Living in a digital world

Facebook app sells for $3million – or perhaps it doesn’t!

There was a flurry of excitement amongst Facebook watchers at the end of last week following a post on the Inside Facebook blog on Thursday, announcing “the first major successful exit of a Facebook application since the platform launched just under three months ago” (you can read about the launch here if you missed it).

Apparently ‘Where I’ve Been’, the most used travel application on Facebook with 2.4m users (making it 21st in the most users ranking) had sold to travel company TripAdvisor for a nice $3million – making the $60k paid for the app ‘Favourite Peeps’ in June look like small change and, presumably, raising the hopes of ambitious app developers worldwide.

However, it seems that Facebook broke the news too soon – as its blog posting was subsequently updated with a concise comment from a TripAdvisor spokesperson simply saying “This is untrue. Beyond that, we do not have any comment.”. Craig Ulliott, the developer behind ‘Where I’ve Been’ also denied the news in a statement added as a comment to a blog posting on techcrunch.com.

So, Facebook seems to have been somewhat premature in announcing the first multi-million dollar app sale. However, the story does highlight the fact that Facebook apps with multiple millions of active users worldwide are clearly perceived to have a very real business value – the question is just how this value can best be quantified in these new digital boom times.

Commentators on this and earlier app sales have typically used a $/user metric – with ‘Favourite Peeps’ going for 4.6cents/user and ‘Where I’ve Been’, had the valuation been true, achieving $1.25. However, given the diverse nature of Facebook apps out there and the resulting diverse levels of user engagement and commercial value this seems a very weak metric on which to base anything much. The true value of any such asset surely has to be related to the level of consumer engagement it achieves, as it is only this which can be leveraged to deliver subsequent value.

If measuring engagement is your type of thing (and it should be whether you’re an online marketer or an aspiring millionaire Facebook App developer) then you’ll find some useful and thought-provoking commentary in this blog post by Dave McClure.

August 19, 2007 - Posted by Bryan | Uncategorized