RockYou are today launching their “Deal of the Day” (DOTD) ad unit, which gives flash game developers the ability to offer and monetize deals on virtual goods and services. This offering is part of RockYou’s ad network, which reaches 280 million people across most of the major social networks. Lisa Marino, Chief Revenue Officer at RockYou, in an interview with SocialTimes, provided a bit of insight.
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Recently, we noticed that RockYou had been promoting it’s ZooWorld application by using graphic ads on the Meebo chat service. This is certainly another sign of the growth of Facebook games, not only in reach, but in value to advertisers, as they pay to make placements on disparate networks or in this case, chat aggregators. We investigate how other game companies are attracting users to their Facebook games from outside of Facebook.
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RockYou has come under fire recently after a SQL injection flaw resulted in a data breach which exposed over 32 million RockYou user emails and passwords. Rather than immediately solving the problem however, RockYou was complacent. As Nik Cubrilovic pointed out, “They have not taken steps to rectify the problems that caused the breach and have not addressed their users in a suitable or adequate manner. An appropriate response would have been to take the site down for a period of a few hours and enforce that users enter new passwords, which would be stored in a hashed or encrypted form.” Two weeks later a class action has been filed.
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Editor’s Note: This post was written by Ro Choy, Chief Revenue Officer of RockYou. In this series, Choy will address the future of social media monetization, focusing on the potential of platforms such as Facebook and the ability for third parties such as RockYou to create their own platforms and monetize a multi-faceted approach to social media marketing.

The Future of Social Media Monetization

Last year (even six months ago) most questioned whether social media could deliver meaningful business results. Whether it was the daily concern over Facebook’s revenue or the questioned utility of social applications, the general consensus was the entire social media industry was hard to monetize.

Today, the huge success of social games, the increasing number of brand marketers using social media and the myriad of business targets that social media leaders are pursuing (payments, e-commerce, search, etc.) are referenced daily. Read the rest of this entry »

hi5 is expanding its gaming section with the addition of RockYou’s Pets game to all of its users. The RockYou Pet game has gained a steady following in its own right, so hi5 is seemingly looking to ramp up the offerings of its own game channel by layering in online activity that is sure to keep users around for extended periods of time, with game titles they already know and trust.

For RockYou, the new partnership means that hi5’s 63 million users will be able to access its gaming products. As one of the major application developers, RockYou has been among the first to create game apps for most of the major platforms, from Facebook to MySpace. So it’s no surprise to see RockYou reaching further with the new partnership with hi5.
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RockYou may be well known for its photo-sharing apps that have become rather popular on social networks like Facebook. But this company, which grew in fame thanks to its use of the widget prior to the days of integrated applications on networks’ platforms, has also been growing its own network approach, specifically in terms of advertising.

Today RockYou is announcing two new options for its ad network, including cross-platform video distribution, application integration and improved targeting of application ads within a given social network.
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This morning RockYou announced a new round of funding from Softbank and SK Telecom Ventures. Part of this new round of investment involves a joint venture between RockYou and Softbank which focuses on the distribution of mobile and social web applications in Asia. In other words, a significant portion of this round is going toward the large and fast-growing platforms in the east.

Last week I wrote about Chines Facebook-copycat, Xiaonei, launching a payment platform for applications. RockYou has already been taking advantage of the Xiaonei platform, as one of the few (if only) large widget or social web application companies to do so. With a total amount raised of $67 million, RockYou is preparing to open up three new offices despite the economic downturn.

The company has announced the opening of offices in New York, Los Angeles, and Detroit. Despite other companies announcing a lockdown on further hirings, the RockYou announcement suggests that the company is handling business as usual. The company will be leveraging some of their funding to acquire other applications as well.

It’s clear that later stage rounds are still taking place especially for companies like RockYou that have over 100 million monthly unique visitors. With advertising dollars slowing, it’s good timing for RockYou to put some more cash in the bank.

Earlier today I had the opportunity to speak with Jia Shen, the CTO of RockYou about his thoughts on the new platform design and Facebook Connect. RockYou is well positioned to adapt to a changing platform given that they have operated in much more volatile environments in the past. RockYou was launched on MySpace before social platforms even exist, putting their company at the mercy of MySpace who would shut down their applications without notice or explanation.

While RockYou recently had one of their applications shut down on Facebook, they now operate in a much more stable environment driving over 1 billion impressions a month. Jia sounds prepared to adapt to the new platform changes and is actually excited about where the platform is going. I also briefly discussed RockYou’s expansion on to other platforms outside of the U.S. Jia said that they are currently on Xiaonei and things appear to be going well there.

I discussed much more with Jia so if you’d like to hear more about the future of RockYou and Jia’s thoughts on the Facebook platform announcements, listen to the podcast below!

The battle of master widgeteer continues with today’s announcement that RockYou has raised $35 million from DCM, the company which provided $1 million in interim funding. Apparently the interim funding was provided while the terms were being nailed down. Whatever the case, this is yet another massive round of funding for the widget market. Slide raised $50 million at a $500 million valuation and Clearspring recently raised $18 million at an unknown valuation.

Widgets are a clear part of the social web, providing content creators with a broad distribution channel for their original content. How broad of a distribution channel you ask? Well RockYou in particular reaches over 87.5 million people per month. The company has found a substantial amount of success on the Facebook platform and has continued that trend on to MySpace and hi5.

Not everything is rosy in the widget and social application world though. Just yesterday it was revealed that Slide, the largest developer of social applications, will stop releasing new Facebook applications. While the company didn’t provide complete details of their reasoning, one of the primary issues was that it has now become extremely difficult to launch new applications on Facebook with the increasing viral growth restrictions.

While RockYou and Slide generate the majority of their traffic from social networks, they are both generating traffic from their core sites as well. Clearspring, a leading widget distribution platform, is also generating a substantial amount of traffic from outside social networks given that their widget platform runs practically anywhere on the web.

It is still relatively early for these companies though but it is clear that investors are willing to take a gamble. Over $100 million has poured into social applications and widget platforms with the majority of funding going to the leaders. RockYou clearly needed to position themselves as a front-runner in this space and with their new round of funding they can continue their leadership position.