NOVEMBER 3, 2010 • There’s plenty of media vying for the attention of online gamers.  And that’s just the fun stuff people like to play. Grabbing eyeballs for advertising or consumer polling isn’t so easy. What’s the incentive for people to devote their valuable time to fill out a survey? There’s a growing number of firms like London-based SupersonicAds that have sprung up during the last five years to provide the lure to get consumers to participate in marketing outreach they normally would ignore.

The rise of free-to-play titles monetized via micro-transactions has provided the carrot that can lead consumers to marketing. Now gamers can be rewarded with virtual currency in their favorite online game, or special virtual item rewards that they can use in game. From what DFC can see, the approach is viable and successful. We spoke with SuperSonic Ads’ COO Arik Czerniak to get up to speed with how this business is developing.

DFC: Tell us more about SupersonicAds. How and why did the company together in 2008? Who are your clients? How many employees do you have, and where do you have offices?

AC: The company started after our chief executive Gil Shoham left Adsmarket  (an affiliate network) where he was vice president of Media, and I left Metacafe as chief executive. Gil was my vice president of International Sales at Metacafe before joining Adsmarket.

Our clients are a wide base of game publishers including most of the tier 1 publishers like Yahoo, Playdom, Playspan, Bigpoint, Watercooler, GalaNet, Digital Chocolate, etc. We have offices in London, SanFrancisco and Tel Aviv, with 30 employees.

DFC: How many tech companies like your own get started in Israel and then relocate their headquarters to someplace else like London or Paris?  What staff do you still have in Israel?

AC: Most companies relocate offices to California or New York. I believe we’re one of the few who have the CEO in London, and that’s because of our strong European focus. Our Israel office’s focus is on product development, R&D and operations.

DFC: Who was first to market the idea of providing consumers with virtual items or currency in return for participating in targeted marketing?  How long has it been going on and how much of the growth has occurred in the past year or two?

AC: I’m not sure who was the first, but TrialPay was a pioneer in alternative payments for things like software, and SuperRewards and OfferPal were the first in virtual currency monetization.

DFC: It seems that the market has many would be competitors.  What makes SupersonicAds different from its competitors or companies like a SponsorPay or TokenAds?

AC: The market has seen significant consolidation and in my view the important players in terms of publisher traction and achieving significant revenue (at least $12 million per year) is Supersonicads, OfferPal and SuperRewards.

In my view TokenAds is a non-player, as are dozens of these small competitors who lack the critical mass in publishers, are underfunded and will probably disappear as the market continues to consolidate.

DFC: You have said you are dominant in Europe and Latin America.  How is that dominance measured, and how did you achieve this dominance.  

AC: This is measured in the effective CPM we generate for our publishers. All of our business has been created as a result of direct competition with companies like OfferPal and SuperRewards, which were there first, and exceeding their results significantly, usually by a factor of X3. This is a result of very diligent work in our target countries, resulting in more advertisers working with us and more offers in those countries. Also better products and our proprietary optimization algorithms. Once we beat the existing players in A/B tests with the large publishers, we started getting more and more traffic to our platform.

DFC: With many games we have found that the core users will actually pay to turn-off advertising.   From a user perspective are there concerns consumers will be flooded with offers?  How do you reach a balance where consumers are able to enjoy the product without irritation?

AC: Actually buying virtual currency is an activity done on a special currency buying page which the user has to specifically go to to buy or earn coins. The amount of irritation a user suffers and the balance is a result of the importance of the currency for the player in the game, which is up to the game designer, rather than the offers.

DFC: The last we heard your platform was translated into 25 languages. What’s the number today?

AC: That’s the number.

DFC: SupersonicAds is operating in more than 100 countries, with more than 450 clients. What dictates which countries you operate in?  Is that a totally a result of your client’s wishes, or are you already set up in these markets?

AC: Our focus today is on European countries, the U.S. and Latin America. We try to specialize in specific countries as a result of publisher traction in those countries, because keeping an updated offer roster is hard work. We try not to do it in advance.

DFC: What do you have to do differently to succeed in Asia, Latin America and the Middle East compared to Europe?

AC: First, the platform and offers need to be translated well, and that’s not simple. Then you need to set up direct connections with the relevant advertisers. Everything is more fragmented and less developed.

DFC: DFC has forecasted strong growth for F2P play games in Western markets.  What can you tell us about the success of the browser based game market in Europe?  What about Latin America?  How many users do you plan to be able to reach in each major market?

AC: We see very strong growth there, and all of our publishers including U.S. based games have very large audiences outside the U.S., with emphasis on Latin America and Europe obviously. We’re reaching over a 100 million players in those markets.

DFC: What is your revenue model? On what basis/rate is SupersonicAds paid for its service?

AC: We have a revshare with our publishers out of the gross revenue they generate. I can’t divulge the exact number, but it’s similar to regular ad networks.

DFC: What do costs look like for advertisers?  How does it vary by country? How does it vary by type of ad?  We assume some ads will be designed to promote a brand or product such as looking at a logo or viewing a video.  Other ads will be a more direct call to action such as fill out a form or buy this product now. How does the cost to advertisers vary by type of ad? Is there a CPM cost? A cost-per-lead? A cost-per sale?

AC: This is almost always a cost per lead or cost per action. Payout vary from as little as 3 cents for watching a video, to $25-$50 for signing up to a premium service. There’s significant variance per country, with costlier advertising in the U.S. & Western Europe as you can imagine.

DFC: How does costs for advertisers with SupersonicAds compare with the cost of competitor’s services?

AC: We try to get the highest payouts from the advertisers. Virtual currency offers are still a very small percentage of these advertisers’ budgets, so for us it’s being competitive for the publishers’ payout sake. The advertisers in performance markets will work with anyone, and brand advertisers are more quality sensitive than price sensitive.

DFC: What percentage of consumers are experiencing your platform via social networks, compared to online game portals, and publisher web sites?

AC: The minority of consumers arrive via social networks. Currently less than 15% come from Facebook for instance.

DFC: What are the demographics of consumers who respond to your platform?  Who responds most, who responds least?

AC: We don’t have that information since it’s very hard to track, but we believe the demographics correspond to the game’s own demographics. Completing offers isn’t confined to a specific demographic as far as we know.

DFC: What is the frequency of unique users? What percentage of people come back for more virtual rewards, and how often?

AC: That’s not a piece of data I can divulge, but like in any network phenomenon, you can expect 80/20 rules to work as well.

DFC: What’s the sweet spot? How many credits or items does it take to bring people back?

AC: That’s a question game designers have to answer, since a credit in each game is something completely different.

DFC: What do consumers seem to prefer, items or currency?

AC: Currency.

DFC: Do you have stats on what percentage of consumers you reached actually purchased from your clients?

AC: I can tell you that our offer pages are generating hundreds to thousands of dollars in CPM for our publishers.

DFC: Can your platform be botted, so that smart game players can automate interaction to gain virtual rewards?  If so, have you been botted, and what do you have to do to prevent such activities?

AC: Fraud is always out there, and we have many systems in place to prevent it. I can’t outline the things that we do, but I can say that all the Tier 1 platforms have to handle that, or suffer huge losses.

DFC: SupersonicAds is looking to go after mobile platforms.  What can you tell us about the opportunity in that space?  What does the market and competition currently look like?  How do you see it emerging over the next few years?

AC: SSA is going live soon with our first major mobile publisher – IMVU. We’re the third company to pursue mobile after OfferPal with their TapJoy acquisition and SuperRewards. We developed the tech in-house, and believe that this will be a very big opportunity as more and more social games migrate over to mobile, and probably all big publishers will have their own mobile versions. All these publishers will need great European and Latin American monetization. That’s where we step in.

DFC:SupersonicAds recently took its first $2 million in funding. Why now, and where will those funds be applied?

AC: We have been profitable since the end of 2009. We’ve raised this round in order to accelerate our R&D for new products, and better pursue brand advertisers in Europe.