When the Facebook platform launched over two years ago, one of the first ways of generating revenue was by charging for application installs. Two years later, installs are still a relatively large business and at between 20 to 50 cents per install, Facebook ad networks are bringing in money one or two quarters at a time. Many clicks on Facebook cost as much as one install though so is it worth it to use Facebook to essentially buy installs?

Facebook’s Targeting Provides Competitive Install Rates

One of the downsides of most of the cost per install campaigns through third-party ad networks is that most campaigns are not targeted. If you want to receive targeted installs, you are going to be forced to pay more money. How much money exactly? It differs from network to network but it wouldn’t be unreasonable to estimate targeted installs at around $1 or more.

Many applications will buy large install campaigns and the chart is consistent: user growth spikes and then drops of relatively quickly. With a targeted install campaign, you’ll often see similar spikes but if you’ve developed your application effectively, the drop off shouldn’t be as dramatic. At least that’s how it should work in theory.

The main purposed of creating a targeted application is to increase your revenue per user. Peanut Labs for example, looks to target various demographic groups for completing surveys. Appssavvy, a New York based ad sales firm, provides targeted ad campaigns based often based on demographic groups. If your application happens to reach that market then you can receive much higher revenues while the campaign lasts.

It’s Not That Simple Though

One of the greatest problems with the Facebook platform is the excessive inventory with not enough advertisements to go around. That’s why offer-based companies like Offerpal, Super Rewards, Gambit, and many others are experiencing widespread success. If you are looking to generate a business from Facebook, ad networks like these are much more useful.

However if you are looking to build a targeted application as an advertisement, you will most likely use a different strategy. Facebook’s new Connections feature which lets application developers target users that haven’t installed their application presents a lot of opportunities for receiving targeted installs.

You can create less targeted campaigns but get ready to spend far more than $0.20 - $0.50 per install if you go that route. Will you be using Facebook to buy installs for your application?