Adknowledge acquires Super Rewards
Adknowledge, an online advertising outfit based in Kansas City, Mo., announced this morning that it bought KTIN Media, which operates the Super Rewards virtual currency platform for casual games on social networks such as Facebook and MySpace.
The terms of the deal were not disclosed.
For those unfamiliar with these companies (and let's face it, how many people you know have ever heard of them?), a primer: Adknowledge serves up 700 million online banner ads a day, and Super Rewards is used by 1,000 social games such as Mob Wars and Yoville. Adknowledge, which generates more than $250 million in annual revenue, built its business around ad impressions. Super Rewards is all about getting consumers to fill out applications for various offers from advertisers in exchange for virtual currency that can be used within a game.
The money that ad companies receive for getting someone to sign up for, say, a car loan or a university brochure, can be five to 30 times more than a simple banner or display ad, said Scott Lynn, chief executive of Adknowledge, who predicts that the amount of money spent on these types of ads could hit a billion dollars in the not too distant future. Last year, advertisers spent $100 million on such "offer ads." This year, Lynn estimates that market to hit $600 million.
He compares this type of advertising to ...
... Google's, which displays contextual ads that are related to queries people type into its search engine. "We believe the virtual currency is the next generation of monetizing social media," Lynn said. "What contextual ads are to the Web, virtual currency is to the social Web."
For online advertisers, social networks present a massive opportunity and challenge. Sites such as Facebook and MySpace generate billions of page views a day, which gives them plenty of eyeballs. But those eyeballs spend so much time online that they've effectively spaced out the ads, Adknowledge President Brett Brewer said.
Brewer should know. He founded Intermix Media, the Los Angeles company that created MySpace. Intermix was subsequently sold to News Corp. in 2005 for $673 million.
"At the time, the most common way to monetize social media was to show banner ads," Brewer said. "But when someone is on your site for three hours, they start to become immune to those ads. So publishers have to show more ads. Then you get into this rough cycle of showing more ads to users who get better at ignoring them."
That's why offer ads are so valuable to advertisers. People who sign up are actually paying attention.
-- Alex Pham
Follow my random thoughts on games, gear and technology on Twitter @AlexPham.