TechPost: Advertising For Facebook Apps
By Zachary A. Goldfarb
Lawrence Lee, an employee of McLean business software firm MicroStrategy, packed up his bags earlier this year and moved to Silicon Valley. He wanted to see if he could make money building applications for Facebook.
His first app was called MyGirls, an application for women. "What we do with this one is basically allow people to show who their best girlfriends are. It allows them to send hugs and write on each other's wall to communicate with each other," said the 24-year-old Carnegie Mellon computer science graduate.
Around that application and dozens of others that he and his roommate have created, Lee features advertising that has, on good days, generated $1,000 in revenues.
And that's in part because he has partnered with SocialCash, a District company that has launched an ad network for all the slight, entertaining applications developers have built. Some apps with seemingly basic utility -- sending a virtual gift to a friend, for example -- can go unexpectedly viral.
SocialCash wants to be there to help developers turn some of the hundreds of thousands of users into profit--and share in some of the proceeds as well. "It used to take years to get the traffic you can now get overnight," said Rob Jewell, chief executive of Gratis Internet, which owns SocialCash.
SocialCash has two products. The first is the advertising network, called BannerCash. Developers put a slice of code into their applications, which serves ads to users of the app, and the revenues are split between SocialCash and the developer. SocialCash works with U.S. advertisers such as Blockbuster and dating site True.com, but most of its ad clients are based in other countries.
Another product called PointCash enables people to pay real dollars or complete offers to sign up for services in exchange for virtual goods such as poker chips or a fancy virtual card to send to a friend.
Social Cash largely been able to operate in this market because Facebook, when it launched its application network in May 2007, left it up to developers to figure out how to turn their applications into money-makers on their own.
"Our focus was on providing tools and services that enable developers to quickly build and scale a business," David Swain, a Facebook spokesman, said by e-mail.
A big risk is that Facebook could pioneer its own program to allow developers to tap into its advertising network, with its enormous scale and advanced technology. SocialCash claims to be unconcerned.
"Just having a lot of money and a lot of power doesn't make you successful. ... It takes a small upstart to understand the developer and be innovative," said Don Charlton, Gratis Internet president. Charlton was the co-founder of local telecom company InPhonicand joined Gratis to help navigate the company though its next phase.
Charlton is now looking for investors to help grow the company faster. "We see this as such a huge opportunity that if we continue to invest at the pace we're are, we'll be successful, but we think we can even accelerate that," he said.
SocialCash first began marketing inside Facebook with an application that sent people free condoms if they put the "FreeCondoms" app on their Facebook page and recruited a number of friends.
The firm now runs ads on roughly 1,000 applications, including HonestyBox, which allows people to post frank messages on the profile pages of others, and Visual Bookshelf, an online book recommendation service.
Ads are currently targeted by geography. But increasingly, data about how friends interact on Facebook, what they buy and what they are interested in will inform targeting.
Often times, SocialCash will begin by deploying a handful of ads for the same client, then determine how users are responding to the ads and adjust accordingly.
Jewell and a co-founder no longer affiliated with the company created Gratis in 2000 after graduating from University of North Carolina, Chapel Hill. Gratis got started pioneering marketing programs such as getting a free iPod in exchange for signing up for services.
The lead guy for SocialCash is Gordon Peters, a University of Virginia grad who has worked as a consultant for Bain & Co. and an executive at an online marketing firm who also spent a few years doing technology consulting for non-profits in developing countries. The Gratis team has about 40 people overall.
The two guys can give off a bit of a frat-boy feeling, but in a slightly geeky way, and their own marketing strategies can verge on the goofy.
Their pitch sheet has the tagline: "SocialCash: It's Crazy Advertising Magic."
At a recent Facebook conference, the company had someone dress up as a gorilla and pass out materials to focus on its "gorilla marketing" expertise.
And SocialCash hands out a plastic card -- emphasizing that they'll pay developers in debit cards if they want -- with their contact information on it. The fake account number on the debit card is the first 16 digits of pi, the famous number one learns in high school math, and an inside joke for developers.
The peculiars of the social network ad industry are leading companies to partner, even if they vigorously compete with each other.
Silicon Valley company 750 Industries - a company created by Stanford grads in a class focused on Facebook - uses SocialCash for advertising around its apps. Most of those ads ask users to click away from Facebook.
Meanwhile, 750 Industries is working to distribute advertisements that don't require the user to leave Facebook. Rather they are asked to play a game or watch a short movie clip while remaining on the site.
"Anywhere there is a social web or a social network, we want to be able to distribute media to users in a social way," said Dan Ackerman-Greenberg, a teaching assistant in the Stanford class and a member of the 750 Industries team.
"You want to make sure you can put cool content in front of them. But the fact that all the data is there gives you the ability to make interesting connections. When someone watches a video, we're optimizing it for them to share it."
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