• by Mark Walsh  @markfwal, September 16, 2011

Is "display" becoming a dirty word in social media circles? Carolyn Everson, vice president of global marketing solutions at Facebook, explained at the paidContent advertising conference Thursday that the company doesn't even discuss selling "display ads" internally, given its focus on social ads and sponsored stories.

After all, Facebook did announce ditching traditional banner ads last year.

Social advertising start-up appssavvy is the latest to renounce display advertising with the launch of a new ad platform tied to online activities, from sharing content to check-ins to taking polls. Like Facebook, the 3-year-old company is eschewing banners and their anemic click-through rates in favor of ads driven by social actions and promising higher interaction.

"We want to deliver ads into the stream of activity online as people are performing them," said appssavvy CMO Robert Victor. "We're no longer going to sell traditional banners." To date, the company has focused on developing branded integrations in social gaming or other apps for clients, such as McDonald's, Frito-Lay and Century 21. Think the McDonald's Farm in FarmVille.

While these types of sponsored programs within apps can deliver higher engagement rates, they can be costly and time-consuming to create and don't have the reach of banner ads. Enter appssavvy's new "adtivity" platform. Victor says the new system provides a way for advertisers to generate high conversion rates at scale by running ads targeted to various social actions.

At launch, appssavvy says the platform boasts reach of 127 million people engaged in 1.4 billion activities a month. Instead of a page loading, the adtivity API (Application Programming Interface) is triggered to someone performing a certain action, whether sending a virtual gift or advancing to a new game level. Overlaid on top are conventional audience targeting criteria including demographic, contextual and geographic factors.

"This is about reaching the right audience at the right time when they're leaning forward," said Victor. But while appssavvy touts tight integration of the ads with what people are doing online, there is nothing subtle about the unit itself: a 600 x 300 (pixel) format that pops up right in the middle of the page. Semantics aside, it's an in-your-face display ad.

One sample ad by Coffee-Mate in a gaming app, for instance, appears within an animated scoreboard after a player has achieved the new high score in the game. It also includes a click-to-play video ad for the brand's "natural bliss" creamer.

Another ad by Pillsbury for its Grands cinnamon rolls appears within a message thanking a user for making an in-game purchase and asking if they want to share it with friends.

"There's always some level of interruption. You're always inserting a brand somewhere," acknowledged Victor. But he said the style and framing of the ads reflects the app or site where it runs, and that ads can be frequency-capped according to activity. Users can also click in the upper right corner to close the ad.

Most important, Victor said testing since April shows that people are responding to the ads, with conversion rates at 2% or higher.

Research released earlier this year by appssavvy also concluded that activity-based advertising was 11 times more effective than standard display ads and doubled the performance of rich media ads. The company says 30 publishers are on board at launch, including 6waves, 50 Cubes, Friend.ly, iWin and GameDuell.

With about 15% of its business coming from traditional banners, appssavvy does not expect to take a big hit from dropping the format. Victor also said the company's mobile business -- helping developers monetize iPhone and Android apps -- has grown to be about 35% to 40% of its overall revenues.

"We're converging our development efforts for mobile and the Web, and I suspect this year we'll have one delivery mechanism" for ads, he said.