactions with their FB friends, promises even more possibilities for the smart advertiser.

You could use Facebook to drive traffic in many different ways, it could even serve as a means of Search Engine Optimisation. Here are 5 ways small businesses and small websites can benefit from Facebook.



Making money in Facebook takes a different mindset and we hope we've set you on the right track. It's not as easy as falling off a chair but it isn't rocket science, either. It's about the idea, about tapping into the community spirit, and making it not look like an ad.

One somewhat frivolous way of ascertaining how profitable a business idea is likely to be is by counting the ebooks out there promoting it. :-)

All the best of luck with Facebook. This isn't a blog but we'll publish comments below. Tell us what you think by clicking the link in the grey box.

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Comments - Tell us what YOU think!


What do you think of this article? Is it possible to make money from Facebook? Is it over-hyped? Is it ahead of its time? What's YOUR take?




holler2: March 31, 2008 cheers mate that was great reading. facebook is a difficult place to make money and you have provided some very interesting reading. surely something to explore some more.


Stuart: March 31, 2008 I recommend using Facebook to research your target audience. You can conduct polls to get an idea of what makes them tick, what they think of your product relative to your competitors, what features they're looking for in their software....

The brilliant bit is that you can get answers to your market research in a few minutes rather than the days it takes to employ an agency + get a focus group together + compile the data.