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Appfuel Joins The Facebook Ad Party

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[qi:021] Like mushrooms after a monsoon, Facebook-specific ad networks keep sprouting everywhere. Latest to join the Facebook gold rush is Appfuel, a San Francisco-based start-up that has developed a way to target ads inside Facebook apps using keywords.

The five-person, angel-funded company says it is less a network, and more a platform that allows better targeting of ads. We spoke with one of the four co-founders, Sundeep Ahuja, most recently of MySpace, and he said that as more social networks open up their platforms, the company is going to expand into those platforms as well.

The way it works is, that if you are a fan of say FooFighters, then the “keyword” specific ads might show you information about their events or special T-shirts for sale. “We want to offer the most relevant ads,” Ahuja said.

“Our secret sauce is better targeting,” he added. “We can offer the relevant ad in less than half a second.” The company claims it can also create on-the-fly creative for the advertisers depending on the keywords.

At last count there were about half-a-dozen ad networks, and that is not including Slide and RockYou, who are using their massive adoption of applications as an advertising vehicle. Some of the more notable FB ad network efforts include VideoEgg’s Egg Network, Scott Rafer’s Lookery and FBExchange. Others include CanvasExchange and Cubics.

Many of the ad networks for Facebook are short-term arbitrage opportunities. As the Wall Street Journal noted earlier this week, developing its own ad network is a high priority for Facebook itself.

Ahuja doesn’t deny the risks and admits that it be foolish for him to think that Facebook is going to let them become a dominant force on their platform. In a blog post Ahuja writes:

What’s most interesting to me is what Facebook and/or Microsoft will do as the landscape evolves. Surely they won’t let any of the above players build out to the point of owning monetization of Facebook applications. Or, perhaps they figure that as long as they limit the opportunity for the above players to canvas pages, they’ll be in a position to borrow best-of-breed ideas and apply them to the rest of the Facebook site.

I agree. In fact, I think there is a good opportunity for Google to jump in here, and build out an ad network of its own. Turn Gtalk and Gmail into widgets and start embedding ads into these so-called Facebook apps. Any other useful iGoogle gadget can be adapted for Facebook and leveraged equally effectively.

As for Appfuel, it is smart for Ahuja and his co-founders to hedge their bets, and be ready for other social networking platforms.

11 Responses to “Appfuel Joins The Facebook Ad Party”

  1. First off, thanks for the post Om! With regards to one of the comments above, I can absolutely see how some might think “another” facebook ad-network is not blog worthy. :) However, a technology company with core, patent-pending IP around serving targeted, contextual ads generated on the fly on a user by user basis — optimized for sites with rich user information — just might be. :)

  2. Alexander van Elsas

    Hi Om, although the idea is simple enough, I agree with you that this will not go far on one platform only. I even doubt it will easily work across multiple platforms as the service providers usually want to keep a firm grip on the advertisement in their networks. On a very similar subject, I watched a very cool presentation by Jonathan Harris yesterday at Picnic 2007. This guy has done some amazing projects by tracking millions of blog posts on specific items (he looked at the words “I feel”and “I am feeling”). Not only did he get massive amounts of data on users, he also was able to create new, intuitive interfaces to explore everything. Anyone in the business of targeted ads should look at this work. It provides a lot of inspiration. If interested check out this post: