Adknowledge was just covered in the Wall Street Journal Venture Beat blog. Since 2003, Adknowledge Inc. has managed to carve out a significant spot for itself while strategically going on a buying spree that positions it to take advantage of the boom in social media content. Here’s a reprint of the article:

“The $100M Revenue Club: Adknowledge Weaves Web Of Ads”- July 29, 2010

Tucked away in Kansas City, Mo., out of the limelight of Silicon Valley or New York, is the home base for an online advertising company whose nine-digit revenue continues to swell.

Since 2003, Adknowledge Inc. has managed to carve out a significant spot for itself while strategically going on a buying spree that positions it to take advantage of the boom in social media content.

Founder and Chief Executive Scott Lynn sums up the past seven years of the company’s work: “The business has grown from nothing to $300 million in revenue.”

With roughly 300 employees, the company has offices in New York, Los Angeles, San Francisco, Vancouver, London and Sydney. Half of those employees are in Kansas City.

While Adknowledge’s growth, both organically and through acquisitions, is impressive, it does bring it into more direct competition with bigger advertising search competitors like Google Inc., Yahoo Inc. and Microsoft Corp. Those companies are also making their own moves in the social media sphere, further putting them into competition with Adknowledge.

Backed by Technology Crossover Ventures, Adknowledge provides performance, or cost-per-action, advertising for companies looking beyond traditional search engines such as Google and Yahoo. Earlier days of online advertising attracted marketing messages that didn’t require much targeting, such as those for mortgages or credit cards. Lynn believes online advertising provides an ideal platform to tailor messages to Internet users. Today, more than 50,000 advertisers use the Adknowledge network to promote their offers.

The company has also managed to find a way to target ads without relying on keywords, which is what drives search advertising platforms like Google’s AdSense.

Using Adknowledge, marketers can bid on such ads as they can through the AdSense system. Adknowledge, however, has carved itself a niche by applying its technology across multiple advertising channels – from email to search to social networks.

While AdSense dominates the search advertising market, search is a relatively small part of Internet usage, and Adknowledge wants to dominate targeted ads in all the other aspects of Web surfing, including the increasingly important area of social networking. The Adknowledge Social Network serves more than 10 billion ad impressions per month across sites like Facebook, MySpace and Bebo.

To do that, Adknowledge has gone on a buying spree. In the past three years, the company has made seven acquisitions, most of which focused on social media.

For instance, in November 2008 Adknowledge bought Lookery Inc., a service to which social networks contribute basic, anonymous profile information and get paid when it’s used for real-time ad targeting. That acquisition occurred just days after Adknowledge announced the purchase of Adonomics, which built a suite of monetization and measurement tools for developers to track activity on Facebook applications.

“We’re buying additional distribution so we can take advertiser base and technology to new publishing communities,” Lynn said.

The major online advertising players, of course, are also trying to get a piece of the social media action. Last October, both Google and Microsoft struck deals with Twitter Inc. to show tweets in search results. Also, Microsoft owns a stake in Facebook through a $240 million investment in 2007.

Competition for social media spend will likely strengthen with most big players providing an offering, but Adknowledge is banking on being a one-stop shop for a range advertising formats. While Adknowledge can help you buy an ad on Facebook, it can also help with a traditional email marketing campaign.

Despite the active acquisition strategy, Lynn said the company still sees about 65% organic growth. While the company certainly is excited about that growth, it creates new challenges by vaulting it into more direct competition with the likes of Google.

“Our take on the online advertising space is it’s really easy to advertise with Google and Yahoo, but tough to reach the rest of the Internet because it’s so fragmented,” Lynn said. “The rest of the Internet is spread across 2,000 other companies.”

Lynn said the company’s current focus is to continue growing organically and through acquisition, while also stepping up its marketing efforts to help make Adknowledge a better-known destination for online advertising.

With a single, patient investor, Lynn said, Adknowledge has several options for its future. While he sees potential to take the company public, there is no immediate plan to go that route. In the meantime, the company receives acquisition interest from not only strategic players, but also unnamed private equity firms. Lynn declined to say how serious those talks have been.

Super Rewards’ Diverse Ad Offer Inventory and Global Reach
Help Power Monetization Solutions for Virtual Worlds

SEATTLE, Wash. – Casual Connect – July 20, 2010 – Adknowledge’s Super Rewards, a leader in monetizing virtual currency for online games, today announced it has been selected by GCREST America to deliver virtual currency monetization solutions for its popular TinierMe virtual world. GCREST America, maker of some of the world’s most successful online games, is using Adknowledge’s Super Rewards offer platform to maximize revenue and improve user experience by rewarding gamers with additional points, virtual goods, or virtual dollars in exchange for completing high quality offers.

TinierMe is a virtual world with free-to-play games that allows casual gamers to explore the culture of Japanese anime comics, which is increasingly popular among young Americans. Within the TinierMe world, users can create their own avatar, dubbed a “Selfy,” to play various games, chat with others, and even participate in various events that follow the Japanese festival calendar, such as the Cherry Blossom Festival.

“We are very excited to partner with GCREST, who provides a unique and highly engaging experience with the use of anime in TinierMe,” said Jason Bailey, general manager of Adknowledge’s Super Rewards social currency division. “We understand the unique needs of virtual world publishers, particularly those in Asia looking to expand into the U.S. Our diverse ad offer inventory, global reach, sophisticated fraud protection and management, customization options, and top-notch customer service are all very attractive for game publishers who need to maximize revenue and enhance the overall user experience.”

Adknowledge’s Super Rewards allows online game publishers to incorporate a monetization platform as a seamless component of their games. Players can earn in-game points by completing a survey, watching a video, or subscribing to online services that are of value to them. The advertiser offers generate revenue for publishers. Adknowledge then converts non-paying players into revenue-producing users. The company’s comprehensive offer targeting and filtering system ensures that the right offers are presented to the right players at the right time — all while delivering the best possible user experience.

“Adknowledge’s targeting expertise empowers us to present the most relevant advertising offers based on our users’ behavior. Our users get rewarded with free game currency by participating in highly interactive and rewarding offers, while providing GCREST with a very reliable revenue stream,” said Masaru Ohnogi, CEO at GCREST America.

Adknowledge’s deep understanding of the gaming industry is also showcased in its sophisticated fraud protection systems. Fraud protection is a serious concern for many gaming and application publishers. To address this issue, Adknowledge’s Super Rewards uses a combination of advanced proprietary systems, internal reviews, and its partnership with industry-leader ThreatMetrix to create a robust fraud protection system. This three-prong approach enables Super Rewards to identify suspicious activity and remove fraudulent activity before it reaches publishers. With its 11 global offices, an expanding advertising operations team that acquires localized offer inventory on a country-by-country basis, and ad inventory that spans across 50,000 advertisers, Adknowledge’s extensive international reach (approximately 30-40 percent more global users and advertisers than its competitors) is a key factor that attracts leading game publishing partners like GCREST America.

About Adknowledge and Super Rewards
Adknowledge, the fifth largest advertiser marketplace, utilizes powerful predictive technology to connect advertisers with consumers across multiple channels, including Social, Email and Web Content. Adknowledge has grown to be the largest privately held advertiser marketplace focused on high-quality alternatives to traditional search engine advertising. Over 50,000 advertisers use the Adknowledge ad network to promote their offers. In the past two years, the company has acquired Hydra Group, Super Rewards, MIVA, and Cubics. Headquartered in Kansas City, Adknowledge has domestic offices in Los Angeles, San Francisco, Chicago, New York and Florida, and international offices in Canada, the United Kingdom and Australia.

Adknowledge’s Super Rewards is a leading provider of monetization solutions for online games and social networks. The Super Rewards “offer wall” delivers highly-targeted advertising offers to millions of global Web site and social network users. The platform seeks to maximize revenues for developers while allowing users to earn virtual currency in exchange for signing up for free products or trial offers.

About GCREST AMERICA
GCREST America, Inc. is the company behind TinierMe, and is a fully owned subsidiary of GCREST, Inc. who is a leading online entertainment company based in Japan. GCREST, Inc. was established in 2003 and has created many successful online games including Trickster, @games, and Barvillage. TinierMe, which is also published in Japan as @games, is a game portal owned by GCREST. The game has gathered more than 1 million active users in Japan. TinierMe is a brand new class of online game portal site, with communication functions that make use of a dynamic Flash avatar called a “SELFY.”

The challenge of these difficult economic times continues for many companies across the country and around the globe, including companies in the virtual currency space. We’ve just learned for instance that a competitor of Super Rewards has announced layoffs and is decreasing their focus on Facebook games.

Here at Adknowledge (the parent company of Super Rewards), we’re big believers in the importance of a diverse and healthy business eco-system and while it’s not our place to comment on the situations or strategies of other companies, we would like to highlight a couple of things. Despite the tough economy:

- we’re fortunate that our business is healthy and growing
- we see a lot of room for innovation in the social games and virtual currency space
- we’re continuing to innovate with and for the Facebook developer community

For social game developers on and off Facebook, we will be releasing a number of new platform enhancements through the end of July and into early August. These include more immersive placement of offers and direct payment options within games, an analytics platform focused on monetization metrics and a wide range of new direct payment providers with significant presence in Europe and Asia that will help tap those fast-growing audiences, with more exclusive features to come.

Over the last 18 months, we’ve also made a concerted effort to expand our business and the way we work with developers across the social gaming space, including not only Facebook but also MySpace, Bebo, hi5 and the various stand-alone games environments. This expansion has been a primary focus of ours and has resulted in a great deal of success as illustrated in recent partner announcements with companies such as Resistor Productions, Nexon America and a number of others. These partnerships demonstrate our commitment to build out new product innovations that benefit advertisers, publishers and of course the millions of consumers who engage with our products every day.

In addition, our recent acquisitions such as the Hydra CPA affiliate network continues to strengthen the ability of our publishers to effectively monetize their inventory through a broader selection of highly relevant, high performing offers.

Like everyone, we’re looking forward to seeing an improved economy and an end to layoffs. In the meantime, we’ll continue to keep you apprised here of our upcoming product enhancements. We also invite you explore the opportunities we have at Adknowledge. We’re always on the lookout for talented people!