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Why Facebook Created Its Own App Store

Posted by Jon Elvekrog on August 2nd, 2012 at 9:37 am

Recently, Facebook created its own store for apps and games, dubbed App Center, and the global launch is underway. Essentially, App Center puts Facebook between you and the rest of the internet. Just like everything else. Everyone’s covering it, generally in the “it’s news!” type of way. Only Buzzfeed pointed out that Facebook’s App Center doesn’t feel like most app stores:

It looks like an app store, and it functions like an app store. It’s been touted as an app store. But it doesn’t feel like a store, and not just because all the apps are free.

It’s true that App Center isn’t your ordinary app store. That’s intentional. Two questions: 

  1. Why would Facebook need an app store? 
  2. Who cares?

Why Does Facebook Want to Help You Download Apps?

App Center might seem like just another of Facebook’s walled-garden plays, styling itself as the new web much in the same way Aol was effectively the Internet for millions of users for years. But App Center isn’t just about the walled garden. The Facebook App Center is directly tied to the company’s future and its revenue potential. Why? 

The key lies in the interest graph. Last week, unnamed sources for the Wall Street Journal leaked an upcoming strategy shift: Facebook will soon offer mobile ads with targeting based on what apps people use. Interest-based targeting. (As a company that specializes in ad targeting based on the interest graph, the news caught our attention in a big way.)

Interests Are Jet Fuel for Advertising

Targeting based on interests is magical for online advertising. Advertisers have seen in numerous campaigns how much a difference that the interest graph can make for an advertiser. Interest graph algorithms analyzes which people and brands that users Like and Follow in order to determine interests and increase relevant ad matching. For Facebook, knowing what apps people use is the interest graph equivalent of a Like.

Why Does Facebook’s Mobile Ad Success Depend on App Center?

But let’s back up. The interest graph is awesome, but why connect apps and the interest graph? Why does Facebook want to put its weight into the App Center? Let’s look at it from the perspective of people buying advertising.

We know apps, especially mobile apps, are huge. Developers and companies earn piles of money from apps through businesses like selling goods (Amazon), selling the apps themselves (Angry Birds), or selling ads within the apps (Zynga). And as we saw with the Instagram acquisition, even a free app can be big business.

Still, the #1 ingredient for an app to be considered successful is users. Even an awesome app like Instagram needs users, and it needs lots of them. So developers are always looking for ways to get more users, and one of the ways they do it is with ads.

Advertisers Really, Really Want to Buy Downloads

The kicker is this: app makers specifically want to buy downloads: not impressions, not clicks, but downloads or “installs.” In fact, developers would pour all their marketing dollars into any source that can prove they can drive app downloads.

Says the Journal:

Facebook’s new mobile ads for apps are potentially highly lucrative. Facebook would charge advertisers every time an app is installed on a users’ smartphone, one of the people familiar with the plans said. Facebook can charge significantly more for an app installation than it can for the traditional cost of every one thousand people who have viewed an ad.

Facebook admitted that “driving mobile installs” was a primary goal of App Center when they announced it to developers in May of this year. 

But Driving Downloads Ain’t Easy

But proving that you can drive app downloads is surprisingly hard to do. Everyone’s trying to do it, but the tools aren’t really in place yet. Apple’s iTunes Store analytics won’t break out which referring site drove the most downloads. Why do you think mobile ad networks want to collect device IDs (and why everyone freaked out when Apple deprecated the UDID)? Correlating IDs of devices with the app to IDs that were served ads helps prove that ads resulted in a download.

Facebook can’t prove what apps you have, and therefore it can’t target you effectively, unless it helps you install them. It needs to get in between you and the actual app store (iTunes, Android, etc) at time of download and verify that you have the app installed.

That’s why there’s an app store. Facebook needs to promote this app store so that they can maximize their ad revenue with a smart mobile play. 

The success of App Center will predict the success of Facebook’s mobile ads for apps. 

But Wait…

Then there’s the second question: who cares? The Facebook App Center has just launched and had its day in the press. But do Facebook users care if Facebook has an app store? Why should they download apps on Facebook instead of where they’re used to downloading it (in the Android store, in the Apple app store, on Amazon, or elsewhere?). It’s a good question, and one only Facebook will be able to answer.

People may switch to App Center if it’s easier and more fun to download apps there or if Facebook wins on sheer brand awareness efforts. For example, if Facebook makes the App Center more well known than Apple or Android, people will use it out of habit and convenience.

It’s a big job, one Facebook is fully capable of. It’s heartening to see this latest validation of interest-based targeting.

One Response to “Why Facebook Created Its Own App Store”

  1. Its good to know that Facebook is launching a new app store. Hopefully, it will help be easier to use. Facebook users need to know about this. I will share this blog to my friends. Thanks

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