They make money from Facebook

Four Israeli developers tell "Globes" how Facebook applications can be more than just fun.

Money from aliens

In Israel, where the target market is very small, earning money from application development is more difficult. One of the more prominent companies in the market is Save an Alien, which has developed an application that enables users to adopt an alien, and rescue it from death as a result of its planet being hit by a meteor. "The reason we developed this application was to create a specific kind of virtual experience on a social networks," explains Roy Man, who developed the application together with Raz Friedman. "We don't see ourselves as a Facebook application only, and we've even raised funds from private investors. The application we're developing is also highly suitable for games companies."

Are you focusing solely on the Israeli market?

Man: "Our vision is much broader than just the Israeli market, and Facebook is simply a successful growth engine for us. The application we have developed offers a new-media experience combining both technology and content, and offering every user the opportunity to express himself or herself. The aim is to reach several million users around the world."

How do you translate this into money?

"We're considering the option of selling alien accessories in a fashion store that we'll open on Facebook. Advertising is another option, and we're still trying to find the most suitable business model. There is no doubt in our minds that money can be made from applications on Facebook but obviously, it isn't all that simple. Anyone who wants to succeed has to develop an application which has something special, and which will make people want to use it daily, otherwise it won't be possible to persuade them to do other things with the application. Being viral is the name of the game, since it saves on marketing and advertising costs."

Another company, which is focusing solely on the Israeli market, is Tagadam Ltd., founded by Orly Izhaki and Tzvika Avnery. It supplies services and gadgets for social networks. The company has developed a Facebook application called "IsraPoke", which enables users to do "Israeli" actions to other users, such as scrounging cigarettes or throwing doughnuts at each other. While Izhaki claims the application is profitable since it features advertising links which generate revenue for the company every time users click on them, that was not their primary goal. "We wanted to prove our capabilities, educate the market and, more importantly, show that Israeli developments can also bring surfer traffic running into tens of thousands. We earn money from this application, but we're more interested in its viral potential."

Izhaki adds, "You can develop applications with a strong business model, where the main issue is the number of viewing pages the application has - the longer people spend using the application, the more you can earn on it. It's important to remember that every hit on an application can generate income. The trick is to find the suitable business model, since people are still into Facebook, even though everyone says its popularity is beginning to ebb slightly. Saying you can't make money on this is like saying you can't earn income on the Internet."

Every new Facebook user is worth 30 cents

Another Israeli application is "SMS Alert" which enables users to stay updated, even if they are not logged on to Facebook, and receive alerts on their cell phones whenever a new message is delivered to their personal profile page online. The application was developed by Unicell Advanced Cellular Solutions Ltd., a subsidiary of Kardan Technologies Ltd., which develops and provides content distribution services and cellular clearing services, and whose business model is based on revenue from SMS messages.

"We don't make a lot of money on this application, and Unicell obviously does not base its revenue on it," says Eran Kaspin, Internet department manager. "We were looking for something that would interest surfers, and this application was born out of a need that we identified among users who want to stay constantly updated."

As part of its involvement in Facebook, four months ago Unicell announced a competition for Facebook applications, designed primarily for students and independent developers. The company undertook to develop the winning idea as a Facebook application. "We chose an idea called "Combina" which is designed to connect people that can help each other in their respective fields," says Kaspin

The application, which was launched last week, does not as yet have a business model, but Kaspin claims, "You can make money from developing applications, but it is not as easy as people tend to think. People have been caught up in a concept that Facebook is a goldmine, that everything is totally viral, and that you can make a lot of easy of money. That said, Facebook has countless applications that no one has ever heard of, and frequently the goal is exposure, and not just money. In any event, earning money on Israeli applications is difficult."

Yuval Weinbaum, a student who developed an application called "Dating on Facebook," an online introductions platform, claims his principal goal in developing the application was to make money. "I'm still considering what sort of business model would be right for me, and one option is collaboration with one of the wireless companies, with the aim of letting users make unidentified calls to one another," he says.

The application now also features advertising, but Weinbaum claims this is temporary. "I think this application offers something innovative, a kind of system that sits inside a social network, and I believe that it will make a lot of money. The fact is that there are already applications today which are worth millions, and the key question is whether you can also earn money on these in Israel. I believe you can."

Published by Globes [online], Israel business news - www.globes-online.com - on March 31, 2008

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