Monetizing Social Networks: The four revenue models

I. Display Ads:
II. Branding Certain Elements within an Application
III. Virtual Currency
IV. Virtual Gifts

How You Should Implement These Models:

Display Ads

  • Allocate about 60% of your ad space to high-quality brand ad networks (you’ll need traffic, and a lot of applying)
  • Allocate about 20% of of your ad space to CPA-based Ad Networks
  • Allocate about 10% of your ad space to Job Listing Ad Networks
  • Allocate about 10% of your ad space to product/widget based ad networks (Amazon Affiliates, Widgetbucks)

Brand Certain Elements within Your Application for CPS (Cost Per Share):

  • Get creative with your application and business model by identifying the major value for your users, and evaluating whether or not you can brand pieces of value without hurting the user experience, but enhancing it.

Virtual Currency:

  • Build virtual currency extensions into your application, but be sure to conduct due diligence on who you’re partnering with.
  • Keep an eye on this arena, as I have a feeling some players in this realm are going to be called out and chastised if the recent allegations about misleading users are indeed true.
  • As a Facebook developer, Facebook made it clear that it’s your job to understand what types of offers are being presented to your users. Have someone on your team routinely click the offers and investigate each ad creative.

Virtual Gifts:

  • Virtual gifts are going to continue to be a cash cow well into 2010
  • It’s critical that you somehow find a way to implement Virtual Gifts into your application. Why? Because this will be the primary way to monetize International countries; you don’t want to find yourself with millions of users that make nothing for your application because they’ll end up costing you money in terms of support costs, as well as other expenses.
  • For now Facebook has the monopoly on this monetization route; however, it seems as if they’ll soon be granting developers access to this revenue stream


About Kyoung Jun Lee
Professor of Kyung Hee Univ.

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