[Posted on October 4, 2007 - 5:07 PM]
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One of the companies benefiting most from Facebook's growth is widget maker RockYou. The Silicon Valley startup has developed about 25 different communications and photo applications that Facebook's users can add onto their profile pages. Just as widget maker Slide and music recommendation engine iLike have seen incredible rates of user adoption since Facebook opened up its platform earlier this year, RockYou's top seven widgets have been installed almost 10 million times on Facebook. Overall, users across the web have installed 50 million RockYou widgets, according to Ro Choy, svp of business development at the company, speaking at the Momentum Growth Conference in Mountain View today.While the numbers are staggering, the revenues derived from those figures are less impressive. I found Choy in the halls after his panel to better understand how he sees the company's monetization strategy developing. He explained that the 50 million installed widgets yield 100 million page views per day. The page views are monetized with ads for widgets produced by other companies. If a user that clicks on an ad served up by RockYou ends up installing the advertiser's widget, then RockYou earns between 40 and 50 cents per install. Choy said the company's best advertisers such as TripAdvisor (NASDAQ: EXPE) generally can attract 10,000 widget installs per day.
Of course, this economic chain assumes that advertisers such as TripAdvisor eventually can make more than 40 or 50 cents from the user referred by RockYou. Even if that is the case, I suggested to Choy that that model doesn't seem sustainable. While he hardly agreed, the eBay-veteran clearly understands the importance of diversifying its revenue to incorporate traditional advertising campaigns. He's encouraged by RockYou's recent deal with Sony Pictures to sponsor its Zombies widget. He foresees a day in the next 12 months when RockYou serves up 400 million page views per day across all of its widgets, which he thinks will force more traditional advertisers to participate in the network. And he thinks RockYou can command a decent rate because the widgets are targeted at specific demographics.
Whether all of this is leading the company to a sale in the $500 million range is questionable. Venture backers Sequoia Capital, Partech and First Round Capital certainly hope so. Either way, if RockYou's monetization skills can match its ability to create and market viral web applications, the startup is on the rise. - Joshua Jaffe
For more on the Momentum conference, see:
Christine Herron
