LifeStreet Brings Its Online Performance Ad Optimization Tech to Facebook

LifeStreet has been quietly signing deals with Facebook applications developers over the last year and, from what we hear in the industry, it has become one of the larger banner advertising providers on the platform. Now, it is revealing a little more about itself and its plans for Facebook, and beyond. To be clear, San Carlos, Calif.-based LifeStreet doesn't run advertising offers like what you see within social games. It runs banner ads like what you see on most web sites, but within Facebook apps. In general, these sorts of ads are not well-targeted, and cost relatively low amounts based on the number of impressions (or CPM), although LifeStreet says its technology can improve targeting -- and CPMs, as a result. LifeStreet is also in the cost-per-install business. While most social game developers do not run banner ads, they do buy lots of Facebook ads. LifeStreet, like RockYou and 6 Waves, essentially provides an alternative ad channel for reaching users, possibly at lower prices than what a developer might pay on Facebook itself. Overall, LifeStreet is also one of several online advertising companies that started elsewhere but made a big push on to Facebook in the last year or so; others include Adknowledge, and more recently, Traffic Marketplace. Adknowledge has been busy buying up advertising companies, although its focus seems to be offers lately, as shown by its big purchase of Super Rewards last summer. LifeStreet recently made a Facebook acquisition of its own -- SocialCash's ad network -- in the latest sign of consolidation among banner ad providers on Facebook. We recently sat down with its chief executive, Mitchell Weisman, to get some more details. The company began life in 2005, trying to better optimize online performance advertising, using a variety of factors to try to serve the best ad in real time. These factors include the different stages of behavior users exhibit before they decide to click, which ad creatives they click on, what landing pages get the best responses, etc. It also shows how different types of ads perform over minutes, days, weeks and longer to help performance ad buyers decide what to run. Like many others in the industry, the company also collects user data, like cookies, to try to figure out which types of ads a given person is most interested in. It decided to focus on Facebook early last year and introduced the latest version of its optimization technology to Facebook developers last spring. It quickly reached what Weisman describes as a $3 million to $4 million run-rate in gross revenue for the year; it started with a $1 million a month run-rate in June to a $40 million rate by the end of the year. Overall, Weisman says the company is live on 8,000 web sites and Facebook applications in 50 countries, for a combined audience of more than 100 million monthly active users, mostly on Facebook. What about advertising quality? Ads from third-party ad networks have appeared before, in advertising offers, and many of the ads have been deceptive or otherwise low-quality. In trying to write about the industry, one finds that almost no one has written in detail about it, even online. The industry is tight-lipped by nature, partly because the complexity is hard to explain, and explaining can give away a business advantage. Some in the industry are also generally quiet because of controversial practices. Among many issues, some companies try to do things like stuff traffic counts in order to charge advertisers more, or show deceptive ads to users, or buy and sell sensitive and ill-gotten user data. Indeed, as the San Francisco Business Times notes in a recent article on the company, many LifeStreet executives were previously at a behavioral marketing firm, Claria Corp., that was sued for distributing adware on users' computers without permission. Facebook, however, has been trying to crack down on issues originating in the online advertising industry, increasingly policing third-party advertising content on the site. Although LifeStreet is pulling advertising from advertising exchanges around the web, Weisman explains it has a customer service team in place, that has pre-screened thousands of ads before its system runs them. He also says his company talks to Facebook regularly to make sure ads are acceptable. LifeStreet appears to be in a solid market position on Facebook. While other competitors run banner ads, most are also focused on offers or other forms of monetization. There are still risks, of course. One is that Facebook has been cracking down on the viral channels that many applications have used to reach users and maintain engagement, especially with the removal of third-party notifications earlier this month. Of course, as Weisman points out, most Facebook developers on the site today have repeatedly adapted to significant Facebook platform changes in the past, and will continue to do so. The other question is where this leaves LifeStreet's overall advertising business. One obvious place it could expand to is advertising in social applications on other platforms, although Weissman isn't sharing more on that, at this point. It has been working on its technology for the past 4 years, and now has a 40-person engineering team working to deliver better-optimized banner ads. Facebook's platform is allowing the company to build out its technology, operations and revenue, but Weisman plans to eventually make a push against the biggest competitors online. Rivals like Google AdSense and AOL's Advertising.com -- to name but two of dozens -- provide performance ad networks that include optimization services. Weisman believes LifeStreet’s technology will allow the company to compete with, and win market share away from these competitors. However, given the lack of data on the company, analyzing this claim is difficult. For the time being, LifeStreet's newly-gained position on Facebook appears to give it a relatively large base for expansion where its optimization technology can help developers and publishers make more money.

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LifeStreet Brings Its Online Performance Ad Optimization Tech to Facebook

Eric Eldon

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Eric Eldon