Flavio about Business 2.0

The police of the canton of Zurich has apparently not felt the economic downturn yet and is still looking for new recruits.
I was surprised to see that they use Facebook to get attention. But it definitely makes sense for them, the age requirements for new recruits is between 20 and 34, an age group which is extremely well represented on Facebook. 73% of Switzerland’s Facebook users are between 18 and 34.
These 811′760 people represent 49.8% of the 1′630′000 people in that age group.

Sources: Sociabliz Demographer and Bundesamt für Statistik

As I blogged before, we put our job ad for a php developer on the Xing Marketplace.

Now I just received an email from Xing telling me that they are going to start charging for use of the Xing marketplace, but contrary to already established job sites like stepstone, they charge on a per click basis rather than on a per ad basis. This will make a lot of sense to headhunters and HR people who can have a much better ROI overview, similar to google Adsense.

One click costs 0.49 € and might drive strong additional revenue to xing. The job ad I mentioned before has had 20 clicks in 48 hours = 10 clicks a day.

This would bring an additional 150 € to Xing for a job ad that runs for a month (usual length). Other job ads have much higher click rates, as suggests the marketplace startpage: 2383 clicks for the most popular one ( = 1 167.67 € for Xing ).

In the last 48 hours there were at least 350 new job ads. Assuming that people continue to use Xing marketplace even though they have to pay as of today, and assuming those job ads have the same clickthrough rates I have, this would mean 175 * 10 * 30 = 52k clicks a day or 26k € of revenues a day. Yearly this amounts to almost 10 Mio €. Not bad for Xing, which would mean they could augment their revenues by 50+ % with one move. They made 8.2 Mio € in the first semester of 2007.

What I like about Xing is that they are not trying to monetize their platform with ads. They are providing helpful service that generates return on investment for it’s users. They are making up to 20 Mio € Revenue (expected for this year) with only 4 Mio members, meaning that each member spends 5 € p.a. on average. Corresponds approximately to the 13 % premium member rate.

Imagine they had the facebook number of users, 40+ Mio, they would do 200 Mio € in revenue, more than 280 Mio $! Compared to the rumored 150 Mio $ of facebook, they are extracting double the amount of money from their users! Xing is doing great on the monetization, really.

Their P/E is around 60 (190 market cap / 3 mio profit), making it a bit more expensive than Google (53.29), but still much less expensive than Baidu for example (P/E = 180). With their new revenue source, this company might just make quite a lot more revenue, so maybe their are not that expensive, after all.

[Disclosure: I own Xing shares]

In a very interesting article, the New York Times talks about several developers-entrepreneurs who are building facebook applications and try to earn money with it. And really no application is reporting profits. Most people can barely cover their server costs.

A couple of reasons why it is so hard to monetize an application:

• Ads can be displayed only on the canvas page but not on the user profiles, where most user attention goes.
• An application that gives user no incentives to come back and explore more stuff, or that is simply not social enough will not generate enough pageviews to generate a reasonable income - even though it might get a lot of installs, e.g. My Heritage app : has 600′000 installs but only 2% daily active users!
• An application on the other hand that is highly addictive has the same problems that all social networks have. Users are focused only on the content because it is so interesting.
• An app install is a really low commitment by the user, he barely clicks on add application. He is not a qualified prospect at all and is not likely to buy a product featured in the application.

A lot of people are building applications just for the fun of it. But how can people with a VC in their back make apps that much better than the 1000 of developers who code for free?

The only people that are making money with facebook apps right now are people that are selling advertisment in their apps for other people’s apps (like google adsense in a way with pay per install/click ). And that’s certainly not sustainable.

The facebook applications are in an extreme hype. Facebook only VC’s like Lee Lorenzen certainly help the fantasies

growing.

via allfacebook