Flurry CEO Simon Khalaf on data, building a Nielsen for mobile advertising, and dealing with Apple's incentivised CPI ban
Looking to video ads for even faster growth
And that's exactly where nascent mobile advertising business Flurry has started. Its free analytics tools are used in over 85,000 active games and apps on iOS and Android.
"It's growing about 20 percent month on month," enthuses CEO Simon Khalaf, when we meet in the company's San Francisco HQ. It also has a New York office, and a London office has just been announced.
"Our data is now about three times the size of Twitter's data," he continues. "On a daily basis we track about three billion events, and cover 225 million monthly uniques."
The power of big numbers
Of course, the point of data is that it's incredibly valuable to get advertisers the audiences they want as well as informing publishers how their apps are being used, and it enables Flurry to see clearly how the mobile market is developing.
"I'm building a media business, which is about balancing a buyer and a seller of advertisement," Khalaf argues. "You can't buy TV advertising without Nielsen or web advertising without comScore, and that's what we are working towards first building on mobile.
"I think we have exactly the same potential DoubleClick had in 1996 [it was bought by Google in 2008 for $3.1 billion]. Our reach is better, the market is moving faster, and the mobile consumer is a lot more receptive to advertising. Mobile is a phenomenal channel for advertising."
Show me the money
Still, data is just the foundation. At present, Flurry only has one product that's generating revenue, its AppCircle advertising and recommendation engine, which comes in rewarded and unrewarded flavours (of which more later).
"Sure, I'm not shooting for $1 billion in revenue, but this year I'll make $30 million, and $60 million next year," Khalaf predicts.
Indeed, he says Flurry has to-date paid out over $15 million to publishers using AppCircle.
"We'll make publishers money through the quality of our data, and we'll take a slice along the way. It's all about scale and we're going for it. There's no other player who can come close to what we have, but we still don't have the brand, we're still just 30 people," he ponders.
Bump in the road
Also demonstrating the risks of the business has been Apple's decision to ban incentivised downloads (aka incentivised CPI); something Khalaf says he expected and hence wasn't involved in as much as rival Tapjoy. Still, he estimates the ban has dropped AppCircle revenues by 10 percent.
"I don't think there's anything wrong with standard CPI. I don't think Apple thinks there's anything wrong with standard CPI. The buyer and the seller are both in agreement," he explains.
"But I think Apple has a challenge with incentivised CPI impacting its App Store rankings, especially since rankings are the primary mechanism for discovery. I believe Apple wants to reward apps for organic success.
"Perhaps 200 to 300 developers were benefiting from incentivised but the majority weren't, and I think the way it was taken to excess, the consumer was being cheated."
Ways and means
His reasoning was that companies buying download campaigns through Tapjoy and Flurry effectively made them a duopoly in terms of the top 25 App Store chart positions.
"Now more developers are having the chance to rise to the top charts, which is good for the consumer and boosts discovery," Khalaf says.
Yet he still thinks Apple could have handled the situation more elegantly.
"I would have simply modified the App Store algorithm, I would have done it in a completely different way. But I respect what Apple's done, and I think the consumer ended up benefiting."
Of course, download incentivisation continues as usual on Android.
Looking to the future, Khalaf thinks the introduction of new incentivised, or rewarded, actions on iOS and Android will enable Flurry to overcome its lost revenue; likewise publishers. After all, rewards encouraging consumer behaviour are universal - from loyalty cards, and buy-one-get-one-free to kudos ranking schemes within web communities.
A big push for Flurry will be rewarding people to watch video adverts.
"We expect mobile video engagement to beat web video engagement. Our reach on mobile is larger than any TV show, but it will take years to cannibalise TV ad spend," Khalaf says.
Another area the company is looking to target with its massive amount of data is app discovery.
"Discovery remains a massive issue. The challenge is unlike the web, apps are not connected so we will be working on something that connects all these mobile apps and facilitates app to app discovery," Khalaf says.
But one thing it won't do is impact Apple's rank.