Applifier has done okay, on balance. Just over a year since launch, the Facebook cross-promotion network now has an incredible 55 million monthly active users, and a client list of around 500 game developers. Not only that, the company's entire ethos and business model is built on equality, fairness and mutual benefit.
Affable Finn Tuomas Rinta is the head of Product at the Helsinki-based company, working on evolving the models and metrics which are the backbone of the company as well as planning the next big thing. Keen to find out what Applifier's secret might be, GamesIndustry.biz caught up with Tuomas for a chat at Nordic Game 2011.
Q:So Applifier has seen incredible growth over the last year or so...
Tuomas Rinta:Yes! We started this about a year ago, and I don't think anyone saw how big it could get. We're currently at twenty people, we have offices in San Francisco, as well as Helsinki - the growth just keeps on going. But, we still have a long way to go. Our internal company mission is kind of to take over the world!
I think we're getting there, it's been a fun ride so far. We've built up an audience, now we just need to take that audience and give them the best tools for game discovery we can. We've grown far beyond just being an advertising network, or at least we're going there. We don't want to be an advertising network, we want to be a social discovery mechanism for games, in the future probably on more platforms than just Facebook.
Facebook's been what we've been working with so far, but we're wanting to go way beyond that. What those other platforms will be, time will tell. At this point we're just expanding beyond our network, one of those things is our Facebook application. It's growing, we have a lot of plans.
Q:Can you give us a quick run-down of your basic business model?
Tuomas Rinta:Well it all started as the new version of the '90s banner exchange model. You advertise another game and they advertise you. What we did was provide a network behind all of this with a slight twist. The basic idea is that the game puts up our advertising banner and that advertises five to twenty different games. Whenever somebody clicks on it they get what we call a credit. These credits are then used to advertise that company's game on the advertising banner of other games. Currently we work with 400-500 different game developers who advertise about 700-800 games on our network.
We send about 350,000 clicks every day. We display about 500,000,000 ads every single day.
The numbers we're dealing with...We send about 350,000 clicks every day. We display about 500,000,000 ads every single day. So the volume is huge, but if you look at gaming on Facebook, there's a lot of volume there. Our reach in game developers is pretty large. Most of the big ones are using us to some extent. Zynga isn't, but they're bigger than our whole network combined, so they'd actually tip the network off balance.
It's very simple when you look at it. It's free for the developers, we don't take any money from viewers of the cross-promotion. Our business is in taking a small commission from the credits, which we then sell as paid inventory. So whenever there's a launch coming up for a new title, or a developer wants to get more traffic than they get through the standard cross-promotion, we sell it.
When you're the end-user, you can't tell which of the ads are from cross-promotion, which are paid inventory - we only promote games. To be able to run a paid-for campaign on the network, we need to approve the game first, agree that it's up to the standards of our other games. Even if you pay us money, we won't let you promote a bad game. I mean, if it spams your Facebook wall or something like that, we're actually pretty strict.
One of the reasons that the network works is that it links to good games. Users get used to knowing that if they click on a game on the Applifier bar, it's most likely going to be good. We get asked a lot if we'll advertise other stuff than games, and we've been saying no. One of the reasons we've succeeded is that we've focused only on games. Games we do well.
It's simple like that.
Q:Is there any upper limit to the number of games running on the banner at once if you're going to guarantee returns?
Tuomas Rinta: There's no upper limit. Of course there are situations where games are of different size. We have games that have millions of monthly active users, then we have games that have 5000. Of course there's a balance in that a lot of clicks come and go to the big games. The smaller games, every now and then they send clicks and it takes, like, two seconds to get their clicks back. If there are big games that send out a lot of traffic, it means that it sometimes takes a while to get their clicks back.
The network is so large that it helps this problem. There isn't a great unbalance. When Applifier started, this was a problem. There were 20-30 developers. Introduce a bigger player into that equation and the network stops: all of the traffic flows in one direction. After a while, it balances itself, because the network is large enough. With the hundreds of publishers, it's no longer a problem.
We couldn't even handle Zynga, because they'd tip the network off balance.
Of course, there are those that sometimes send out more traffic than we can send back, but then we have different ways of fixing this problem by running larger ads or promoting them on on Facebook application. But again, this is why we couldn't even handle Zynga, because they'd tip the network off balance. It's one of the reasons we've been successful with the smaller guys, making a large network out of small pieces works well.
And after that stage, we've been able to introduce the larger players as well, without any problems.
Q:And do developers get any control over what games are advertised on the bar for their game? Could they specify no violent games, for example?
Tuomas Rinta:We have a family friendly setting we can turn on, but it's not really used. We've had one or two enquiries about it - we pre-approve a set of games, and if somebody asks about it we can turn it on, but it's not really used. There aren't that many games that are harsh enough.
What we do provide, and what's asked for a lot, is the prohibition of games that are in the same genre as their own game. Especially, there are a lot of casino slot games on Facebook, and those don't want to advertise each other. They're happy to advertise other genres, but not games in the same genre. So we allow that to be blocked.
Other than that, we usually say, if you want to filter too many other categories out then in the long run you may actually be doing yourself damage. If people can't find anything fun to click on then you won't get any traffic back.
Q:Have you noticed any particular genres which generate or receive particularly high click rates?
Tuomas Rinta:Sports games. People who play sports games are interested in playing other sports games, other than that we've noticed that there's really no correlation in trying to match genres. There are certain trends. People who play, for example, one of the big games on Facebook; Baking Life, people who play that tend not to play other similar games. They look for games in other genres. Other than that... we've done testing in these areas, we noticed that the changes are pretty meaningless.
People can try games, and how much they end up playing them, or if they ditch the original game, depends on so many factors outside of our control. The sports games are a category where we've noticed that if we advertise games from a similar category, there's a pretty high chance that people will end up playing them as well.
We've seen a great influx of Fantasy Football type applications, especially those licensed from the US, from the NFL or NBA, these are increasingly popular. We've seen a lot of traffic between these applications.
Q:And have you ever had a situation where a client is struggling with the retention rate of the return clicks that they're getting? Is that their problem?
Tuomas Rinta:Well what we've been talking about a lot is that publishers have this fear where they feel that they send out good users and they get bad users back. I was actually talking to one of our bigger publishers at Casual Connect in Hamburg and he said exactly that. When they first started using they were afraid that they'd be sending out good users and get users back that don't retain or monetise. They measured, and what they realised was that the level of the users was pretty much exactly the same or better than the users they were sending out, on average.
So of course it's a rational fear for the publisher, but what we've noticed is that the traffic level retains pretty well on average. Retention between games is actually something that we measure constantly. What we do is to look at the traffic from game A to game B and see how well it retains compared to other traffic coming in. Then we know if we should send people from game A to game B or not.
Q:And are the publishers fairly open in sharing their data and metrics with you to help that sort of monitoring?
Tuomas Rinta:Well, not really! Some of the publishers we've been working with longer tend to be pretty open. Sometimes they'll send us the monetisation data, but other than that we have to deal with the data that's public. Also we have our bar running on all the pages so we can use that to measure page views and see trends. We are a marketing channel for publishers, and they use us if we benefit them.
Some of the publishers we've been working for a long time - well, we've only been doing this a year, so that's a relative term - but we have a good relationship with them, they're very upfront about how they feel and how they see it. If they test out our competition, and we ask them, they tell us why. With 400-500 customers and four people dealing with the account management we can't get very deeply into it. We're hiring! [laughs]
If I were a game developer on Facebook myself, I'd adopt Facebook credits instantly
Q:It's a really interesting model, extremely democratic. Was that idea of everyone benefiting equally an important place to start?
Tuomas Rinta:Yes, this is what it all boils down to. What we talk about a lot is that the exchange needs to be fair, it has to benefit everybody. In that case, us running a network like this is beneficial to the partners - we have no personal interest in the traffic, other than it working well.
Therefore I believe that it's a good idea to use a third party for this. I know there's been some talk among big developers about doing cross-promotion between games. I know that they can do that, and sometimes it's beneficial, but in the bigger picture it works better if you have a third party who focuses on the trade being fair. One of the things we do to improve that fairness is to measure retention.
Q:Are you able to track individual users? Their progress and retention from game to game etc?
Tuomas Rinta:It's more a general movement of numbers. At that level we're not really interested in the individual, it's about trends and how applications move. For retention tracking we get to low levels but we branch it out to bigger numbers. One of the reasons is that we're an ad network but we want to be really careful with user privacy. When we go down to individual user tracking, there's always the question of identification. Whenever we do individual tracking, there's never any identification information attached to that, so we don't know who that user is. We know we're tracking them, but we don't have any link back to the actual user.
It's standard, cookie-based tracking that's totally anonymous. We could never extract personal information from that.
Q:What about demographic tracking?
Tuomas Rinta:We're gathering that data in some form, but it's not connected to individuals.
Q:How's your relationship with Facebook? You're doing them good in terms of keeping users moving and refreshed, but you're also basically undermining their own ad networks...
Tuomas Rinta:Our CEO has been meeting with Facebook. We've talked about what we do, and we're still there. We're a Facebook approved app provider, so we're on good terms with them. When dealing with a single platform you always have to keep in mind the platform's own interests. I think we're beneficial. We improve retention and discovery. With the introduction of Facebook Credits, Facebook's personal motivation is to get people to play more games, so we help with that. When they're taking a 30 per cent revenue share on the credits, the more people that play, the more money they get.
I personally see Facebook Credits as being a great source of income for Facebook in the future.
Q:And Facebook are in the process of making them mandatory?
Tuomas Rinta:Yes, what I've been hearing is that they're making them mandatory in terms of them having to be present as an option, but they're offering benefits to people who use them exclusively. As they've stated themselves, you can use other payment methods but if I were a game developer on Facebook myself, I'd adopt Facebook credits instantly. I mean, the ease of use... What they're doing is what Apple's been doing on the App Store - purchasing is incredibly easy. Typing in your credit card number every time is never easy. It's a showstopper for many people.
They have a wide distribution network for buying Facebook Credits - I think they sell them at Target. It's incredibly easy, you click okay and you've bought stuff - you've got to love that.
Q:How well does your democratic model fit with competitive business? Do you ever get companies asking to get a special deal?
Tuomas Rinta:I haven't run into too many of those enquiries. Everybody knows that players aren't loyal to their game so it's beneficial to share traffic. Our network is also so large that most developers realise that we can't give out special treatment. Of course, we have negotiation with bigger players on what we can do with exclusivity, those sort of things, but we want to play fair.
The same mode of operation for everybody is the clearest for us, it's the easiest to maintain. Of course there are interesting questions now and then, but they never go any further than us saying "what"?
What we're building behind the scenes, and yes we're building something new, it kind of puts us back to our roots of working with the indie developer.
Q:The workability of the model is quite reliant on factors outside your control - changes to which could upset your business model quite a lot. Are you exposing yourselves in the way that Tapjoy did?
Tuomas Rinta:It's a risk we know. When we look at the big picture we realise that relying so much on Facebook is kind of our single failure, but also we realise that at this point we've grown pretty large so I think we've alleviated the biggest risk of them making a sudden change and killing us off. But of course we also want to expand. We know that the business is in a transition state. The numbers are, in some cases, dwindling. Monetisation is changing, new factors are coming in, like social growing to mobile, stuff like that. We're expanding and trying not to rely so much on Facebook.
Q:Presumably there are metrics companies who would kill for access to your data...
Tuomas Rinta:[laughs] Yeah! Sometimes we have so much data we don't know what to do with it! The amount of data we track is huge. One of our senior developers, who is in charge of all our data mining and stuff like that, is constantly coming up to me and reminding me that he's not a statistical analyst! There's just so much data.
So yes, we have a very interesting view of the data, we see different trends, but it goes pretty well with what the market is reporting overall as well. The big players are still there, dominating, nothing is changing that.
Q:When you first started out you described yourselves as 'the rebel alliance'. You were a small company trying to help level the playing field, to make things easier for the little guy. Is that still the case now you're one of the big boys?
Tuomas Rinta:Actually, on our recruitment website it still says we're the rebel alliance! [laughs] I personally want to believe that. When people ask me what our company motto should be I always say it should be 'helping games grow'. It's what we want to do.
If you look at us from the developer's perspective you see the Facebook network. It doesn't discriminate on size, it's open to big and small developers. It's just been a natural transition that the bigger players have come to us now, but it's also beneficial for smaller games. The big games tend to have a bigger budget so they drive traffic from other sources that appeal to 'good' users. Those then trickle down to the smaller companies too, that's the network benefit again.
What we're building behind the scenes, and yes we're building something new again, it kind of puts us back to our roots of working with the indie developer again. It's up and coming, and I'd love to tell you more about it, but I really can't.
Within the next six months or year, we'll be doing some new stuff.
Q:You talked about social to mobile, which seems like a natural progression for you too. Do you think there are extra barriers to advertising in that market? Are people less likely to click through on mobile?
Tuomas Rinta:Mobile is different, you're right about that. I personally think that if you introduced an ad element to a game just like that, the click through rates would be lower, but the conversion rate would be higher. If you go there, you're more likely to download it.
The barrier on mobile is that we still have a lot of paid-for apps. Advertising on paid for apps always has a bounce rate of people from the App Store page. What I think we are seeing though is a movement to the free-to-play model on mobile as well. There, cross-promotion works extremely well.
With that transition I think there's a lot of room for cross-promotion on mobile. Of course there are players that are doing it, Open Feint etc, but what we see is the lack of a true, well-functioning cross-promotion platform on mobile. We'll see about that in future.
Tuomas Rinta is the head of Product at Applifier. Interview by Dan Pearson.