Red Hot Labs launches Toro, a Facebook mobile app tool

Toro makes it cheaper and easier for developers to create and run mobile install ads on Facebook

(Correction: Red Hot Labs has raised $1.5 million, not $2.5 as previously stated)

If you use Facebook's mobile app, and based on the numbers almost all of you probably do, then you have seen things ads popping up on your news feed asking if you would like to download a certain app. 

Introduced in October 2012, these are called Mobile App Install ads and they have been extremely successful for Facebook. The company saw 245 million apps installed at the end of last year and accounted for hundreds of millions in revenue.  

At the same time, these ads also represent a big opportunity for developers to get their apps to stand out in a very, very crowded market. They just need an efficient way to do it. 

With that in mind comes Toro, a new product from Red Hot Labs that is designed to make it easy as possible for developers to launch successful mobile app install campaigns with as little effort as possible.

"App developers are building great products that are being launched with very little exposure through organic channels on the App Store," Amitt Mahajan, co-founder of Red Hot Labs, told me in an interview. "It's so crowded and the are odds that they going to get a little traffic if they lucky enough to get featured, but most have to turn to paid user acquisition in order to grow."

While Facebook is the number one channel to buy on, he said, it's also "time consuming and hard to get good results."

That is why Toro is tool that manages those campaigns. Here's how it works: all the developers have to do is use Facebook connect. Toro doesn't require them to make any changes to their app; it just asks them a few questions, such as where they are running and what kind of users they are targeting. Setting up a campaign takes only 10 minutes.

So, for example, a developer can say he wants to only target males, who lived in the United States, who are on iOS and who like to play Candy Crush. Toro will then use its algorithms to create a micro-targeted campaign that is will also adjust and manage on a day-to-day basis.

The product, which had been in beta for the last month a half, has already signed up 30 paying customers, including gaming firms like Bee Cave and Betable; social discovery site Sosh; mobile search engine Quixey; and on-demand phone number service Burner. 

Those customers have already started to see excellent return on investment. Bee Cave Games, for example, has already seen a 27% reduction in cost per install (CPI) and 90 hour savings in development time. Burner had a 32% CPI reduction.

"It's a classic story of a company that was focused on one thing, ended up releasing a product that became its core business later," he said. 

Started in 2012, Red Hot Labs started out as a platform that helped developers to create games and bring them to market. Founders Mahajan and Joel Poloney were the creators of Farmville at Zynga. And it was that experience that helped them found their new company. 

"People think that company was a game company, but its core competency was focusing on growth. When we left felt that we had this unique skill would be helpful. We wanted to build apps, and give developers the tools and services to do it," Mahajan said.

When they started talking to developers, though, they quickly realized that user acquisition was a big problem that needed to be solved.

"We built a really great, enjoyable product. We think of it as rolling down hill toward good campaigns. Our experience running at scale is baked into the product," he told me "We hide options that aren’t as important a lot of time on the dashboard and curate all the information in the top three or four things that really matter."

The point is, he said, to "focus is on creating a crisp, intelligent experience for people," and of giving its customers the best customers, even if that means paying more per install.

"A lot of developers focus on the cost of install, but that is not what they should be aiming for. We want to be able to report on things like revenue-generated campaigns. You might be paying more, but they are more likely to become customers and pay back the cost," Mahajan said. "It's not just about getting cheap installs, but, in a sustainable, healthy way, looking at what happens after the install."

That kind of attitude, he said, comes from the company's background. 

The San Francisco-based Red Hot Labs has raised a $1.5 million seed round from investors that included Andreessen Horowitz, Greylock Partners, SV Angel, General Catalyst Partners, Japan’s IT-Farm and private individuals.

"When we think about our inspiration, we really respect Stripe. What they did for payments was really amazing. It was kind of hard to use, and integration was a chore and they created something people really enjoy using and they give a really good experience," said Mahajan. "Stripe solved the payments problem and we want to be the same kind of solution for marketing."