Girls Virtual World Stardoll Transfers UK/U.S. Ad Sales Out Of House, Focuses On Managing Shift To Mobile

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Online gaming continues to be attacked on two fronts: the over saturation of casual titles and “me-too” offerings coupled with an increasingly savvy but fickle user base, and the rapid transition to mobile. This has led to major challenges right across the industry, from the likes of Zynga’s Wall Street woes, and Zattikka’s financial problems, to a refocus on quality and “differentiation” by Europe’s Bigpoint. It seems that no online games company has been left unscathed.

It is in this climate that late last year rumours were swirling around that Stockholm-headquartered Stardoll, the fashion-oriented virtual world for “tween” and teenage girls backed by Index Ventures and Sequoia Capital, had shuttered its London and L.A. ad sales offices. As part of the reorganisation, we’d heard that ad sales in the UK were being transferred to Venatus, the boutique ad sales house that targets the gaming industry — something that Stardoll has now confirmed to TechCrunch.

In parallel, Stardoll tells us that U.S. ad sales are now being handled by Roblox, the massively multi-player 3D world that lets users build things, which is particularly popular with teenage boys. This is actually a bit of a role reversal. Two years ago, Stardoll began selling ads on behalf of Roblox in the UK and U.S., so in many ways this is a continuation of that arrangement, albeit structured in reverse.

Thus, UK and U.S. ad sales have now been effectively outsourced, where they were previously brought in-house, leaving Stardoll to focus on its core business of building various virtual world and gaming experiences based on the Stardoll IP.

Under both arrangements, Stardoll’s ad sales teams — based in London in the UK, and L.A. and New York in the U.S. — have been transferred to Venatus, and Roblox respectively. However, my understanding is the company’s London-based 8 person ad team were quite taken aback by the change in ad-sales strategy and four employees have chosen not to take up that offer, while two of the team were offered to relocate to Stardoll’s Stockholm HQ, which, according to a source, they may have declined.

Contrary to rumours, Stardoll says that only one member of its ad team hasn’t been offered a job elsewhere.

So, why the change in ad sales strategy? A change in strategy that effectively sees ad sales come full circle.

In a phone call with TechCrunch, Stardoll CEO Mattias Miksche explained that back in 2007, when the company decided to supplement revenue based on selling virtual in-game currency with advertising, very few advertisers “got” the concept of a virtual world. Using generic ad networks produced very low CPMs, leaving Stardoll no choice but to bring ad sales in-house and recruit its own specialist sales team.

However, fast-forward a few years, says Miksche, and the market has evolved significantly with the advent of free-to-play online and (now) mobile games. “Does it really make sense to have our own sales team in a changing market?,” he asks somewhat rhetorically. Clearly, in the case of Stardoll, Miksche believes the answer is a resounding “no”.

This, it could be argued, frees up the company to plough more resources into tackling its biggest challenge to date: the transition from Web to Mobile. “Everything is about managing this shift,” says Miksche. “Mobile is by far the most important for us as a company”.

The shift from Web to Mobile shouldn’t be underestimated (and is industry-wide). Various third-party measurement services point to a downwards trend for Stardoll.com, while the company’s own official metrics claim 1.8 million unique users in the U.S. for December 2013 versus 2.2 million in December 2012. Globally, however, Stardoll says it’s seeing 15 million uniques/month overall.

To-date Stardoll has launched 8 mobile apps/games.