While there are several ad networks operating on the Facebook Platform – including RockYou Ads, Adknowledge’s Cubics, AdParlor, SocialMedia, SocialCash, and a variety of others – it’s been a while since a new ad network was founded to heavily focus on monetizing Facebook application inventory. However, Jeremy Olsson, formerly the director of performance marketing at RockYou, tells us he has struck out on his own to do just that.

Recently, Olsson closed a seed round of funding for his new ad network, Dizzy Networks, that’s initially going to be focused on improving Facebook application monetization. We spoke with Olsson about the founding of the company, Dizzy Networks’ value proposition to publishers and advertisers, and Olsson’s plans for the next few months.

Justin Smith: What’s the story behind the founding of Dizzy Networks?

Jeremy Olsson: I’ve been in the ad network space for 6 years now, going back to my time at FastClick. I’ve often seen the inefficiencies of ad networks. One thing I did at FastClick was creating a CPA division (this was around the time the crazy free iPod/co-registration stuff was happening). I actually internally arbitraged our CPM inventory to fulfill our CPA deals, and this became my specialty. It’s a really efficient model because you can manipulate your margins depending on what the goals of the company are. That’s how I really got into direct response marketing.

A couple of years ago I moved back to the Bay Area and discovered RockYou. I wanted to bring my experience to RockYou to set up an internal lead-gen arbitrage model, which you can get running really quickly. However, it’s been my intention for a long time to do something on my own. The big hurdle I have is I’m not a technical guy.

Most of the third party ad servers out there were built so long ago, including DART and Zedo, that they don’t really handle CPA well. So I was looking to build something from scratch, from a CPA perspective, but there aren’t that many guys that can build good ad servers. I had a relationship with SocialHour, as I do with every major ad network on Facebook, and I knew that they were developing this ad server around CPA stuff. It just kind of clicked that since their ad network business is shut down as far as I know, I asked them if there was a way I could license their technology, and that’s what happened.

So now, we’re looking for office space in San Francisco, and I’m looking to hire a few people to help with campaign management and publisher development.

What’s the core value proposition you hope to offer publishers and advertisers?

I think having been exposed to the ad network business outside of social media, there’s a lot more innovation going on out there. Social media is still relatively new, and the players still have a lot of room to catch up. I think I bring a lot of experience on that front, whether it be retargeting or using third party data providers to help capture the right audience within this massive pool. I think it is important to point out that we’re not 100% focused on social media – I just think that’s where the biggest inefficiencies lie now. I’m also exploring repping other website inventory, even Twitter and mobile inventory.

I really see the ad networks that succeed put a lot of effort into making sure that the ad server does all the work. Technology really drives this segment of the industry, and we definitely plan on putting a lot of resources toward the technology component in order to stay lean on the employee side. I have done a lot of manual campaign management and optimization and it’s very labor intensive.  With the proper technology and planning, I think much of this can be done by a good ad server.

So you’ve raised a small seed round?

We have one angel investor, Daniel Starr. I’m not a big fan of VC money, but in order to get access to the ad server, I had to get access to a little capital.

My sole focus is great customer service for publishers and great returns for my publishers. We plan on still being able to pay out the publishers better than any other competitors. While I definitely do want to expand into other markets, I’m going to start by getting a foothold on the Facebook Platform because I know a lot about it and I think there’s less competition there.

What will your ad products look like to users – more like offer walls or banner ads?

I want to explore breaking out of the traditional banner. Everyone has gravitated toward the IAB standard units, and there’s a very strong reason to have those – you can reach into agency budgets who can’t possibly create unique ad formats – but that’s a great reason to work with direct respond advertisers who can. I think what will work best in the Facebook Platform ad world is something outside a 728 banner at the top.

We’re planning on trying a lot of different formats and pretty creative things, all the while understanding that if you don’t have the right message it won’t matter what the ad format is. The other thing I want to focus on is making sure there is some context to the ad – if there’s no context, it’s much more difficult to find relevant ad messages.

The offer wall is not really our focus at the moment. That space has become very competitive. We’ll see – there does seem to be a transition from app developers to more of the gaming stuff because virtual currency is such a huge success, so who knows, we could follow suit. Overall, we have heard from publishers that the banner CPMs are pretty low. Hopefully we can bring a new level of monetization to the app world that hasn’t been there so far.

Are you working with SocialHour in any other way besides licensing their ad server?

Their technology will be serving the ads, but they’ll be coming from my domain. For now, it’s a pure licensing deal.

My understanding is that Facebook suspended SocialHour from the Facebook Platform due to the ways they were using Facebook user data. Do you plan on using any of that part of their technology?

Absolutely not. I’ve talked to Facebook directly about this, and I actually recommended to Facebook that they never allow those types of ads back. I think it was a gray area that people tended to gravitate towards, but personally, I don’t want to see those ads – even being in the business, a banner with my name or friends’ pictures in it would still freak me out.

I do think there’s a lot of value in using data to target, but not necessarily to display in the banners. But understanding Facebook’s rules, app developers aren’t allowed to pass that to any third party, so any data that I do obtain I would purchase from someone like BlueKai, who is selling cookie data.

In terms of using Facebook data, that’s completely out of the question, which is understandable. I’m playing in their playground, so I’m planning on playing by their rules. It’s in my best interest to bring up directly with them any gray areas that come up.

How did Facebook’s recent decisions to limit the ways user data can be employed in Platform ads affect your view on the Platform ad space?

I think it was a necessary enforcement of their platform advertising guidelines.  User experience is what has made Facebook the dominant player in the space and keeping that integrity is critical to their success.  I still believe there is a lot of room for innovation in the Platform ad space and I’m confident Dizzy Networks can help lead this growth while playing within Facebook’s platform advertising guidelines.

Last week, we received word from someone claiming that Dizzy Networks was actually SocialHour relaunching under a new name. Do you have any comments on that?

It’s tough to speculate on why someone would say that. When it comes to advertising on Facebook, my goal is to create the best ad network in the space while being 100% compliant to all Facebook platform policies.

Thanks for your time Jeremy. Any final thoughts?

In our initial beta tests, we have seen great results.  Because of our small size, we need to be selective with how we grow our publisher base, but I encourage any application developer to sign up.  We will also be ramping up our team and I hope to post some job positions on the site this week.