Payment Industry Perspectives: Q&A with AdParlor CEO Hussein Fazal

As we continue our look at the Facebook Platform payments ecosystem, today we turn our attention to AdParlor, a full service social network ad agency that operates its own virtual currency monetization platform and social ad network. We recently spoke with AdParlor CEO Hussein Fazal about his view of the payments landscape on the Facebook Platform and AdParlor’s approach to the market.

Inside Facebook: Why did AdParlor make the transition from traditional online advertising to offers and direct payments for virtual currency?

Hussein Fazal: Feedback from application developers told us that banner advertising was making up only 5 to 20 percent of overall revenue, whereas the rest was coming from offer walls and direct payments. Virtual currency is doing so well, but keep in mind that not all applications are suited for it. There are applications out there that do in fact make a majority of their revenues from banner advertising.

We started in the ad network space and are still focused on growth within this space; however, we have also brought on dedicated individuals to grow our virtual currency and wall offer piece. When it comes to revenue potential, the offer wall outperforms the ad network. Right now the ad network piece is a larger portion of the business because we’ve been doing it for over a year, but virtual currency will take over at some point. Given the fact that we started in the ad network space, we had relationships with all the major app developers.

How would you compare your business across different platforms and countries?

AdParlor primarily focuses on Facebook and MySpace – that’s where most of the transactions are. In terms of banner advertising, we’re on most of the social networks, but the focus is on Facebook and MySpace for virtual currency monetization.

There’s not much disposable income in some countries where social networks are strong. In Malaysia and the Philippines, it’s difficult to monetize because there’s not much willingness to spend. The Chinese market and some of the other Asian markets are a bit different because they have massive populations that have enough disposable income, and are comfortable playing games with built-in virtual currency such as RPG’s. It’s difficult for us to get into the Asian market because of the language barrier and the difficulty of building relationships with strategic players in those local markets.

Who are the key players in your value chain and what value does AdParlor deliver to each?

On the application developer side, the value for app developers is that they don’t need to worry about going to hundreds of different offer providers, managing payouts, seeing what works and what doesn’t, and handling user complaints. By going through AdParlor, given our volume, we can negotiate better rates when it comes to completing offers. Developers can focus on building applications. We help monetize.

In the same way, the offer provider has no interest in going to each app developer and would rather go to aggregators like us that can draw users from different types of applications. We work with around 30 offer providers, 10 of which we work closely with. They provide us with best offers at highest payouts.

In addition, we partner with payment platforms, including Zong and Social Gold. We’re also looking at something pretty interesting right now, which is bringing landline companies into the value chain. Users can buy virtual currency by billing to their landline bills.

Can you walk us through the transaction process, from the end user to the advertiser?

Users see an offer in an application asking them to complete a survey in return for, say 10 credits. They click on the survey and complete it through AdParlor. The survey provider then pays AdParlor a certain amount, say $5 dollars per survey. We pass on a portion of that to the application developer, ranging from 70 to 90 percent, sometimes higher if the developer is pushing a high amount of volume. Based on the amount we pass on, that’s how many credits get passed on to the user.