Monetizing Premium Social App Ad Inventory and Scaling a Capital-Efficient Business: appssavvy CEO Chris Cunningham (Part 3)

Sramana: Selling brand advertising in social advertising has been challenging for many companies that also tried this model. Why did you succeed when they failed?

Chris Cunningham: In order to sell a premium brand representation at the highest value, we created perceived value of advertising in social apps. That is critical because many other companies with similar models have come and gone. They did not hold the value line in terms of what they would charge, in some cases they almost gave it away free.

Sramana: What was the first the application you represented?

Chris Cunningham: The first and largest in our two years was a community of mothers called Circle of Moms. It was the facilitation of moms talking to other moms about everything under the sun about parenting. As you can imagine, that was a very important piece of inventory for our business as it related well to the consumer goods industry and resonated with companies like Proctor and Gamble and General Mills.

Sramana: What kind of advertising rates were you able to get for Circle of Moms?

Chris Cunningham: Anywhere between $20 and $25 dollar CPMs.

Sramana: What were the terms of your deals with the ad vendors? How did you split those revenues?

Chris Cunningham: We were generally 50/50 as we started the business. It moved to 60/40 fairly quickly in favor of the publisher or developer.

Sramana: What level of revenue were you able to generate from Circle of Moms at that point?

Chris Cunningham: We generated just shy of $4 million during our first year of business. I don’t know what the exact numbers were for just Circle of Moms. LivingSocial was another huge partner of ours. At this stage, LivingSocial did not have a group buying business.

Sramana: Tell me about the LivingSocial story. What was their use case?

Chris Cunningham: They were originally a custom app business. They developed an application called PickYourFive that became extremely viral.

Sramana: What was their audience?

Chris Cunningham: It was your traditional Facebook audience with the 18 -to 35-year-old demographic.

Sramana: Which were some of your other early adopters?

Chris Cunningham: We signed Social Interview and Status Shuffle. If you look at the four partners I have mentioned so far, they were leveraging the science and the virility of what was entertaining. That was how the Facebook app environment exploded. That is why custom-branded applications failed on Facebook. They cared more about revenue than users. Unlike app developers, they did not understand the science of Facebook and how to make it viral. The people we signed understood what it took to make applications click.

Many people have dogs and love dogs. We worked with Dogbook. That was a Facebook app for dogs that would allow owners to check in at dog parks and post photos of their dogs. We also had one of the original partners of Where I’ve Been, a travel bragging app for Facebook. We had 80 partners and we were able to carve out very specific verticals. That gave our sales team the ability to have a very interesting dialogue with ad agencies. At that time they were left with a subpar, non-mature Facebook ad offering. We were arguably offering brand advertisers a much more effective and contextual work environment on Facebook even though we worked independently of them.

This segment is part 3 in the series : Monetizing Premium Social App Ad Inventory and Scaling a Capital-Efficient Business: appssavvy CEO Chris Cunningham
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