Facebook app install ads were the star of Facebook's earnings call today. Sheryl Sandberg said 3800 developers used the ads to drive over 25 million installs. 40% of the top 100 iOS and Android app developers bought these ads in the last week of Q1 alone. Mark Zuckerberg meanwhile said, "We're starting to see real revenue from selling mobile app installs."
As I detailed yesterday, the app stores are becoming increasingly overloaded as every type of business goes mobile. Developers need a way to get their apps discovered, creating a massive opportunity of for Facebook's app install ads which launched in October. These lets developers promote their apps in the mobile news feed with a large image, description, and "install now" button that opens the app's page in appropriate app store. By combining Facebook's massive mobile user base with its app install ads, Facebook is becoming the paid gateway to app traction.
Zuckerberg noted that with the rise of iOS and Android which it doesn't own, it wasn't clear how Facebook would add value to developers. But now Facebook has settled into helping developers build and growth their apps.
In terms of building apps Facebook already offers free SDKs that make it easier for developers to build in Facebook login and sharing options. Then just last week, Facebook acquired mobile app backend platform Parse, which handles servers, data storage, and more for developers so they can focus on creating enjoyable mobile app user experiences. While a relatively small business now, Parse subscription fees could contribute a few million dollars per quarter to Facebook in the future.
Where Facebook really stands to earn money is app discovery. Sandberg said "We're uniquely positioned to offer developers massive reach", alluding to its 751 million monthly users. Regarding app install ads, Zuckerberg explained that "Even if every recommendation isn't one you take….we think [app discovery] is good for the community."
Facebook's CEO went on to note that the ads work well because they're mobile by design. "Most ads make you visit website", said Zuckerberg, while app install ads just open the app stores which users are already used to visiting. And since people already have their payment info loaded into these stores, the commerce experience is quick and easy.
App install ads also a good bang for developers' buck, as Sandberg said "Our costs per install are highly competitive." Meanwhile, CFO David Ebersman said this ad format is"early in its development but really doing quite well. We're pleased with the experience we're providing and the revenue we've seen." They're getting new businesses hooked on Facebook too, as Ebersman detailed, "A lot of the mobile app ads purchasers are new advertisers."
Zuckerberg sees the app ecosystem continuing to get larger and more competitive, which will make Facebook's app install ads increasingly more crucial. They helped Facebook boost its mobile ad revenue to $375 million, or 30% of its total ad revenue, up from 23% last quarter. Zuckerberg concluded that "this market is already big and I expect it to grow quickly."
The only issue is that others see this too. Twitter just launched app install cards, which show big visual app previews and links to the app stores when people tweet about the download pages of apps. Meanwhile, some including Hunter Walk suggest that Apple might start offering its own native app install ads within the App Store.
Apps are proliferating, and developers need a way to rise above the crowd. Considering the amount they stand to make off of downloads, they could growing increasingly willing to put dollars directly into the pockets of Facebook and others if it gets them discovered.
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