As companies figure out a way to monetize social media, one of the areas which has been lacking is a way to measure the impact and effectiveness of social media advertising. To gain some insight into the area, we spoke with Ian Swanson, one of the founders of Sometrics (www.sometrics.com), which develops software to gather information on social media and optimize advertising. Sometrics is venture backed by The Mail Room Fund, a Los Angeles-based early stage fund backed by Accel, Venrock, and the William Morris Agency. The firm has also received investments from Greycroft Partners and AT&T.
What's the idea behind Sometrics?
Ian Swanson: Sometrics is a social analytics and advertising company. My partners and I were all involved in the social media space in one fashion or another. I worked at Userplane, building social applications for sites like MySpace. To better understand the audiences using applications, we built out an analytics system a little over a year ago. We just recently started rolling out ad-related products, like Ad Manager, which is like Google's ad manager with baked-in social targeting.
What do you mean by social targeting?
Ian Swanson: It's demographic targeting, targeting around a bucket. That bucket could be a user with a particular affinity to rock music, or a user which likes a comic movie. You want to be able to target these buckets--for example, an advertiser like Warner Brothers might want to promote their Batman film and show a trailer to a user that fits a certain profile.
So who is using your software?
Ian Swanson: We have 1500 publishers using our products. The majority of them are social application developers, who have social applications on Facebook, MySpace, Friendster, Bebo, and Hi5, either using the Facebook API or OpenSocial. We also just recently launched a standard API, which allows any social networking site to use our analytics code. It's very easy to implement, and we're also starting to sign up partners not in the application space but who are traditional social networking sites.
When you say API, how difficult is this to implement?
Ian Swanson: If I'm a Facebook app, I can go to Sometrics and grab a very simple code snippet. It's simple as Google Analytics, and you just place it on your canvas page for your application. Installation really only takes a minute or two, you do a copy and paste, and by doing so they start to get relevant information back. We provide traffic analytics, cross-tabulated across demographics, A/B testing to see how an audience is using certain pages, and engagement metrics. Developers that use our analytics code are able to optimize their applications based on audience traffic trends.
There has been lots of controversy over social ad targeting, and questions about effectiveness and low CPMs- your thoughts, and what have you been seeing?
Ian Swanson: Our Ad Manager product launched about a week ago, and what that product does is to takes advertising inventory and banners and stuff like that, so you can throw it on your Facebook application and get information about what was successful, and what wasn't. We're the first company to close the loop on ads. There are people who serve ads--lots do that--but when someone clicks on an ad we tie that back into our analytics and build optimization around that. If you run a banner, we can tell you if males tend to click more than female, and that it is males in the US and the UK, and particular times of the day, and on the first five impressions--but not afterwards. Based on all that insight, we are able to truly optimize where ads can be served, and in which sequence.
One thing I was trying to get across was that not all applications are equal in the socail space. What people need to do is sequencing. You might see a user on MySpace.com who will go through 1,000 page impressions in a session. Out of that 1,000 pages, only 5-10 ads tend to get clicks. With our technology, we're able to pinpoint that information, and do lots of analytics, and tie that back into zones but also specific advertisers. Ads in social media is less about click-through, but about having an engaged audience, and knowing where to insert ads to engage your audience, so that you see click-through, brand lift, and awareness.
On average, we're seeing around a 50 cents CPM on both Facebook and MySpace, which is actually high. Looking at MySpace and Facebook, their own internal ad sales teams might get a lower CPM, but we find that games and applications sitting in canvas pages are actually getting slightly higher click through rates.
How do you make money in providing these services?
Ian Swanson: Right now, our products are free on the analytics side, and free on the advertising side. We're going to do some partnerships on the advertising in the next couple of months, as white label products. The platforms will be using it to serve ads into their ecosystem, essentially allowing their ad sales teams to sell into their impressions. We'll do a rev share with those platforms.
It seems like this market initially had a lot of individual developers just playing around with the APIs. Do you see more serious companies now?
Ian Swanson: We're seeing more companies. In October of 2007, at some of the first big Facebook events, we saw hundreds of developers working out of their dorm rooms. Now, those hundreds of develops have turned into major companies. They're trying to scoop up the talent out there. It's really helped to legitimize the space. And, some of these companies are pulling in some pretty serious revenues. Case in point in Zynga, which was able to raise more than $20M in funding. Now when you go to a Facebook event, instead of hundreds of developers, you see major companies like EA. I think the interest is starting to get away from the sheep throwing apps to pretty high level, gaming applications from companies like Playfish, which is doing great stuff in terms of their games.
Where are things in terms of social media and advertisers?
Ian Swanson: I think we're at the state where people are accepting it. They see its a very popular space, there's a lot of eyeballs, and that they need to learn about it. We're going through the education process right now. There are lots of great companies helping brands to get involved, show real results, which drive value from their brand perspective. There are more and more brands doing test campaigns, and we think we'll see some real budgets being thrown at it by mid 2009, or especially 2010. Right now, they're working with the experimental budgets on the brand side, and we'll see real budgets in the next year or two.
Finally, what's the next target for you?
Ian Swanson: As we evolve, our analytics product is going to be the base of any other product we launch. We're very interested in the gaming space, and how it ties into social networks. We're planning on a launch in the middle of October playing on the attributes of gaming and social interaction, and tying that into analytics and advertising.