Today Slide is announcing the launch of season two of KatalystHQ within their FunSpace Facebook application and with it, a $500,000+ sponsorship by NESTLÉ® HOT POCKETS®. Recently the company claimed that they has laid off a large portion of their sales staff in order to focus “its attention on building a team that will focus on higher-end campaigns, ones in the $500,000 category range.” (Source: GigaOm) Many large developers that I spoke with laughed at the concept, asking “Are there really that many $500,000 plus sponsorships?” Apparently so.
This is the first big sponsorship deal that we’ve heard of from Slide and I’m guessing that we’ll hear about more in the near future. For an industry that’s struggled to find large monetization opportunities, a half million dollar sponsorship is a big deal. This model is similar to traditional television sponsorships except that Slide is leveraging the diverse content library of the internet.
Browsing through the FunSpace application you’ll quickly realize that Slide is simply separating out verticals of video content within a social video player which allows for “viral” distribution. The company then proceeds to sell advertising on top of that content. Large consumer brands can provide developers with big revenue potential and it’s a revenue area that companies like Facebook and MySpace are also pursuing.
The new videos include pre-roll and post-roll advertisements, making this a similar ad model to television except with shorter content. While we haven’t heard of many of these sponsorships, it definitely save resources rather than going after 10 campaigns with similar budget sizes. Last year there were over 8 million video posts of the KatalystHQ content by Facebook users according to slide which would make this sponsorship an estimated $0.06 per share.
I’m not sure how the sponsorship package was calculated given that their are additional impressions within the FunSpace application but it could work out to be a good deal for Hot Pockets. In contrast to performance advertisements which are looking for direct conversion, branded sponsorships present big revenue opportunities with less measurable results. Yes, Slide can say HotPockets had the video shared over 8 million times but what does that really mean?
Regardless of return on investment, Slide will need to generate a large number of high value sponsorships in order to justify the $500 million valuation previously assigned to it during the multiple rounds of funding (amounting to over $58 million). It will be interesting to see how this pans out for the company. I’ve gone ahead and embedded the first episode of KatalystHQ with the Hot Pockets ads below so you can see how the sponsorship is structured.
On a promotional note, we’ll be speaking with Keith Rabois, VP of Strategy and Business Development at Slide during our first panel at this year’s Social Ad Summit. We’ll be sure to discuss this new sponsorship and the company’s overall strategy during the panel.