An app that pays you $6 a month to display ads on your smartphone’s lock screen is preparing to push into Europe.
Startup Slidejoy, fresh off the back of a $1.2 million funding round earlier this year, thinks it has the solution to a big problem – how to get people to take notice and engage with mobile advertising.
Its model is to allow users to opt in to see ads on their Android phone lock screen and get paid for doing it.
“We want to make sure we are providing value for advertisers, that’s who our clients are,” Robert Seo, founder and CEO of Slidejoy, told CNBC by phone.
“We are creating a system where a user is incentivized to have the ad on the phone but not necessarily needed to click the ad to the get the reward.”
Countering the rise of ad blocking?
Various services have been looking at how to create a successful model for mobile advertising, particularly with the current trend of people using ad-blockers. There were 198 million ad block users as of August, a 41 percent rise from the same time last year, according to a study by PageFair, a company that tracks the use of these services.
But at the same time, mobile internet ad spend is set to account for over 52 percent of total digital budgets next year, according to eMarketer, highlighting the opportunity for advertisers trying to get this right.
Slidejoy currently has over 500,000 downloads and is launching in Europe on Monday. Seo said that the start-up had signed up advertisers to its platform in France, Germany, Italy and Spain, but could not give specific names.
Economics ‘work out’
Analysts said that an app like this will require scale to be successful and to that end the $6 payments to users is a bid to expand quickly.
But is such a model sustainable in the long-run? Seo thinks so.
“What we have done is we have focused very intensely on the unit economics, right now they work out,” the founder said, but could not reveal the exact prices it charges or the mathematics behind it.
CNBC asked an independent research firm to run an analysis on potential revenues Slidejoy could be making based on current market prices. Ampere Analysis said that looking at various research, people check their phones 30 to 50 times a day which would equate to 30 to 50 impressions per day per person, based on Slidejoy’s model. Ampere then took 40 as a midpoint. It also found that a full display ad costs between $3 and $4 per thousand views. It took $3.50 as the mid-point. Based on an advertiser paying $3.50 per thousand views, and a user checking their phone 40 times a day over a month, each user would make roughly $4.20 a month. Slidejoy would be roughly breaking even per month.
“However, Slidejoy has the advantage here of knowing if someone has seen an advert – the fact that the user has to interact with the advert to unlock their phone means that Slidejoy knows when an advert has been seen. With this in mind, they might be able to get away with charging higher CPMs than average,” Richard Broughton, research director at Ampere Analysis, told CNBC.
And this is exactly what Seo thinks could happen. As the user base grows, Seo said that the company can charge more as it’ll be a “premium spot” and have higher engagement.
“We will have an easier time as we scale,” the founder told CNBC.
Seo also said that ideally the company would like not to be in a situation to pay out, but right now, the fees are here to stay.
“If we had a killer feature where we don’t have to pay anybody, we would want to do that. But it helps to get this out there. I’m not saying there is a future where we do take payments out, but ideally if we could make that we would love that,” Seo said.
Image credit: CC by Johan Larsson