Layout applications threaten Facebook, Google revenue
New background apps demote advertising paid to Facebook, Google; Promote in-app ads
There were three big reasons why I stopped using MySpace more than six years ago: the excessive spam, the gaudy backgrounds on everyone's pages, and Facebook.
It was only a matter of time before application developers started offering new background layouts to jazz up the Facebook-blue template, but few anticipated that doing so would throw a big wrench in the networking giant's revenue model.
Users of layout applications such as Buzzdock and PageRage aren't seeing the ads sold on Facebook, Yahoo, and Google -- at least not where advertisers paid for placement.
These layout options are covering up the familiar sidebar advertisements seen on Facebook and search engine home pages, and are often layering in ads paid to their app service (which these Internet bigwigs don't get a cut of.)
This new development has got Facebook, Google and Yahoo scrambling to speak with app developers that are threatening their crucial ad dollars. Facebook and Google were not immediately available for comment.
How this could threaten Facebook and search engines
Google, Yahoo and Facebook have the most bargaining power with advertisers because their traffic numbers are second to none -- each of them pulling in ad dollars, usually based on CPM or CPC. But if advertisers can't guarantee that their ads are even seen on given pages, much less given prominence so that their click-through rate has a fighting chance, these layout apps could gain more advertising dollars.
Facebook has already sent the creators of PageRage, Sambreel Holdings LLC, a cease and desist order, according to the Washington Post and that the app company has no contractual relationship with Facebook. PageRage was not immediately available for comment.i
If Facebook and other ad drivers can't control how people see their pages, and advertisements, the Internet companies may need to do some renegotiating with their advertisers and keep a close eye on the number of actual users of these services to see if it will disrupt their whole model.
One promising factor in Facebook's favor is that many consider the ads offered by the applications to be far more obtrusive than those that live on the sidelines of Facebook. In fact, Facebook lists several applications made by Sambreel as adware because of the way it displays the ads (sometimes covering up your feed), though most of these applications offer a paid layout download that is ad-free.
Google already has the options of personalizing your homepage and search experience and, if they see the number of people going to applications like Buzzdeck jump, they could easily squash the movement by offering more templates for people to decorate their page with.
Facebook may also woo enough people toward the new Timeline rollout to keep these apps from doing any major detraction from its advertising model.