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Summary:

As the mobile app market grows, it’s creating new opportunities for app marketing companies like Tapjoy, which has raised $30 million even after running into an Apple ban on one of its products. The new money highlights the opportunities available as the app market booms.

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As the mobile app market grows, it’s creating new opportunities for application marketing companies like Tapjoy, which has raised $30 million even after running into an Apple ban on one of its products. The new money, which follows on a $21 million investment last year, highlights the growing market Tapjoy is playing in and shows that despite problems with Apple, Tapjoy and others can find success as the app boom extends to multiple platforms.

Tapjoy’s investment was led by JP Morgan, which joins existing investors Rho Ventures, InterWest Partners, North Bridge Venture Partners and D. E. Shaw Ventures in this Series D round. To date, Tapjoy, formerly known as Offerpal, has raised $70 million. Mihir Shah, Tapjoy’s CEO, said the money will go toward acquisitions and building out the engineering and sales teams. The company expects to double its 70 employees in the next couple of quarters.

Shah said San Francisco-based Tapjoy is reaching up to 30 million users a day with its campaigns. That’s even after Apple closed the door this spring on so-called incentivized app installs, in which a user can gain virtual currency or goods in exchange for downloading another app. Apple didn’t say why it banned new and updated apps with incentivized installs but indicated that it was because the downloads were affecting the App Store rankings. Tapjoy was the leader in this field of pay-per-install app monetization but has now shifted its efforts on iOS to more traditional banner ads or cost per action campaigns, in which users gain currency in exchange for watching a video or completing some other task.

Shah said Tapjoy, which became profitable in the fourth quarter last year, has not missed a beat with the loss of incentivized installs on iOS. He said the growth of Android, which is doubling month over month, as well as a new opportunity on Windows Phone 7, have helped Tapjoy maintain its momentum. Tapjoy last month started a $5 million Android fund to help developers port their apps to Android, which doesn’t ban incentivized installs, and also recently started supporting Windows Phone 7.

“Regardless of what Apple did with respect to incentivized app installs, the mobile app market we power is booming,” said Shah. “It’s booming on Apple and a variety of platforms.”

Even though Tapjoy has moved on from the incentivized app install situation with Apple, it wasn’t without a fight. The company floated a couple of ideas by Apple including not having app downloads count toward the App Store rankings. But Shah said Apple has not responded at all.

Shah said it’s disappointing because he believes pay-per-install can be a legitimate tool when limits are applied. Without it, developers are having to pay more for other app marketing. Incentivized installs were also a significant way for developers to monetize their apps beyond traditional advertising or in-app purchases. But ultimately, the standoff has forced Tapjoy to diversify and it seems to be doing well because of it. The reality is, in a market that’s expected to hit $37 billion by 2015, many mobile apps will increasingly need help to be noticed and downloaded and serving this market is just getting more lucrative.

  1. Developers are always looking for creative ways to market their apps, and Tapjoy’s incentivized downloads proved successful until Apple pulled the plug on it. With Android’s market share increasing, there’s no doubt users are hungry to consume and find content easily. At the Mobile Marketing Forum held in NYC a couple weeks ago, Patrick Mork, CMO of GetJar noted that the best way to advertise a new application was through viral word-of-mouth, which can be hard to bolster without other forms of app advertising helping it along. It’s great that Tapjoy has continued to evolve despite some early setbacks.

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