Web 2.0 Ireland

Application development on social networking platforms was the hot topic this week at the Graphing Social Patterns conference in San Diego. Ironically it’s like the wild wild west of a few hundred years ago - lots of prospectors in an undefined territory where the opportunity is massive.

Here are the key challenges and recommendations I collected from the speakers and conversations I had at the conference:

Challenges:

• Applications and widgets are hard to monetize. Traditionally brand advertising is related to the web CONTENT (e.g. target “Grey’s Anatomy” watchers because they appear to fit with the brand). Essentially the new world of social network advertising is trying to monetize NEW types of experiences and context-free environments. Since users can create any type of group, profile, page etc. there is some fear over what the ads will be placed next to.
• There are low barriers to entry. Anyone and their dog (who knows a bit about PHP) can create an application on Facebook rather quickly at very low cost. This has lead to low quality, low utility, disposable, spammy apps but the good news is that the trend is quickly moving towards high value, engaging, quality apps.
• The metrics for measuring and analysing applications are minimal. This is an evolving area in itself.
• There are multiple APIs. OpenSocial vs. Facebook/Bebo platform - different audiences, channels, usage patterns etc.

Recommendations:

• Develop apps that have utility and meaning. Facebook is changing the rules of the platform to protect its users and provide an experience that increases communication and improves user engagement.
• Ensure your app is: 1. Clear in its proposition and easy to use, 2. Measurable - track growth, engagement, advertising etc., and 3. Flexible - many crappy trials beats deep thinking/planning (Note: I believe this was the case for the low quality apps but the future apps require significant planning to make them of value. The main point of this is to get it out there early to see how users react - “perpetual beta”)
• Apps have three distinct stages of development: 1. Marketing - use appropriate channels to spread your “call to action”; 2. Growth - tune and track virality; What are the other apps in your category doing?; 3. Engagement - increase page views and time spent on site
• The level of trust must be improved between the users, applications, networks, and marketers.
• Plan for a portable ID. The industry trend points towards a future that allows for an ID that’s shared between applications/networks but will be controlled by the users (e.g. permissions)
• For social games the “social” aspect is more important than the “game” - it’s better when your friends are contacting you to “play”. You still must implement typical aspects of gaming - level/goal progression, turns, leader-boards, incentives/rewards: gifts, unlocking features etc.

I did a post on the sexy work Nooked is doing in Facebook over at blognation (picked up by SiliconRepublic) but given Ben’s recent question regarding FB developers in Ireland, I thought it was worthwhile to point out what a lucrative area it is to be in.

The big story last week was on TripAdvisor and the will they/won’t they buy Where I’ve Been for $3m. Even if they aren’t, no-one is blinking an eye at the valuation. Those who are managing to get lots of users of their FB apps are highly attractive right now.

The clincher for me is that Facebook’s own venture backers are investing in FB application developers. They see the Facebook Platform as something which benefits both FB and the apps guys rather than just being a land-grab by FB. Social Media in the US which develops FB and MySpace apps just received $1m in funding. When Jeff Clavier is involved in an investment, it is always worth watching.

Looking forward a few months, it seems clear that MySpace are going to come out with their own platform. Bebo will be roadkill if they don’t too. Those who are active in the FB application space will be ideally placed to exploit these other platforms. I’m convinced that Irish companies with expertise and a track record in building successful FB applications must be on the radar of European investors.

Enterprise Ireland will host a full-day summit on how to design, develop, deploy, scale, as well as market and sell on-demand software. The day will focus real-life case studies and learnings from Irish companies interspersed with keynotes from US representatives, analysts and journalists. More information on http://www.saasie.org. Hope to see you there.

Josh Kopelman of First Round Capital [one of the most active early stage investors in "web2.0" space] has an excellent article on business models

Quote:

“The truth is, scaling from $5 to $50 million is not the toughest part of a new venture - it’s getting your users to pay you anything at all. The biggest gap in any venture is that between a service that is free and one that costs a penny.”

Check out the blog postRedeye VC: The Penny Gap and subscribe …..

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