A Startup Competitor to Google AdWords

www.portfolio.com
By Michael del Castillo  
28 February 2012

GraphScience has already signed some of the United States' largest retailers while in stealth mode. And after today's launch, the CEO hopes to soon compete with Google AdWords.
If everything goes as planned, today’s announcement of GraphScience's official launch may soon mean that Facebook has a viable competitor to Google AdWords, and the companies already signed up include some of the biggest retailers in the United States, by no accident.

Of the two main types of advertising offered on Facebook—those that drive traffic to a company’s page with the hopes of accumulating “likes” and those that drive traffic off of Facebook to make purchases—GraphScience focuses primarily on the later.

“What we focus on is actually driving traffic off of Facebook," Raymond Rouf, CEO of GraphScience, told Portfolio.com. GraphScience's SocialEngine uses Facebook's ads API to identify consumers who share social interests and have already demonstrated the intent to purchase the customer's brand. The technology then tracks the customer as she moves from Facebook to the customer's site or makes a purchase on a Facebook store. “For us, dollars equals data, and if we can’t get as many data points as possible, we’re not doing the best for the customer.”

Unlike other companies that offer similar services, Rouf said that GraphScience is one of the few built explicitly for Facebook.

At 31 years old, Rouf is already a serial entrepreneur, having founded three companies, and he says that although each company is driven by a different problem, his underlying motive is the same: increased freedom. In this case, the problems he wanted to solve was the huge influx of social data and figuring out a way to leverage the advantage the company's SocialEngine provides. In other words, creating a provable cash stream using Facebook marketing.

“I think if we really want to think long-term with these [corporate] budgets, we have to show that Facebook isn’t just a viable cash stream, but a necessary one,” said Rouf.

And although the company only officially launched today, it already claims to have a proven business model, garnering an average of four to eight times return on investment (ROI), according to the site. And to Rouf, this proven revenue stream is exactly what big businesses need to make it worth their time to invest.

“When I see a company spending $30 million to $40 million per year on Facebook, a good portion of that will be branding dollars, but another good portion will be advertising,” said Rouf. “And $15 million to $20 million into a four to eight times ROI is a good return for them: It can generate $60 million in revenue.

Founded in 2010, and in stealth mode since 2011, GraphScience has already signed nearly 30 clients, making for a pretty solid foundation on its official day of launch. But what stands out on this list of clients is a preponderance of legacy companies. This startup is going after the big fish—and getting them.

“We aim to work with the top retailers. So if you look at the top retailer list, most of those guys are our targets—most are our customers,” said Rouf. And that list of clients isn't restricted to established companies such as Williams-Sonoma, JCPenney, Macy’s, and Zales, but also includes highly successful fashion startup HauteLook and jewelry startup Ice.

"What we’ve seen throughout the [social-marketing] ecosystem is a lot of companies will compare this to Google AdWords," said Rouf. "They’ve seen Google be very successful at this, they haven’t those same expectations from Facebook."