The Value Of Virtual Currency: The Real Price Of Super Rewards Was Closer to $50 Million

by Erick Schonfeld on July 26, 2009

Last week saw an unusual burst of acquisition activity among Web companies. Yahoo bought email add-on Xoopit for about $20 million, Nokia bought social address book provider Cellity, and overshadowing them all was Amazon’s $928 million purchase of Zappos.

But the week started off with another acquisition that quickly got lost in all the subsequent news. Advertising network Adknowledge bought KITN Media for its flagship virtual currency product, Super Rewards. The acquisition price was undisclosed, but Eric Eldon at VentureBeat noted that the rumored price was $30 million (he also noted that AdKnowledge disputed that number as “patently inaccurate.”)

I heard the same number the night before the acquisition was announced. It was being floated by one of AdKnowledge’s competitors. When
I asked Adknowledge and Super Rewards about it, they gave me the same line: that it “was incorrect and it would be a material misrepresentation of the transaction.” I dug around a little more and found out that the price was actually more than $30 million. A source with direct knowledge of the deal told me that it was closer to $50 million. When I ran this new number by Adknowledge CEO Scott Lynn, he wouldn’t confirm it. But he didn’t deny it either like he did the earlier figure.

How does a company most people have never heard get a $50 million exit? Super Rewards started in the back room of KITN Media founder Jason Bailey’s house three years ago with a single computer and no funding. Within six months, it had made its first $1 million in revenues and was profitable. Today, its annual revenues are more than ten times that size.

Super Rewards helps grease the wheels of the virtual economy on social networks and gaming sites by offering app developers an easy way to convert their virtual currency into real cash or advertising subsidies. Super Rewards provides a white-label virtual currency system to more than 1,000 apps and games (such as Mob Wars) on Facebook, Hi5, Bebo, Tagged, and other social networks.

But the real action is in the ad sponsorship model, and is the reason AdKnowledge bought the service. Super Rewards connects those 1,000 app developers with 4,000 advertisers. While many players pay directly for the virtual currency to advance in games, buy better gear, or obtain virtual goods, the majority accept virtual currency from advertising sponsors in return for signing up for a product or filling out a form. For instance, Netflix might offer $20 in virtual currency for someone to sign up to Netflix. For the consumer, it is an even swap. They still pay $20, but they get the virtual currency for free. Netflix ends up paying $25, with Super Rewards pocketing the difference and Netflix chalks it up to customer acquisition costs.

What is happening is that the advertisers are subsidizing the virtual currency and converting it to real cash for app developers (and Super Rewards). In other words, they are effectively paying lead generation fees directly to consumers in the virtual currency of their choice. Super Reward’s biggest competitor is Offerpal, and it is doing the same thing.

At a time when conventional ads on social networks still aren’t hitting the mark, virtual currency is a small, but quickly growing, bright spot. Industry estimates peg the size of the virtual currency economy coursing through social networks at $100 million last year, going to $600 million this year. Adknowledge believes the size of the overall market will be several billion dollars within a few years. And it is not just social networks. Mobile apps on the iPhone and elsewhere are going to tap into virtual currency as well. If Super Rewards can maintain a 20 percent margin and remain one of the top virtual currency platforms, that $50 million price is going to look like a bargain.

KITN Media

Acquired:     July 22, 2009 by Adknowledge for $50M

KITN Media is the holding company for various websites, including Super Rewards. (To learn more view article link below)

Adknowledge

Website:     adknowledge.com
Location:    Kansas City, Missouri, United States
Founded:     2003
Funding:     $48M

Adknowledge is an online advertising company that seeks customers who are looking for ad solutions beyond Google, Yahoo and Microsoft. Adknowledge operates an online marketplace that allows advertisers to bid for traffic in websites, email and other channels.

Congratulations to Owais Farooqui from King.com for winning the Super Rewards drawing held at Casual Connect, Seattle this past week!!!

 

 

July 22, 2009, 10:00 AM ET

Adknowledge Buys Virtual Currency Company

By Marisa Taylor

Adknowledge, one of the largest independent online ad networks, announced Tuesday that it has acquired KITN Media, owner of Super Rewards, a virtual currency monetization platform for online games and social networking sites like Facebook and MySpace, for an undisclosed amount.

AFP/Getty Images

Spare change

Super Rewards uses virtual currency as an incentive for online gamers in order to target them with advertising. For example, in games like Mob Wars or Spy Master, a user may get to skip a level or earn a weapon if he or she fills out a form to choose which kinds of ads are displayed on the page.

The relatively nascent company has boomed since it was founded in 2007–it’s working with many of the top app developers across social networks and says it’s on track to reaching $100 million in revenues this year. Super Rewards even launched its platform on Twitter recently with the game 140 Mafia, leading co-founder Jason Bailey to boast that he’s “already making more money from Twitter than Twitter is itself.”

Adknowledge CEO Scott Lynn says his company has been interested in the virtual currency space for the past 12 months because of its ability to solve the ever-present issue of monetization on social networks. “The first thing we’ve seen that really answers the monetization questions is virtual currency,” says Mr. Lynn. “Virtual currency will be to social media what contextual ads were to the Web.”

Adknowledge, which works with more than 5,000 publishers and generates 25 billion impressions per month in targeted pay-per-click ads, has been on a buying spree of late. Super Rewards is its sixth and largest acquisition in the past 18 months–most recently, Adknowledge purchased the media division of MIVA for $11.6 million.

Despite some grumblings in the blogosphere about the quality of customers that virtual currency brings to advertisers, Adknowledge president Brett Brewer says virtual monetization will take off because it allows customers a choice of how they’re being targeted. “The ability for the user to choose which ad they want to interact with is obviously a huge paradigm shift from the way we did it at MySpace for years,” said Mr. Brewer, who is also co-founder of Intermix Media, the company that launched MySpace. “The user gets to say, hey, it makes sense for me to fill out this form.”

Wall Street Journal
http://blogs.wsj.com/digits/2009/07/22/adknowledge-buys-virtual-currency-company/

The Super Rewards team enjoyed the night in Seattle this week at a private dinner party with some of the leading social application developers and industry partners! 

 

Don’t miss Adam Caplan, President of Super Rewards, speaking today at the Casual Connect  gaming conference in Seattle, WA.   Adam will join a panel of experts to discuss the business of gaming, emerging business models, and new ways to monetize games.   

http://seattle.casualconnect.org/

Also - be sure to stop by the Super Rewards table at the show to talk to one of our super sales stars or game analysts if you are looking to monetize your games or social applications or if you are looking for creative ideas on how to take your game to the next level.

Enjoy the show!

ADKNOWLEDGE IS THE LARGEST INDEPENDENT ADVERTISING NETWORK

Adknowledge has acquired KITN Media, owner of Super Rewards, the largest virtual currency monetization platform for online games and social applications.  The acquisition combines the Super Rewards platform with the technology expertise, financial strength, and international presence of Adknowledge to create a full suite of social advertising solutions for developers and advertisers.

The Super Rewards platform enables developers of social applications and online games to offer virtual currency to consumers who sign up for advertising offers.  Consumers redeem the currency for virtual goods or other services in more than 1,000 social games, including five out of the six largest virtual currency applications on Facebook.  Super Rewards has experienced rapid growth month-over-month and recently announced its expansion into iPhone applications and Twitter games.

Adknowledge currently partners with more than 1,200 developers to deliver banner ads on social networks through its sales operations in the U.S., the United Kingdom, and Australia.  Adknowledge delivers more than 700 million banner impressions daily to consumers using Facebook, MySpace, and other social networking sites.  Combined, Super Rewards and Adknowledge will work with over 80 percent of the top application developers on the leading social networks.

“This is a significant step forward for the social advertising industry,” commented Jason Bailey, Super Rewards CEO and co-founder. “The acquisition combines the strengths of both companies to create an unrivaled monetization vehicle for social application developers.  We will be a single company offering developers access to a monetization program for virtual currency, offer redemption, and banner representation.  The Adknowledge network will bring sophisticated targeting technology, an international presence, and more advertisers to Super Rewards, creating more choices for our consumers and more revenue for our developers.  It’s a win all the way around for advertisers, developers and consumers.”

“We are excited about the Super Rewards team and the unique advertising model they’ve created for consumers and developers,” said Scott Lynn, CEO of Adknowledge.  “On any given day, consumers are earning hundreds of thousands of dollars in virtual currency by signing up for advertising offers.  Super Rewards is the leader in the space and they clearly offer the best solution for developers.  This is our fifth acquisition in the last two years in the social media space, and we’re excited about maintaining a leadership position,” said Lynn.

Brett Brewer, President of Adknowledge and co-founder of Intermix Media, commented: “In 2003, when Intermix launched MySpace, we projected that traditional banner advertising would drive ad revenue.  Applications and virtual currency weren’t even on the map.  MySpace and other social networks have added hundreds of millions of members who are engaging daily with many of the applications and social games that offer virtual currency.  Super Rewards has proven that virtual currency provides significantly more revenue than traditional banners for game developers, and increased engagement for consumers.”

The acquisition solidifies Adknowledge’s position as the largest independent cost-per-click network focused on high-quality alternatives to search engine advertising.  Adknowledge remains the leading choice outside of Google and Yahoo! for advertisers looking to bid on ad space in Email, Social, and Display mediums.  Adknowledge has acquired MIVA, Cubics, Lookery, Mediarun, and Adonomics over the past two years.

About Adknowledge

Adknowledge is a performance-based advertising network that utilizes powerful predictive technology to connect advertisers with consumers across multiple channels, including email, search, domain, and social networks.  Adknowledge provides a social advertising platform (www.cubics.com) that is used by thousands of applications developers to monetize their user base.  Over 50,000 advertisers currently use the Adknowledge ad network to promote their offers.  Headquartered in Kansas City, Adknowledge has domestic offices in Los Angeles, San Francisco, Chicago, New York, and Florida, and international offices in the United Kingdom and Australia.  For more information, visit www.adknowledge.com.

About Super Rewards

Super Rewards is the largest provider of monetization solutions for online games and social networks.  The product enables applications and online games to turn virtual currencies into real dollars by offering users an opportunity to earn extra points or virtual dollars by participating in surveys, trials and online purchases.  This turnkey solution delivers highly-targeted offers to millions of local and international social network users across multiple platforms.  Super Rewards maximizes revenues for developers while increasing engagement for users through points, credits, and currency.  The company has offices in Burlingame CA, Vancouver, and New York.  For more information, visit www.srpoints.com.

Super Rewards Signs Distribution Deal With Mochi Media

Flash Game Developers Now Able to Better Monetize With In-Game Offers

Tuesday July 21, 2009

Super Rewards, the largest virtual currency monetization platform for online games and social networks, announced today a partnership with Mochi Media, the leading platform for Flash game monetization and distribution. The Super Rewards advertising offer platform will appear within the newly-released Mochi Coins product to help Flash developers more effectively monetize their games. This joint solution will provide alternative ways for gamers to earn virtual currency they can redeem for in-game items, level unlocks, and extra content available within the premium Flash games.

“Earlier this year, Super Rewards was the first to bring virtual currency monetization to mobile apps, and then Twitter games. Now we are excited to deliver the first in-game offer monetization solutions to the independent Flash games community at-large,” said Julie Craft, vice president of marketing at Super Rewards. “This is another strategic step to extend our leadership position in virtual currency and offer management solutions.”

According to recent comScore data, Mochi Media attracts nearly 100 million unique visitors a month and, in April of this year, took over the number one spot within the online gaming category, surpassing Yahoo! Games, MSN Games, and EA Online. The Mochi Media product suite provides game developers with monetization, distribution and analytics solutions, delivers compelling games and incremental revenue to site publishers, and empowers advertisers with targeted opportunities to reach this engaged audience.

“We are excited about our partnership with Super Rewards because it provides more payment choices to consumers, which enhances the overall user experience while delivering additional revenue to the Flash developers within our community,” commented Jameson Hsu, Chief Mochi and co-founder, Mochi Media. “MochiCoins will help encourage developers to invest more in building bigger and better games which will in turn provide better content to game players and our network of publishing partners.”

About Super Rewards

Super Rewards is the largest provider of monetization solutions for online games and social networks. The Super Rewards turnkey solutions deliver highly-targeted advertising offers to millions of Web site and social network users. The platform seeks to maximize revenues for developers while increasing engagement for users of any Web site, game, or application through additional points, credits, tokens, coins or chips, etc. Super Rewards has offices in Burlingame, Vancouver, and New York. For more information, visit www.srpoints.com.

About Mochi Media

Mochi Media is the world’s largest casual online game network, serving the needs of thousands of Flash developers, reaching over 100 million unique users each month with a library of over 14,000 games, and enabling advertisers to reach engaged consumers with targeted display, text, and video ads. The company’s Flash game development products and services provide developers with tools to track distribution and usage analytics, enable version control and live updates to distributed games, and provide monetization via micro-transactions and real-time insertion of pre-game and in-game ads. Mochi Media’s developers gain distribution opportunities to over 30,000 Web sites, as well as monetization opportunities by sharing in the ad and micro-transaction revenue generated by their games. Mochi Media is headquartered in downtown San Francisco.

We read in the media today that another virtual currency offer provider is launching a “new security product” and we are glad to see others finally stepping up to do the right thing by providing this service to consumers, advertisers and publishers.

Super Rewards has been providing postback security hashes for more than seven months now and it is a core component of every new integration as a part of our standard developer documentation that is available online at www.srpoints.com/publishers.  Super Rewards was actually the first virtual currency provider to offer proprietary rules and triggers including real-time velocity controls to detect irregular patterns in user behavior and we view this as a fundamental basic part of our core platform, which is currently being used by Super Rewards developer partners around the world. 

The Super Rewards team built our core platform on the premise that superior fraud prevention and detection is a basic and necessary minimum network requirement, which our platform was built upon in 2007, and we would not consider it to be a separate or optional add-on product later.  We are proud to be the first in the industry to have provided such sophisticated security controls, in which now other offer providers are beginning to implement.   We are glad to finally see other virtual currency providers step up to implement what we consider, not a separate product offering, but just basic standard and necessary “security 101” core fraud requirements to ensure a great experience for gamers, legitimate conversions for advertisers and a high revenue return for publishers.

June 25th - MSNBC, “It’s the Economy” segment covered Super Rewards live from NYC!

The segment highlights Super Rewards virtual currency monetization platform and in particular, focuses on the fact that Super Rewards was the first company to monetize Twitter Games.  The wildly popular Twitter game, 140 Mafia, was showcased as an example of how Super Rewards is successfully monetizing Twitter games and demonstrates how Super Rewards continues to maintain its leadership position in this market segment.    

Check out the Super Rewards MSNBC video now:   Super Rewards LIVE on MSNBC

This news story was also picked up on 17 additional TV stations across the U.S. on Fox, NBC and ABC.