Lookery, a startup that focuses on collecting demographic data about users and sites around the web and then selling this information to ad networks to target users, is heading to the deadpool. In a blog post, Lookery’s CEO Scott Rafer confirmed that the startup will be shutting its doors after launching in 2007.

Lookery initially started as an ad network for social applications on Facebook, and quickly encountered the troubles of making money off ads on social networks. Lookery ran a promotion for advertisers, offering a guarantee of 12.5 cents per thousand ad impressions (CPMs) in January of 2008. Lookery also made a bold play for ads on traffic from European markets, guaranteeing 25 cents per thousand impressions per advert from European traffic. But things clearly weren’t working out — by July, Lookery was downgrading its guarantee offering 7.5 cents per ad impression, cutting its rates nearly in half.

Although the network served around three billion ad impressions per month, Lookery sold its ad serving business to online advertising network Adknowledge in November of 2008. By that time, Lookery had already branched out into collecting anonymous demographic data from websites and providing this info to advertisers, social networks, dating sites, ISPs, and e-commerce sites.

Lookery raised $3.15 million in angel funding over the past two years, from notable investors and VCs including Charles River Ventures and former FCC Chairman Reed Hundt. And the startup managed to raise a round of funding last September, during tough economic conditions. But in his blog post, Rafer wrote that one of the startup’s downfalls was its original dependence on the Facebook platform. Rafer also mentioned that Facebook’s Summer 2008 redesign had a negative effect on the ad network going on to say that in retrospect, he should have sold the ad network much earlier than November.

Lookery has been added to the deadpool.

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Like many others, Triana Global claims to have been one of the first ad networks that started focussing on monetizing facebook applications after the social networking service started opening up for outside developers with the launch of Facebook Platform back in May 2007. Its biggest competitors are Adknowledge (which recently picked up both Cubics and Lookery Ads), Social Media, Offerpal Media and Appssavvy.

The service has managed to stay largely under the radar since its launch, and even when they started guaranteeing floor CPM rates of $0.15 and $0.08 CPC rates on standard banner sizes for new developers joining the network they seem to have gotten the silence treatment and were also downright criticized for developing their own Facebook apps besides acting as a social advertising network. It didn’t help that Triana Global claimed to have hundreds of applications in their network, which they later expanded to other social networks like MySpace, hi5 and Bebo, but never published a portfolio or customer reference list.

Either way, apparently the company was acquired by ShopIt in October 2008, and that startup is now relaunching the service as ShopIt Media, essentially providing a way for their users (1 million according to the company) to market the products they have for sale across a multitude of social communities. New publishers are being wooed with a 80% revenue share for all campaigns on Facebook, Ning, MySpace, hi5, Bebo and Orkut that are kicked off in February.

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From the announcement:

Lookery has been seeking a company to acquire its ad serving business that is able to both provide you with the same or higher payouts that you are currently receiving and provide the same level of service that you have come to expect from Lookery.

The way this is written, as well as the fact that the terms of the acquisition have not been shared, suggests this was a rather small deal. Lookery raised a total of $3.15 million in funding, mostly from angel investors. We have an e-mail in with co-founder and CEO Scott Rafer for more information about the acquisition. (update: he got back, had nothing to add about the terms except to say the deal was in fact quite small in size)

Last we’ve written about Lookery, was that they were lowering guarantees for application developers to 7.5 cents per thousand ad impressions (CPMs). At the beginning of this year, that guarantee was 12.5 cents / CPM. Anyone still think monetizing social networks isn’t tough?

Cubics and Lookery say that nothing will change for app developers using Lookery’s ad network, and that the Lookery Guaranteed CPM program will continue for all participants. Lookery initially started as a Facebook ad network, but has since branched out and is now focused on collecting anonymized demograhic data about sites around the web. The company then sells this information to ad networks in order to help them target ads, a business which it is continuing.

Adknowledge / Cubics claims to be the largest social ad network, and that buying Lookery’s advertising business enables them to display over 10 billion impressions per month on social networking sites. Looking at the number of monthly impressions Lookery boasts on its website (3 billion), that means that the acquisition has made Cubics’ inventory 1/3 larger in size.

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Other social app ad networks, such as Social Media, are commanding CPM ad rates of around 50 cents by focusing on higher-quality inventory. Lookery is not so picky, and thus is probably more reflective of the what the majority of Facebook apps can expect to get (85 percent of its inventory is from Facebook).

Promoting a guarantee to starving app developers who have no other options is working for Lookery. When it offered its first guarantee in January, it was serving 140 million ad impressions per month. Now it is serving about three billion per month. (Social Media serves two billion).

Lookery is hoping all of those pennies will add up, but it isn’t counting on it. CEO Scott Rafer says the ad network is running at break even in terms of gross profits. But his plan is to use it to “bootstrap a data services business.” To that end, he is beginning to collect age and gender audience metrics from all the publishers in the Lookery network. For instance, the Facebook app Friendzii (which seems like it is geared towards people with no friends who are hoping to meet some) is actually most popular among 35-to-44-year olds.

If Lookery can’t sell ads to marketers, maybe it can sell the data.

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Does Hundt even use Facebook? it looks like he’s set up a profile, at least. Reed, time to add a picture!

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This is a market-share play for Lookery. By offering a guaranteed rate, it hopes to attract enough application publishers to get to a billion impressions a month, up from 170 million in December. Lookery is smaller than the other major social-app ad networks, like Slide, RockYou, and Social Media. On social networks, more so even than on the Web in general, advertising is obviously a volume game. And Lookery is trying to catch up to the larger app ad networks, which may very well have higher average CPM rates, by taking all the low-hanging penny inventory that is out there.

Find out more here.

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It also shows the steady maturity of Facebook from a college network to a full on world network, where friendships, business contacts, family and other types of relationships need to be more fully described. And this is also as much about privacy as it is about organization – users will be able to limit the information that certain friend groups receive.

A few existing applications are going to be affected, like Slide’s Top Friends application, the most popular third party app on Facebook. Lots of other applications will likely need to be tweaked to work properly when this launches (so many of them access the friends list). And this will shut down at least one “startup” we’ve been tracking that was creating this exact feature as an application. At least they can quit now and stop putting good time and money after bad.

Building Facebook applications is a big dice roll. If it’s too popular or too obvious of an idea (even if it hasn’t been done yet), Facebook is just as likely to compete with you as pay a few bucks and just buy you (they are probably more likely to compete with you than buy you, actually).

Some developers will probably wonder if getting a cash grant from Facebook’s just-announced fbFund will lessen the likelihood of direct competition from the company. Only time will tell.

Update: Wired is writing about a slew of Facebook ad networks and the almost inevitable fact that Facebook will be competing with them directly, too. We’ve covered most of these: SocialMedia, VideoEgg, Lookery, fbExchange, and RockYou. Also mentioned are Cubics and Appfuel. Lots of brave souls racing to build a business before Facebook comes in and stomps all over the scene.

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fbExchange

The first out the door was FBExchange, a copycat of the LinkExchange idea from the nineties. It was created by the 30Boxes Calendar team – Narendra Rocherolle, Julie Davidson and Nick Wilder. Display others’ ads on your facebook application and build up credits, which can then be used to run your own ads on other apps. It’s a cheap and easy way to get exposure for your application, should the viral Facebook machine not create enough growth to keep you happy. See GigaOm for more. The company says they’ve booked $200k in revenue after just two weeks live.

Lookery

Lookery, founded by serial entrepreneur Scott Rafer, is a straight up advertising network targeted solely at Facebook applications. They say they’ll have access to deep demographic data on users and can therefore target ads to users with very specific characteristics – a woman between the ages of 20-25 in New York, for example. That theoretically will lead to much higher advertising rates. I like the idea, but Facebook itself has access to the same data and more and has had trouble selling high CPM ads at scale. Lookery needs big scale to be successful, and so will likely struggle in the early days. For now, Rafer says, they are passing 100% of revenue to content providers and will start to take a cut in a month or so when the economics support it.

RockYou

RockYou has been quietly testing their own idea of an advertising network – selling “users” to other applications. They’ve had a tremendous amount of success building viral applications on Facebook so far. Their Super Wall app, for example, has nearly 3 million users and is adding hundreds of thousands of new users each day. It’s basically what it says – a better “wall” where friends can leave messages. With Super Wall, people can add pictures, video and other rich media.

They’re offering to promote third party applications on Super Wall, and charging on a per-user-acquired (CPA) basis. When a user is signing up for Super Wall they are asked if they’d like to also add a additional application (the advertiser). See the screen shot to the right (click for large view).

The test so far are going very well. CEO Lance Tokuda told me today that they moved $30k in inventory in just four hours. They are testing various price points, but the low end seems to be around $0.30 for each user they sell to another application, and they believe they can get as much as $1 over time. The effective CPM (or revenue per 1,000 pages) is a “multiple of $20″ he says. This make them possibly the first Facebook application to have found a real way to monetize users and pageviews.

Tokuda also says they have developed an API for Super Wall and will give free access to other applications to build their functionality into it. This can make your head spin a bit – Facebook is now widely considered a platform, and now Super Wall is a platform on top of a platform. It’s a good thing I guess that no one is slowing down long enough to really think too hard about how quickly the online world is evolving. Instead, they’re experimenting wildly. And some of this stuff is going to stick.

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