App Search Engine Chomp Takes Next Natural Step: Search Advertising

Chomp, the app search engine which recently scored distribution deals with carriers like Verizon, is turning on revenue from the most obvious source — search advertising.

Developers will be able to bid on ads that appear alongside search queries and keywords that are relevant to their apps. Like Google’s AdWords, it’s an auction-based service where developers bid for the right to a keyword and can set a daily maximum spend or maximum bid price for any given phrase. A higher bid increases the likelihood that the developer will get the keyword, but Chomp says relevancy is the most important part. Interested developers can look at the private beta here.

The company is pricing the ads on a cost-per-click, not cost-per-install basis.

“You could pay as little a 10 cents a click but you might pay as high as $2,” said Chomp’s chief executive Ben Keighran, who adds that Chomp’s engine does in the “low” hundreds of millions of search queries a month. It’s possible though that if this private beta goes well, these search ads might appear in partner integrations. Chomp recently signed a deal with Verizon to power app search in the carrier’s apps on the Android phones it sells beginning this fall.

Keighran is hoping that search ads will appeal to the long-tail of developers who might not otherwise be able to justify large marketing spend.

In general, there tend to be two types of developers that can pay hundreds of thousands of dollars to acquire users: games and large brands. (The group deal sites tend to be big spenders as well.)

For the long-tail of apps, however, it often does not make sense to do this because these companies are pre-revenue. They don’t know the lifetime value of their customer, so they can’t determine an appropriate amount to pay for acquiring them. The most popular existing marketing channels like display or incentivized ads also work better when developers do “burst” campaigns on them where they spend enough to break into a higher part of the app store charts. Smaller developers may not necessarily be able to afford this. So a steady, but maybe more modest spend, on search ads may make more sense since these are users that are already looking for what these companies have to offer.

A few other companies have tried variants of Chomp’s model before. Getjar, the independent app store, has had display, search and free-app-of-the-day units, but Keighran argues that it isn’t as relevant as what Chomp offers. Getjar also raised far more funding, with $42 million in three rounds. Chomp raised $2 million last year in a Series A round led by BlueRun Ventures and Keighran thinks that the company won’t need to do another based on projections for search ad revenue.

“Realistically, we might not have to raise again,” he said. “We have a lot of search traffic and we really think advertisers are going to want to use this product.”