Investing in Facebook Preferred Marketing Developers: How and Where the Top VC’s are Allocating their Investment Dollars Globally
By Matt Monahan, Chief Executive Officer
Facebook recently announced the merger of its Preferred Developer Consultant and Marketing API Programs to create the new Preferred Marketing Developer (PMD) Program. The landscape of companies building apps, optimizing social plugins, managing advertising campaigns and developing social strategies for brands on the Facebook Platform is growing and changing rapidly. In the past few weeks alone, Facebook’s list of PMD’s grew to more than 230 companies, and the majority of those companies have raised Venture Capital.
At AlphaBoost, we take pride in being as knowledgeable as possible about the different facets that make up the social marketing and advertising industries. We did a bit of due diligence recently on the investments made to date in Facebook Preferred Marketing Developers and wanted to share some of our insights and findings. Facebook PMD’s have received $915,170,000 in publicly disclosed funding thus far, with almost half of that amount invested in Ads API vendors alone.
When it comes to investors, there is an obvious correlation between the investors that topped our list and the top VC firms identified by InvestorRank. We found that six out of the ‘Top Ten Overall VC Funds’ named by InvestorRank have invested in the space thus far. Notably absent from our research findings were Accel Partners, Andreessen Horowitz, Kleiner Perkins Caufield & Byers, Spark Capital and Khosla Ventures. First Round Capital and Battery Ventures have been the most active, with three investments made in Preferred Marketing Developers. Maybe the absentee investors realize there can really only be a few winners, and there are a lot of companies running the race. Or maybe, they are waiting to see what happens with Facebook’s IPO before they make their bet. As a side note, I’m happy to talk at length about the opportunity (matt at alphaboost dot com).
The majority of investor dollars is going into Facebook advertising and Page management companies. Although Ads API vendors have received over $450,000,000 to date, it was interesting to note that the Ads API is only being utilized by 17.7% of Preferred Marketing Developers. Apps are the clear favorite with 178 companies or 77% of PMD’s building products in this category.
It was shocking to see how similar the product offerings are for most of the Ads API vendors. These companies are getting a lot of investment looks but the majority of them are not building game-changing technology. They’re positioning themselves against the competition by marketing their expertise in certain aspects of the Facebook advertising process.
There are a handful of companies that have received a significant amount of funding that have not utilized the Ads API for their Facebook marketing products. Hearsay Social, for example, has received $21M in funding and built a CRM system compatible with platforms such as Facebook and Twitter.
We were surprised to find that London tops the list as the most popular HQ city for Facebook PMD’s. Paris had a great showing as well, taking the #3 spot right behind New York. We’re inclined to think that agencies account for a pretty significant piece of demand with London and New York as the top two HQ cities. When broken down by country, the U.S. was the overwhelming favorite with 89 companies headquartered there.
To date, $915,170,000 has been publicly invested in Facebook Preferred Marketing Developers. With the list of PMD’s doubling in the last few weeks alone, it’s clear this market will have a very steep growth trajectory in the next few years. We’re thrilled to be apart of it!
For more interesting stats and highlights, click on the infographic we created below:
Disclaimer: This data was collected on April 18, 2012 and based solely on publicly disclosed information about the companies listed in Facebook’s Preferred Marketing Developers directory. All investor and investment information included is based on publicly disclosed information as well. Please take into account that gaps in our knowledge exist due to undisclosed information.
