SocialWire, a startup building Facebook ads for retailers, has raised $1 million in “seed extension” funding. The company is also announcing that Chief Revenue Officer Bob Buch, a former exec at Aol and Digg, is taking on the role of CEO.
When I talked to Buch this morning, he acknowledged that when he tells people that he works in the advertising business, they usually respond, “Oh, I hate advertising.” But that, Buch said, is “why I’m doing this.” The company’s goal to is to create advertising that’s a “win win win” — something that attracts customers for advertisers, makes money for publishers (for now that means Facebook), and actually exposes consumers to relevant products. He compared it to his work at Digg, where the ad formats pushed advertisers to communicate their message in “more newsworthy ways.”
In the case of SocialWire, the company’s working on a technology that it calls Dynamic Product Ads. Instead of just showing people a generic ad for a store (“Shop at Nordstrom’s!”), SocialWire can present them with a specific product that’s targeted at their interests, so the ad is much more likely to be relevant and attention-grabbing.
As outlined in a company blog post, the Dynamic Product Ads take advantage of a number of Facebook’s targeting capabilities, including interests and location (so people who live in San Francisco and are interested in golf, Tiger Woods, or something related would see ads for golf lessons in San Francisco), as well as Custom Audiences (so a retailer can use their own data about different customer segments to deliver customized ads).
This is a bit different from SocialWire’s initial focus of connecting organic social sharing with promoted Newsfeed stories. Buch said the vision remains the same, but the team decided that initial product wasn’t going to grow quickly enough. As it developed the new platform, SocialWire started to get a lot of interest from advertisers, and it’s already working with LivingSocial, Shoedazzle, and others.
“All of a sudden we were off to the races,” Buch said. “We realized, ‘There’s a lot of technology here that we want to build, so we need to raise another round.’”
SocialWire announced a $2 million seed round last fall. Buch argued that the company hadn’t quite reached the point where it made sense to reach a Series A (“you’ve got your product market fit, you’ve got your core technology, now go scale out your revenue”) , so it raised the seed extension instead. The funding comes from new investor SoftTech VC and previous investors First Round Capital, 500 Startups, Accelerator Ventures, and Joi Ito.
Buch also said that he’s taking over as CEO while founder Selcuk Atli becomes executive chairman. He said he really liked being the only business person at the company when he joined, because it meant it was “a very technical and product-oriented team.” However, they reached a point where they looked at the work Buch was already doing at the company and “it just made sense” for him to become CEO. Still, he acknowledged that this could be a “sensitive” situation.
“The guiding principle for me has always been transparency,” Buch said. “I wasn’t even willing to do it unless it was something that Selcuk was totally supportive of and that everybody else wanted. This isn’t a coup or a forced takeover. This is what we all think is the right plan.”