Facebook Inc (NASDAQ:FB) has launched a new feature for its app advertising platform that lets developers monetize with ads that drive installs and re-engagement. The advertisements are for in-app purchases within an app itself. The purchases are for Facebook desktop game virtual goods that appear in the News Feed or sidebar. If Facebook brings this feature to mobile apps, it could be a way for the social network to earn money from developers that have apps on Google Play or Apple iTunes. As of right now, the ads are only for desktop games. The ads are already live and it essentially lets Facebook double-dip, meaning the ads cost money to show on Facebook.com and the company takes a 30% cut of the in-game purchases.
Kixeye is using the out-app purchase ads for selling discounted virtual currency in the game Battle Pirates. The ads buy $10 worth of in-game credit for $5. The ads saw a 10% click-through rate and a 50% conversion rate for people who had paid in the game before. There was a 14% conversion rate for users who had not previously paid. Kixeye saw a 5,000 % return on investment by targeting biggest spenders with ads for $500 worth of currency for $250.
Currently Facebook generates a large portion of its $1 million mobile ad revenue per quarter by helping developers get app installs.