Inside Facebook

Since the Facebook Platform launched two years ago, Facebook has taken a relatively open approach to third parties interested in building advertising networks on the Platform. One of the companies that has been active on Facebook ever since the Platform launched is Washington, DC-based SocialCash, which has now entirely focused its efforts on Facebook. We recently spoke with SocialCash CEO Rob Jewell about the current state of the market, the recent Facebook policy enforcement actions that were taken against other Facebook Platform ad networks, and SocialCash’s plans going forward.

Inside Facebook: SocialCash got its start on Facebook building both an advertising network and an offer network, but now you’re focused just on your ad network. Why?

Rob Jewell: When we looked at the macro picture of all social networking inventory and all the available social information, we just saw a bigger opportunity over existing ad networks to use the social information across all inventory. We had to choose – it’s a massive opportunity, but it takes a lot of focus.

What products are working best for you right now?

Our main product is the headliners unit, which can be integrated in any Facebook app. From a technical perspective, it’s built more like a developer tool than an ad. We’re leveraging CPA advertiser relationships that we’ve had for a long time to create innovative ads, using dynamic social information to increase performance.

What are some good examples where you’ve seen performance increases?

Zoosk is a good example – it’s the biggest dating app on Facebook. We can do things like, “Tired of being a bridesmaid?” in ads, and show the person all their friends who are married, and that creates a pretty relevant and eganging ad that gets them thinking they should add Zoosk. We can also choose the best same-sex friends and put them in the ad. It really brings it home that it’s relevant and higher engagement.

We can also do stuff with education – for example, we can show you any of your friends that have jobs listed, show you what they are doing, and ask you if you want to advance in your career. We do this with the University of Phoenix. We can also see what students’ concentrations are, so for example if you recently changed your degree, we can show you what your friends are studying. It creates that sense of engagement around, “Why am I going down the path of being a lawyer?” As we get the targeting down, we can do more things like pulling in your favorite movies, and giving you the opportunity to stream now with Netflix. Some of these are in production now.

How many publishers are in your network?

We’ve got about 100 active ones across a variety of types of applications – gaming, gifting, quizzes, dating. Some of the largest are LivingSocial, FamilyLink, and Zwigglers.

How do things split out internationally?

70% of our impressions and 50% of our revenues are international. A lot of the efforts in the space now are focused on agencies and brands, but typically those dollars trickle in on a massive amount of inventory, and our efforts are to take the rest of that inventory and maximize it. We have infrastructure in all countries.

Is most banner advertising inventory CPA at this point?

I think CPA is majority of the banner advertising on the platform, but I think overall it’s probably less than the total virtual currency market. There’s still a lot of innovation happening, and things change significantly every month, especially due to regulations Facebook could put in as well.

How have Facebook’s recent suspensions of SocialReach and SocialHour affected you?

It really clears the path for innovation and for new advertisers. We’ve always been inside Facebook’s terms, and they’re really just enforcing the terms that have been around for a while.

We wanted to align the company with Facebook from the start. It’s no surprise that they enforced what they set out to do at some point. We think it will be good both for us and the platform in the long run, by keeping the playing field equal.

Do you think Facebook has successfully enforced Platform policies?

Yes, they have done a good job. However, it can’t be a one time thing – it has to be consistent to make sure everyone is playing by the rules. They have to be committed to doing that.

I don’t want to speak for them, but I think they also see the opportunity to increase the innovation that goes into the space by doing that. They’re very clear that a good user experience is their top priority.

Did you learn anything from your recent conversations with Facebook regarding the policy enforcements?

That they meant what they said. It’s as simple as that. Some people tried to call their bluff and others actually reacted to it and made the changes that they wanted to make.

Facebook has also started testing its in-house ad network this year. What have they told you about it?

I think that Facebook will always want to have third parties innovating social advertising on Facebook. They’ve told me that they encourage third parties to help innovate on the platform. It would be a massive shift from their overall philosophy if they were to say you have to use our ad network. It would put too much burden and risk on them to deliver what developers need and would stifle innovation, and it doesn’t seem like they’d want to do that.

What’s coming up next for SocialCash?

More diverse ads, higher CPMs, improved relevancy, more and deeper social content, more ad unit sizes. We feel like we’re still pretty early on in the process.

Thanks Rob. Any final thoughts?

I think it’s interesting that there haven’t been any of the larger ad networks like Advertising.com, Specific Media, or Right Media making a play inside Facebook. It’s obviously a large opportunity, I think it makes sense that they aren’t doing it because it’s a totally unique kind of creative and set of data you’re working with.

As the inventory grows and the open movement gets bigger and bigger and Facebook Connect takes off, I would think there’s going to be a big play there at some point for one of the bigger ad networks. But even Google hasn’t cracked the code on how to monetize social network traffic – it’s a paradigm shift for almost any ad network, and that puts us and any other ad network working on this at an advantage. Besides, they’ve got hugely successful business already, and they can probably barely keep up with growth on the rest of the internet.