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E-Commerce: Facebook and MySpace applications

We have developed an online application for fashion retailers which is launching on Facebook and MySpace. There are opportunities for advertising on the application which will be seen by a specific, targeted and highly viral market of fashion lovers. How do we go about ‘selling’ ad space to complement the fashion content for example, beauty products and lifestyle ads?

Carl Davis is CEO of Dealgroupmedia UK Ltd:
Interesting question - you can either do this in-house by approaching a few targeted companies or you can work with an outsourced provider, such as an Advertising Network, Google AdSense or an Affiliate Network.

One thing you need to consider is what metric you wish to charge on - i.e. will you charge by Cost per Impressions (CPM), Cost per Click (CPC) or Cost per Action (CPA)? Cost per Impression is less risky for you - as long as your application is used and seen by lots of people, then you’ll make some money, but the return will not be particularly high: you might be able to get 1 per thousand impressions if you do a direct deal. The Cost per Action model is more risky for you (as you are looking for people to click on the Advertising and then buy a product at the Advertiser’s website) but the return will be higher - you may be able to get 10-15% of the basket value of whatever has been bought, dependant on the Advertiser’s commission rates.

Selling the concept of the application to an Advertiser on a CPM basis will be slightly harder as you will need to contact them, get a time to explain the concept and basically organise a mutually acceptable deal. Working with Google AdSense, or other Contextual Advertising, it is very easy to set up & you can get the advertising on your site almost instantaneously, but you will have no control over which advertisers will appear. With a CPA deal, it is very easy to set up - you can join an affiliate network and sign up to a suitable advertiser’s affiliate program and then the affiliate network will track how many impressions, clicks and “actions” have been delivered - so you’ll be able to see how successful your application is.

My suggestion would be to start working on a CPA basis with one or two relevant advertisers or work with Google AdSense and then if it works and you are receiving some good traffic to your application, then you can move onto CPM.

If you need any advice, we are happy to help.

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