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Published by Umeverse
Important information about a new company that is dramatically changing the way that advertisement revenue is structured with social networks.
Important information about a new company that is dramatically changing the way that advertisement revenue is structured with social networks.

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Published by: Umeverse on May 07, 2008
Copyright:Attribution Non-commercial


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This is very important to understand, as it will dramatically affect how we structure our revenue model: 
**Assuming that ad revenue alone will be the primary source of revenue on a social network is not realistic. Corporate Sponsorship, and some form of products sales or subscriptions is an alternative source of revenue and must be included in the revenue model.
Facebook ad network Lookery hits its billion-impression target; Socialnetworking doomed?Eric Eldon | March 21st, 2008 | 4 Commentslookery032108.pngLookery, a company that sells advertising onFacebook, and more recently also other social networks, and other websites, has been scraping the bottom of the social network advertisingbarrel, and growing fast. Starting at the end of January, it beganguaranteeing Facebook applications and more recently any other web siteor widget a cool $0.125 per thousand ad impressions for any traditionalbanner ad it ran — a trivial amount for so-called cost-per-mille (CPM)ads.Lookery’s plan was to hit one billion impressions by April, then introducedemographic-targeting features that allow for better targeting of users,and for higher CPMs from advertisers trying to reach specific types of users.The plan is ahead of schedule. The company has gone from less than 200million impressions in January to 640 million impressions in February,and last night, it hit the one billion impression mark (and there’s still athird of March left).Of course, the arithmetic says that at a twelve and a half cent CPM, thecompany is making (a minimum of) $125,000 total for its partners — thecompany offers higher CPMs on some applications, and it neitherdiscloses its total revenue figures nor how much it is making from itsads.
So where’s the money (and the privacy)?If an advertiser can buy advertising that only reaches the people theywant to reach, then the ads are more effective, and worth more,especially to brand advertisers that still spend the lion’s share of their adbudgets on traditional media — that want to reach social network users.Yes, Lookery isn’t yet making significant money from running banner adson its social networks or other sites. But if it is able to build a successfulway of targeting its ads, its bottom-scraping strategy could pan out toreveal more than fool’s gold. The company is collecting information onusers across Facebook and its other sites on the web, sometimes throughcookies, sometimes through javascript that identifies demographicinformation. It collects basic information, like sex, age and generalgeographic location of a web user, and anonymizes that data.Lookery has been talking up its data-focused plan since it launched lastsummer, but it is part of a larger trend to use social networking data andother web data to target ads. Social networks themselves are working onsimilar efforts. For example, MySpace has claimed that its own, somewhatrelated ad targeting efforts that use its user data have already increasedclick-throughs on its ads by 300 percent (although the value of a bannerad is in being seen by the right person, not just if a click happens). Thisweek, MySpace is continuing to roll out those ad-targeting efforts, inBritain.Of course, online ad companies of all sizes tend to overpromise theirability to target ads, because they know advertisers are hungry for thatability. Lookery itself been criticized by competitors I’ve spoken with, whosay targeting is a lot harder than Lookery makes that service out to be,and that Lookery can’t do what it intends to.And, like every company trying to target ads through user data, Lookeryhas also taken some heat from privacy advocates who don’t wantcompanies tracking any sort of personal data. In the grand scheme of things, Lookery is actually relatively mundane when you consider thatcompanies from internet service providers to publishers are busy buyingand selling much more personal data. Consider the ad startup Phorm,
which is explicitly trying to track every action of every person acrossmany different services, not just social network, in order to help it serveup more targeted ads (note: That company also says it obscures theactual identify of each person it tracks).Lookery, like many in the ad industry, is also looking to start selling thedata it collects about users — its plan is to specifically sell the data to theinside sales teams of online publishers, who can use that information tobetter target their own ads.The gold is getting panned, as we speakLookery is gobbling up a lot of cheap inventory on social networkapplications and it is in an interesting position to do a better job of monetizing. To criticize the efforts of Lookery — or MySpace, orFacebook, or any other social networking-focused ad effort — ispremature.Indeed, the mistake that social networking critics tend to make is thatthey think online advertising is only about clicks. A great example of thatis when Google discovered that its AdSense ads on MySpace weren’tdoing as well as expected, last month. “This has huge nasty implicationsfor social networking sites” Barron’s Eric Savitz declared, wronglyassuming that Google’s ads on MySpace are where the dollars should be.While the online ad industry is really good at direct response advertisingthat rely on clicks, highly lucrative brand advertising is still comingonline, Federated Media’s John Battelle noted recently in an interview.Until “you have engagement, integration and proof of user awareness,” hesays, “you are just going to keep devolving down to direct responsepricing, which is sub $5 cost per thousand (CPM) for an ad.” (Disclosure:FM sells some ads for VentureBeat.)Sure, not every effort to monetize social networks has worked.Untargeted banner ads don’t work and neither did Facebook’s Beacon —which tracks users purchases on other web sites then shows their friends

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