A Model for Optimally Promoting Application Diffusion on Facebook

Facebook, the leading social networking site, has opened its platform to developers and allow them to publish applications. Subsequently, numerous Facebook applications of various types were designed and deployed. Despite a huge portion of applications without business context, there exist a substantially increasing number of applications tailored specifically for marketing and advertising. From a business perspective, a Facebook application possesses the advantages of low development costs and strong word-of-mouth effect, which provide an ideal alternative to traditional advertising formats. This paper utilizes the well-known Bass model for forecasting product diffusion, and proposes its adaptation to produce an optimal promotion budget allocation for Facebook applications. For a given application promotional budget to be used over a fixed timeframe, the model offers a unique solution for allocating the funds between direct promotion and indirect promotion (word-of-mouth) in order to achieve a maximum percentage of user installations from the target population of potential users. Numerical examples are provided to illustrate the optimal solution and suggestions are made for future research necessary to validate the model for possible use by practitioners