Advertising Technology Review Aug 20, 2012
Advertising Technology Review
by Carla Rover

LifeStreet Media: Making Ads That Work

Despite the fact that LifeStreet is in social media and apps, its worth is not based on a jargon-fueled valuation, buoyed by advertising technology's ebuillent army of publicists. LifeStreet is making ads that work for brands. How do we know this? Because the company is making money from its business model and paying its developer partners, to the tune of $100 million, having driven more than 200 million app installs. LifeStreet's advertising technology approach focuses on relevancy in its advertising, using its method of "iterative high velocity testing" to find the most effective elements of an advertisement and it seems that investors are backing its methods. The Advertising Technology Review spoke with LifeStreet Media CEO Mitchell Weisman about his company and its data-driven approach to advertising technology.

Your company recently received a $66 million investment, ostensibly because your business model is that strong. What are you doing differently with social and mobile in-app advertising that is different than the rest of the industry?
The industry is chock full of ad networks which are not adding any value and are just playing matchmaker between advertisers and publishers. LifeStreet is completely different. As a technology company, not an ad network, we actually create and optimize the ads and the many factors that drive revenue for those ads. This means that LifeStreet's technology goes way beyond matchmaking. We literally create revenue for each thousand impressions. We've invested over $25 million into inventing a brand new type of technology, called universal object serving, with which we've constructed a transformative optimization platform called RevJet. RevJet applies Iterative High Velocity Testing to any digital revenue driver — where each revenue driver is modeled and served as an object. For example, should the background color of this ad be blue, green, red or black? These are visual objects and definite revenue drivers — we test them all. Should the copy say "click here," "click now," "click," "learn more," or "learn"? These are visual objects and definitely impact revenue — so we test all of these too.

What about logical objects, such as targeting algorithms, which also impact revenue?
Using universal object serving technology, RevJet is able to apply Iterative High Velocity Testing not only to visual objects, but also to logical objects such as targeting algorithms. Here's an example: suppose we have an opportunity to serve an ad into a leaderboard inside App 123 to a user located in San Francisco at 8PM at night. Which campaign will generate the most revenue? Sounds like a simple question with a simple answer: just "look at your data" and "see what performs best," right? Wrong! Which data should we look at? Should we look at "the last 3 days of data from ads served in San Francisco?" Or maybe we should look "only at evening data for the last 7 days from ads served in San Francisco?" Or perhaps recency and daypart are both more important than geography? In that case, maybe we should look at the whole United States rather than just San Francisco? That, of course, would preserve daypart and recency. Because we would have so much more data we would be able to look only at data from the evening daypart instead of the full day for the most recent 2 days of data, rather than for 7 days or more. So if an object is both digitally instantiated and impacts revenue, definitive revenue maximization is achieved only by true field-testing- and it has to be rapid, iterative, perpetual, and definitive field-testing in order to work. That's what Iterative High Velocity Testing is all about. Before LifeStreet came along and invented universal object serving technology, this sort of testing wasn't possible. Now, with RevJet, it's happening in the marketplace as we speak.

Exactly what is the opportunity for in-app advertising?
The in-app advertising opportunity is enormous. There are nearly 9 million apps and websites integrated with Facebook and nearly 1 million mobile apps for Android and iOS. Many of these apps are free and need avenues to help them monetize. We help apps make money by placing banner ads within them. These are our publishers, and we've paid out $100 million to them so far. Similarly, all of these apps need to be discovered before they can be used. We help apps become hits, and we've completed more than 225 million app installs on behalf of our advertising customers. Borrell Associates expects the mobile in-app advertising opportunity to reach $8 billion by 2015, and eMarketer predicts that social advertising will reach $8 billion this year. It's a great time to be an app developer, and we're happy to play a vital role in helping them achieve success.

There are a few voices out there saying that apps are great initially but then they don't deliver value consistently, or in the long term. How do you respond to the critics of the app space?
Obviously we're a big believer in apps — both in social apps and in mobile apps. It's the app ecosystem that has helped Facebook reach astronomical engagement levels, and it's apps that drive mobile engagement levels. ComScore found that 4 out of every 5 mobile media minutes are spent with apps based on 2012 data.The numbers tell a very clear story: Americans spend 16 percent of their time online on Facebook according to MarketBeat (2011) and Statista calculated Americans' engagement with Facebook to equate to 100K years per month (2012). Americans spend on average 50 minutes a day on mobile devices, equal to the combined time spent with magazines and newspapers according to eMarketer (2011). Social and mobile apps are here to stay. The strong ones will continue to deliver value for users, and the weak ones present an opportunity for savvy developers eager to create the Next Big Thing.

What does LifeStreet have planned for the future?
We started this company to free the industry from conventional ad serving technology, which we consider to be outdated, overly rigid, and unable to produce the kinds of results advertisers and publishers deserve. Right now we're focused on social and mobile in-app advertising, but it's extremely clear that applications for RevJet and universal object serving technology extend well beyond digital advertising. That said, LifeStreet's charter today is to serve as an app developer's "best friend." We seek to be their partner of choice to help them drive customers and monetization, so it's exciting to us to think about applying RevJet and Iterative High Velocity Testing to other areas of developers' businesses. For example, we could help optimize in-game user experiences and virtual good sales within social and mobile gaming apps. In fact, we're having early discussions with large industry players about doing just this — applying RevJet to in-game revenue optimization. We see this as a fantastic opportunity to use universal object serving technology to help developers make even more money from their apps.

Mitchell Weisman is a co-founder and CEO of LifeStreet Media.