Monetizing Free Traffic That Refuses To Convert To Premium: SocialVibe CEO Jay Samit, Los Angeles (Part 3)

Sramana: What is the use case for the donation-driven advertising?

Jay Samit: If you are on Causes or SociaVibe.com and you want to make clean drinking water to people then the value proposition is that if you watch an advertisement, a company like Nestlé will give a donation to charity: water.

Sramana: When you parse out the business model, how does the money flow?

Jay Samit:The advertiser pays us the same regardless of consumer motivation. We either share a piece of it with the publisher or we share a piece of it with a charity.

Sramana: In advertising terms, what are CPM and CPA rates?

Jay Samit: We are about a quarter of the rates of banner ads today. Our model is CPE, which is click-per-engagement. Most of our campaigns are around a dollar an engagement. If you compare that to a two-dollar CPM cost per thousand where you only have one tenth of one percent respond then you would spend four times as much money to get the response rate we get in our model. Under our model, the advertiser pays only if the consumer responds.

Sramana: What types of users respond the best? Are there specific segments?

Jay Samit: We reach 100 million people, so we hit every demographic. We have teens, office workers, business travelers, and just about everything else you can imagine. Women over 60 has been a fascinating group. Different advertisers have asked for different segmentations. We have had 100% renewal for our advertising clients. We have found every segment they have asked us to find.

We just opened an office in London. We do this across the Europe and the U.S. It is interesting what insights we get from those audiences.

Sramana: What stage was the company in when you got involved?

Jay Samit: The company had done a great job of building the backend and figuring out how to make this work. They were pre-revenue. They had not focused on solving the problem for advertising. Last year in the U.S., brand advertising spent $125 billion and only 3% was spent on the Internet. The question is why is so little brand advertising spent on the Internet when people are spending more time on the Internet than on TV and magazines combined?

The answer is that the Internet did not have a solution that sold story. The 30-second TV commercial was lost in banner and display ads. By taking this model to the Internet, we quickly had responses from various categories. We just expanded from there until we had hundreds of top brands.

Sramana: Who was the first publisher to join the network?

Jay Samit: Zynga was the first to join the network. They tested us with a single game, and we had great results and income for them. We expanded through all their games and then beyond social gaming into sites with very different profiles.

This segment is part 3 in the series : Monetizing Free Traffic That Refuses To Convert To Premium: SocialVibe CEO Jay Samit, Los Angeles
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