Monetizing Premium Social App Ad Inventory and Scaling a Capital-Efficient Business: appssavvy CEO Chris Cunningham (Part 4)

Sramana: How long did you carry on with your initial business model, and what were your revenue ramps in the early years?

Chris Cunningham: We went from 80 partners in 2008 to several hundred in 2009. We went from just under $4 million in revenue in 2008 to $9 million in 2009 and over $20 million in revenue in 2010. We really capitalized and rode the wave of Facebook applications. The thing that changed about our inventory in 2010 was the arrival of social games being the dominant category.

We started to spend more time and energy on our social games vertical than we did with the other applications that I did earlier. We were the first business to put brand integration into every major social game that you know today, including Zynga. We created that marketplace.

Sramana: This brings up a couple of trend questions. We know that Zynga monetizes a small percentage of their traffic with paying customers. They monetize another chunk with advertising. There is a huge problem in the web with huge amounts of unmonetized ad inventory, including Zynga. Would you comment on that in general as an industry trend as well as what you see in your premium selling process?

Chris Cunningham: This is what motivates us at appssavvy. That is our billion-dollar opportunity. We can be game changing here. Publishers have been inefficient, and there has been no creativity or science about creating value for ads. The more inventory you have in market, the less there is a perceived value. The performance of those ads decreases as well.

When we started the company we had two options. We could either take the existing model of putting banner displays next to what people were doing, such as banners around Circle of Moms. We took the old model and threw it out the window. We felt they were bad habits and instead created a new model and built it around what people do. Today we call it activity. The emergence of our business from a rep firm to a technology organization shows how we change the marketplace. We do not use existing inventory. We create new net inventory.

Sramana: It seems that you key innovation was centered on activity. Would you talk more about this?

Chris Cunningham: We decided to focus on the behavior of the user. We focus on what people are doing. For example, people on PickYourFive created a lot of lists. They would list their favorite sports teams or movies. We packaged and commercialized that to sell to brands. For Circle of Moms the behavior was to complete polls, and we branded the integration of polls with Proctor and Gamble and General Mills. For Social Interview we did not put banners around like 99% of the publishers; we figured out a way to put branded interview questions on behalf of the publisher. We used what the publishers were already using. We used the most popular activity that people were already participating in. We then figured out how to productize and commercialize that activity.

This segment is part 4 in the series : Monetizing Premium Social App Ad Inventory and Scaling a Capital-Efficient Business: appssavvy CEO Chris Cunningham
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