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Aug 25, 2008

Demandbase Raises $8 Million For Online Lead Generation Platform

Demandbase Raises $8 Million For Online Lead Generation Platform

Demandbase, a company involved with B2B sales leads, has raised $8 million in a funding round led by Sigma Partners, Adobe Systems, and Altos Ventures. In conjunction with the funding round, Demandbase is also releasing “Demandbase Central”, a platform integrating data from across the web and various databases that will be used to power some of the company’s online services.

The first two of these offerings, also announced today, are Demandbase Direct and Demandbase Stream. “Direct” allows users to manage their leads through a web interface and have them automatically distributed to their email or CRMs. “Stream” allows users to monitor passive visitors to their site and generate sales leads by analyzing incoming traffic. Demandbase says that Stream will allow companies to capitalize on the “98% of unrealized passive Web traffic” by allowing them to directly target specific visitors (Stream’s success will likely hinge on the company’s ability to accurately identify this incoming traffic).

Demandbase is notable for its pay-as-you-go services plans (as opposed to a standard subscription service).

Can You Guess Which Facebook App Is Making A Million Dollars A Month?

Facebook is a famously difficult place to make money. Despite the popularity of the social network, most ads go for pennies per thousand impressions (CPMs). Even Social Media, a Facebook ad network that is able to get effective CPMs of about 50 cents, has only paid out a little more than $8 million total to application developers since it launched a year ago. Yet AllFacebook claims:

There’s a pretty well known secret among top Facebook application developers: one developer is generating over $1 million a month. Who is that developer exactly? Well, most people won’t talk about it and after some prodding around we’ve narrowed down the suspects. We aren’t going to post them though because ultimately it doesn’t matter who the individual is.

Excuse me? Actually, it does matter who this mystery million-dollar-a-month Facebook developer is. Facebook apps that make real money are few and far between. It is important for anyone creating such apps to know which models work and which ones don’t. Nick O’Neil at AllFacebook should understand why his readers would want that information, even if his sources would rather that he keep it to himself. It is also important to know who it is in order to try to test the claim.

As it so happens, I’ve heard this million-dollar-a-month claim before. It came from Anu Shukla, the CEO of Offerpal Media, a lead generation network for Facebook apps that gives users a way to earn virtual currency by looking at an ad and completing an action (such as filling out a registration form). O’Neil also points to Offerpal in his post, noting that it can generate average CPMs of $75, with some as high as $200,

When I interviewed Shukla earlier this summer, she told me that about 200 apps on Facebook and elsewhere are tying their virtual currency to Offerpal and that “there are publishers earning up to $1 million a month with a single app.” She also said that 80 percent of the top 25 apps on Facebook are using Offerpal.

Friends For Sale! is one of them. This app lets you “buy and sell your friends as pets” and includes a virtual gift shop as well. It boasts 4.5 million monthly active users, making it one of the biggest apps on Facebook.

Could it be the million-dollar app? I don’t know for sure (Shukla wouldn’t say—if you have a better guess tell me why in comments). But let’s run some numbers and see if it makes sense. While Offerpal’s CPMs are high, Shukla said that only a small fraction of any given app’s users—typically only 5 to 10 percent of active users—will look at Offerpal’s CPA ads.

So let’s be generous here and assume that 10 percent of the people who play with Friends for Sale engage with an Offerpal ad (450,000). Let’s give it a $100 CPM and multiply that by a generous ten pageviews per month per user. That would be 450,000 X $100/1,000 X 10 = $450,000. You’d have to really stretch that to get to $1 million a month. But a $200 CPM or more than 20 pageviews per month would get you close. So would expanding Offerpal’s reach to a larger percentage of the app’s active users (after all, the whole point of the app is to buy and sell “pet” friends and virtual gifts).

That’s within the realm of possibility. Just barely. I guess some people will do anything for money, even if it’s not real.

Of the 200 social networking apps that tap into the Offerpal network, Shukla told me the median app was collecting $150,000 a month in revenues. That suggests that Offerpal is paying out more per month to developers than the $8 million Social Media has paid out over the past year.

It also suggests that creating a virtual economy inside Facebook could be more lucrative than plastering it with generic ads.

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