83 Weeks: The Time It Will Take To Return Your MySpace Featured App Investment

Editor's note: Yesterday we wrote about the new MySpace featured gallery for applications with a cost ranging between $50-100k per week. Hussein Fazal, AdParlor CEO has put together an analysis of how long it would take to show a return on the featured investment.

I just read Nick O-Neill's article MySpace Begins Charging for Application Promotion. Instead of taking the approach that most are taking by simply declaring it outrageous, I decided to take a mathematical approach and look at the ROI. I have made many assumptions and obviously every app is different. I have tried to take an average or an educated guess in some cases - PLEASE let me know if you have any reason to believe they are far off.

MySpace has ~15 Million unique visitors / week. Let's say of those 15 million, 1% check out the application directory - 150,000 people. Assume a conversion rate (people who see your promotion click on in and add your application) of 30% (It is quite the prominent display) so 45,000 people add your application. Also assume that each person has an average of 3 friends who also add the application, so you are looking at a total of 180,000 installations from your $75,000 investment!

Now, assume each person that adds your application will visit your canvas page 5 times a week.

Showing ads on your canvas page, an ad network like AdParlor has an ~eCPM of $2/1000 impressions, let's be conservative and use an eCPM of $1/1000 impressions so each person who adds your application will earn about 0.5 cents / week. Earning 0.5 cents/week from each of these 180,000 people = $900/week. That translates to about 83 weeks (~1.5 years) to earn back your $75,000.

I will leave it up to you now to decide if it is worth the investment?