Facebook is creating a new way of tailoring advertising to suit its users' preferences - and an Israeli company is one the select few chosen to go along for the ride.
Israel is brimming with technology start-up success stories, from the band of friends who invented ICQ in a supportive parent's garage, to the creators of the world's smallest intestinal camera. In fact, someone even wrote a wildly popular book about it. But the latest example of Israeli ingenuity is, in no small part, down to an immigrant from Scotland who moved across continents for love, and found gaming – and a partnership with Facebook.
Adotomi is a small but rapidly growing company which started out as a vehicle for marketing video games but somehow has ended up as one of a small handful of businesses in the world with access to Facebook's database – a coveted position to be in for any organization which relies on real information about potential customers. The brains behind the operation (and CEO) is Joe McCormack - an Edinburgh native who ended up in Israel to be with his Israeli wife. Scotland was “too cold.”
The idea is simple: When a user posts information about himself on his Facebook page, unless those details are locked down through the social networking site's privacy settings, it is up for grabs by any interested party, and that includes people trying to sell you a video game. They harvest all the personal information you freely provide, and use your music, movie and even clothing preferences to determine which kind of game you would be most likely to play. It's not a million miles away from Google's automated advertising model, and apparently even Farmville players are just as much a "type" as World of Warcraft fans.
Adotomi has grown exponentially since it was founded in 2008; it now has 25 employees and is looking for more. But compared to its technological giant of a partner, it is little league. So, how does a small company in the Middle East end up with such a lucrative deal with Facebook?
The answer, according to McCormack, is the company's “tech savvy,” combined with its “deep penetration in the gaming market.” Facebook was “very keen” to make its mark on the gaming world, and about 18 months ago its headquarters for EMEA (Europe, Middle East and Africa) approached Adotomi. It was at the time the only company in the Mideast to have access to the Facebook application programming interface (API) – the way in which the website communicates with the applications downloaded by users to have this access. It is still the only gaming company in the world with this partnership with Facebook, although McCormack believes there are now a couple more companies in the region who work in this way with the social networking giant.
He says working with the Facebook team was a thrill. “We did meet some fairly senior people,” he says of their business encounters in San Francisco. But, alas, not Mr Zuckerberg.
The concept of targeting Facebook users as based on their preferences is as a marketing tool “extremely effective,” McCormack maintains. He predicts it will soon put Facebook in a position to outstrip Google, whose own advertising model was considered revolutionary when it was first implemented.
Collecting information in this way has turned up a few eyebrow raising results. For example, a significant proportion of massively multiplayer online (MMO) gamers have shown an interest in duct tape.
“This seemed very strange for us, but on closer examination it makes perfect sense,” McCormack explains. “A high percentage of hardcore gamers are part of a sub-sect of society who 'void warranties.' So they will overclock their processors or hack their devices to run different kinds of operating systems.” This system of pimping your own computer, presumably, needs the duct tape to hold it all together. And even that can be used as a way of targeting certain audiences: “These technology experts are a key demographic for playing specific types of games and our clusters helped us find them.”
Setting up shop in Israel was, he says, relatively straightforward, despite the country's notorious reputation for elaborate and seemingly endless bureaucracy. The business community in Israel was remarkably supportive, he recalls, and they received a great deal of encouragement as a new start-up. “Setting up a company in Israel is easier than opening a bank account here.”
For all its famous connections and revolutionary marketing tools, Adotomi is at heart a company about video games. Its offices are decorated with gallery-sized images from the most famous games in the world – the Angry Birds gang and Mario are among those who stare down from the walls - and the boardroom boasts a Wii and a retractable projector screen to play it on.
Video games form a huge industry in almost every corner of the world, one that is worth billions of dollars in revenue each year. As an example, the latest in the Call of Duty series of games, Call of Duty: Black Ops, made more than $650 million in its first five days on sale. Yet the industry is struggling to increase its revenues, and some companies, most notably Sony, have recently begun to adopt a system of “pay for use” - where the basic product is free, and users are invited to pay for extras. McCormack sees this as a natural solution, “a much fairer pricing model,” and one that could be applied to other industries, including newspapers, who find themselves scratching their heads over how to make money in this new online world.
So is the future truly consumer based? Your adverts, thanks to Google and lately Facebook, are now tailored to your tastes, and you could soon be paying only for what you want, or need. McCormack believes this is “a much fairer pricing model.”
“It's essentially like the car test drive. I - as a consumer - want to try before I buy. And if a game or piece of media is good enough I will pay for the extras.”