The business model behind social apps

Bambi Francisco Roizen · February 3, 2009 · Short URL:

Buddy Media's Lazerow on why $1 per app subscriber is the new model on social networks

It seems difficult to believe, but it hasn't been a decade since the establishment of auctioned-based, CPC (cost per click) pricing for search results pages. Prior to this new model, many search companies, including Google tried different forms of monetization, including licensing out search listings.

Today, the search to make money with social applications is underway as half a billion people are on social networks.

Buddy Media is experimenting with an interesting model to help its brand customers, such as Fox News, Budweiser, InStyle and find a way to reach and pay for an audience across social networks. 

It's so successful, says founder and CEO Michael Lazerow, that the company has 50 customers. 

There are a number of companies that provide services to brands to help them reach this audience, such as Watercooler and appssavvy. But unlike Watercooler, Buddy Media provides a full service, including promotion and marketing of a campaign. Its customers are brands, which pay a $1 per application subscriber. Watercooler creates its own applications and works with sponsors. 

In this interview, Lazerow explained the economics behind InStyle and's campaigns. One of Buddy Media's first campaigns was with InStyle. The app allows women to change their hairstyles. The app was installed 340,000 times and each user stayed on for an average of four minutes.

What was InStyle’s ultimate goal? i asked. According to Lazerow, InStyle managed to attract new users from Facebook who ended up buying more magazines. Additionally, InStyle got to package more inventory with their magazine pages.

InStyle paid Buddy Media $1 for 100,000 members, or $100,000. The campaign worked out so well that InStyle managed to attract 340,000 members. Lazerow explained that the results demonstrate the value in paying per subscriber vs per impression. After all, it takes millions of branded impressions to sign on the first 100,000 users, he said. To that end, the brands get a lot more bang for the buck, he suggested.

Lazerow also talked to me about the economics behind's app, what the site's goal was and how engagement was and continues to be measured.

Importantly, I asked Lazerow why a member (who may be inactive after signing up to an app) is ultimately more valuable than someone who sees a banner. Watch the interview for his explanation.


Image Description

Bambi Francisco Roizen

Founder and CEO of Vator, a media and research firm for entrepreneurs and investors; Managing Director of Vator Health Fund; Co-Founder of Invent Health; Author and award-winning journalist.

All author posts

Support VatorNews by Donating

Read more from our "Interviews" series

More episodes

Related Companies, Investors, and Entrepreneurs



Joined Vator on


Kabam is an interactive entertainment company leading the next wave in social gaming, developing and publishing massively multiplayer social games (MMSG’s), including the popular and critically praised title Kingdoms of Camelot and Dragons of Atlantis. Our studios focus on combining the best elements of traditional and social gaming to appeal to a growing audience of players looking for deeper, more engaging social games. The first wave of Kabam’s new games for Facebook and leading media sites have been widely recognized for their depth of play and social interaction.

Kabam started out as Watercooler, whose aim was to make connecting with your friends, family, and other fans of your favorite TV shows or Sports teams more compelling than ever before. By bringing fan communities into the context of your social network, Watercooler enables more engaging sports and TV fan experiences. Fans are able to access Watercooler's FanSection and TVLoop communities no matter where they are on the web: Facebook, MySpace, Bebo, Friendster, Hi5, MyYahoo, and  Over 35 million sports and TV fans have joined Watercooler's fan applications  making it the largest online fan community.

Company History
Kabam was founded by a team of social networking and community software professionals in Mountain View, CA, in 2006. The company has raised a Series A round of financing from Canaan Partners of Menlo Park, CA.

Salesforce Buddy Media


Joined Vator on

Salesforce Buddy Media is the social enterprise software of choice for eight of the world's top then global advertisers, empowering them to build and maintain relationships with their consumers in a connections-based world. The Buddy Media social marketing suite helps brands build powerful connections globally with its scalable, secure architecture and data-drive consumer insights from initial point of contact through point of purchase. Buddy Media is headquartered in New York City, with additional offices located in Asia, London and San Francisco. 



Joined Vator on

appssavvy is a mobile advertising technology company with the mission of rethinking the delivery and reception of advertising. Focused on activity, appssavvy redefines how brands reach consumers, creates native ad experiences for publishers, and most importantly, improves advertising through data and insights about real-time behavior.



Michael Lazerow

Joined Vator on

Related News