Update (Ed Note): After taking a quick look at the bidding history of the auction, I’ve come to highly question its validity. It looks like an attention-gaining scam by the creators of the app, and there are too many fake bids to ignore. Mark Mayhew, who caught this in the comments, has more here.
An eBay auction for the facebook application ‘I am Hungry’ recently closed with the winning bid reaching a startling $20,100 USD. The performance of the application is acceptable with over 250K users, however, it’s recent growth has been minimal and the new benchmark facebook app statistic of ‘average daily users’ is low at only 455.
This is a startling result for the developers of the application who must be over the moon having sold their application for an amazing $43 USD per active daily user. The effort that has gone into building the application is pretty much limited to development given that the primary function of the application is to inform people in your network as to what you feel like eating. One could hardly class this as one of the most creative facebook apllications?
The whole issue of facebook platform development projects, their developers and the business value that can be generated when the later are combined is a hot topic in the web 2.0 world at the moment. This news only adds more fuel to the fire. How do you value a facebook application?
In this instance it seems that the logical answer lies in the depths of Adonomics. Formerly known as Appoholic, Adonomics is a service that focuses on providing stock-market-style analysis of facebook features. These guys provide a current valuation for the ‘I am Hungry’ application of a little over $25,000. Based on this info, the successful eBay auction bidder will obviously feel that they got a great deal.
So why does the Adominics valuation of ‘I am Hungry’ fly in the face of the common sense of many experienced online entrepreneurs? The answer is in the methodology behind the Adonomics system which seems to measure an applications valued based on it’s potential to generate advertising and sponsorship revenue.
To me this approach seems a little web 1.0 as the KPI’s would surely be ‘old school’ metrics such as page-views. Personally, if I were looking to invest in a facebook application I would be more interested in the quality of the community that it had succeeded in building. I would be looking for high levels of engagement with a specific niche of people and a more sustainable business model than simply an ability to sell ads.
However, from Adonomics perspective this is probably a smart move as they look to pitch a service that the wider advertising industry can understand in period where facebook is ‘so hot right now’. It almost seems like the facebook boom is a repeat of the dot com boom, where investors spent their money wildly without actually considering the sustainability of their acquired virtual businesses.
I have a funny feeling that the facebook bubble will burst above those who are not careful in considering the true value and sustainability of the social networking real estate (mainly applications) that they choose to invest in.