Sramana: Are you applying any other type of monetization model, such as advertising?
Kenny Rosenblatt: We recognized that 97% of the users would only play free, so we do put advertisements in front of those users so we receive some compensation.
Sramana: What kind of strategies do you use for advertising?
Kenny Rosenblatt: We focus on premium display advertising. We are in the midst of a growth stage, and we now have enough users that we can build out our own ad sales team. Up to this point we had small user bases and relied on ad networks to provide advertising to our consumers. The problem is that those ad networks never provided the premium display CPMs in the $10 to $15 range, and we were stuck in the $3 to $4 range of video display advertising. That is slightly lower than average. We used folks like AppsSavvy, Tribal Fusion, ValueClick, and anyone else we could find in the space.
Sramana: What insight can you provide on having tried all of those networks?
Kenny Rosenblatt: They are all pretty poor. Some are better than others at the time. We quickly tried to figure out yield optimization because one ad network may be better on one day, and the next day someone else may be better. We are constantly flipping and exchanging the ad networks to see who can give us the most revenue.
Sramana: Have you looked at the CPC or CPA networks?
Kenny Rosenblatt: We have. We experimented with them. Our games are repetitive, so we did not see great conversion rates on CPA programs because the user would see the same ad over and over. We saw limited upside in all the different models. We realized that for our games and our audience, premium video display advertising was the best option that would yield the highest return for us. That is the model we use today and see the best success with.
We have made several partnerships over the past years to let us move away from traditional advertising networks. We have partners with companies like GSN, which has a large ad sales team. They were providing high-quality display ads and filling our inventory. They could never fill 100% of the inventory, but they did bring in great quality. After they filled 15% to 20%, we still had to go back to the ad networks and get lower rate CPM ads.
Sramana: That seems to be the standard in the advertising industry right now.
Kenny Rosenblatt: Yes, it definitely does. There is some premium and then you have to backfill with ad networks. I would have been happy if the fill percentage was higher. If they were filling 80%, that would have been enough for me to let things be; however, some months they were only filling 6% of the inventory. Once we were able to build up a significant audience, we decided to take the strategy of building out our own ad sales force, which will be done in 2012.