How Free Texting App Pinger Plays the Monetization Game

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Free text and calling app Pinger is the biggest mobile app you've never heard of.

In December 2011, ComScore rated it third in daily usage minutes among iOS apps, ahead of Facebook and Twitter, and fifth in device installs. It's backed by Kleiner Perkins Caufield & Byers, which has a knack for picking winners with portfolio companies such as Amazon, Google, and Twitter. DAG Ventures, Deutsche Telekom, and T-ventures have also invested.

The company has spent this year ramping up its direct sales efforts while honing its proprietary ad network mediation platform.

AdExchanger spoke with Joe Sipher, Co-Founder, chief product and marketing officer, and Brian Gilbert, director of advertising & monetization.

What is Pinger and where do ads fit in?

Joe Sipher: It's texting and talking, free on a smartphone.  The user downloads our app. Then they use that app to text for free over 3G or Wi-Fi.  As it turns out, people really like to text for free.  We have over 25 million downloads, and we send a couple billion messages a month.

The way the ads work is that most of them just sit at the bottom of your screen. When the user sends the message, it's a perfect time for an ad because they're waiting for the other person to respond, and so we have this moment that's built into the system for them to look at the ad.  We end up getting good click rates and strong brands interested in us.

Brian Gilbert:           We're very focused on delivering the right ad experience. The engagement is high, the post-click activity is high compared against benchmarks… We've got something unique and different that a lot of other developers or publishers are struggling with day in and day out, and that's how do you really build a scalable business.

What's your demographic?

JS: We have a fairly young demographic.  Most of our uses are between 13 and 24, a lot of young kids in high school and college kids who are addicted to texting.  It's like breathing for them. They're split about 50/50, male and female.  They're spread out all over the country.

BG: In an advertising context, that means that maybe we aren't a good fit for a brand like BMW or Land Rover, who've done a lot of really interesting things in mobile. But for Disney and for Universal Pictures and for Paramount, you've got great opportunities because we can deliver an audience at scale that those same brands may go through a network and they don't necessarily know what they're getting.

How do brands work with you? Who are the buyers, and what targeting and pricing options are available?

JS: We price in line with what most folks on the mobile side are doing.  A lot of our buys have been standard banner engagements. The application is not dependent on somebody else's third party [ad platform] and that's allowed us to leverage multiple rich media vendors on Pinger.

The buys and the ad units that we're working on, they consist of a blend of static banner images and some expandable rich media ad units.  We've got larger ad units available -- there's now a 300 x 250 ad unit. When we're thinking about the digital buys, where so much of the focus has been in the online world, we can take a [creative] that's already part of an online buy and independently leverage that in mobile. What everybody hears is that mobile's interesting, but there's not a lot of time, resources, or energy allocated to it. Introducing an ad unit like this means we can take advantage of something that already existed in the online world.

We're looking at other ways to deliver advertising, whether that's messaging those users directly on behalf of brands, or focusing on how they interact with Twitter or Facebook.  These are things we're going to continue to explore over the coming one or two quarters.

Are you selling through mobile exchanges or other programmatic channels?   

JS: We get approached daily by most of the vendors out there. We're trying to assess what's best with respect to the user privacy implications and how do we strike a balance between wanting to show the most relevant ad possible but not infringe or make anybody feel uncomfortable with what's happening behind the scenes. Those are discussions that we have both from a product technology road map perspective, but then from a legal and privacy perspective as well. There's a happy medium that we're looking to achieve, but to date we have not done or engaged with any of those platforms.

It sounds like you've almost decided to though.

BG: Well, no. The only way that we're ever going to know is to engage, partner and go down this path and make our own assessment.

Is the privacy issue in mobile just more sensitive? Is that why you're easing off the brake pedal slowly?

JS: There's certainly higher sensitivity in general. People are getting more aware of it. I don't know if mobile is any more sensitive than the web or other places for privacy.

The big focus is on global expansion and what are the nuances of trying to operate.  In the EU countries versus North America, how do we think about it from the back end, or from the platform perspective? If we do something in the audience, if it was feasible in the U.S. but not necessarily globally, well, we'd love to drive the global expansion. These are all ongoing discussions that we're having.

How many direct-sold campaigns have you run in Pinger's lifetime?

JS: We're north of a dozen brands that have run in the network.  That'll easily be more than 20 to 25 as we walk into Q4.

BG: We just started the direct initiative.  Before January 1, 2012, all our stuff had been over networks.  This is a relatively new initiative for us and that's why the number is so low; we're just getting started.

Tell me about working with ad networks.  How do you rate that, and are you still doing it?

JS: Oh absolutely.  It's the vast majority of our traffic.  We started working with one, then we added another and another.

And then we looked at these ad mediation products and attempted to implement two of them at two different times and found them inadequate for our needs. We've actually built our own ad mediation server. Now we're supporting 25 networks, and we mediate between those networks. Brian and the team have people at the dials so that we can serve the best impression, or serve the best ad for every impression for every user around the world.

This is one of the proprietary things -- this ad mediation layer -- that we feel we're doing better than the generic solutions out there.  We've invested quite a bit in it.  A lot of time and resources are devoted to managing the networks daily from management of the dials, but then also from a product and engineering perspective.

We believe we're better than anyone else from an ad network management perspective. We could license the platform we built.  But that's not the focus of the company. It's been a really nice side effect or secondary initiative, beyond making communication free.

Have you considered spinning it off, and making Pinger customer #1?

JS: Yeah, it's definitely crossed our mind.  We're just focused on building great products for consumers and this is a tool to monetize.  I think at some point that might make sense.

Who do you consider your main competition?

BG: Well certainly Skype is a competitor.  In some ways Google Voice is a competitor.  There's a bunch of other little app companies that are competitors as well.

We're not quite as well known as Skype and Facebook and Twitter, but in fact our users use the product more than Twitter, Facebook, Words With Friends, Skype and Pandora.  Our users launch our product more than 14 times a day.  This is how engaged they are. The next [metric] is daily minutes per use.  We are third after Netflix and Pandora.  People use our product more minutes a day than they Facebook or Twitter. We're the fifth most installed iOS device after Facebook, Pandora, Skype and Angry Birds. If you don't use us, you don't know who we are, but we're heroes in every junior high school.

What was the thinking behind the rebrand from Textfree to Pinger?

JS: Some of our competitors have copied us, and they even copied the name. It wasn't a very protectable name. It was an opportunity to do both a rebrand and have a protectable, copyrightable brand. We took that opportunity to redefine the user interface for combined calling and texting products.

Follow Joe Sipher (@joesipher), Pinger (@pinger) and AdExchanger (@adexchanger) on Twitter.

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