• by Erik Sass , Staff Writer @eriksass1, October 3, 2011

One of the more difficult parts of social media advertising is achieving scale, especially with "earned" media, meaning, when your message goes viral and the consumer does your advertising for you. One company that's addressing the scale issue is Crowd Factory, a San Francisco-based startup that raised $6.5 million in equity financing in a round led by Storm Ventures back in January of this year.

Crowd Factory helps marketers and advertisers integrate social engagement into all their online programs, including email, videos, web pages, microsites, webinars -- and of course the social networks themselves. Crucially, the platform helps advertiser keep the consumer in their proprietary, branded spaces. Crowd Factory CEO Sanjay Dholakia explained: "There's a lot in social where if you do decide to interact it takes you away to Facebook, Twitter. But here they stay in the experience."

Some of the more popular ad formats borrow from social commerce, for example, "Get five friends to download this app, and you all get 30% off." But there are a wide variety of formats; HBO recently used Crowd Factory apps to build engagement among viewers commenting on its shows. Here Dholakia noted that "for each person who comments, 15 new people come back on average." Overall he boasted that the platform is "powering on average anywhere from one to five billion social actions per month -- and we're not having to pay for that, like with a banner ad."

Dholakia said the start-up was also founded to grapple with "the question that every marketer and CEO asks out there: what is this stuff doing for me?" Preliminary data certainly seems to suggest that "people are much more likely to interact with ads from their friends as opposed to ads straight from an advertiser." The Crowd Factory platform allows advertisers to choose the most relevant metric for their social media ad program before the campaign runs; overall data show that conversion rates for earned media are two to five times higher than paid online media, according to Dholakia.

Although most of its advertising clients so far represent national brands, including HBO, Sony, Microsoft, and Universal McCann, Dholakia was hopeful that the accessible interface will attract growing numbers of local advertisers to the social media marketplace. Crowd Factory apps also enable customers to create a long-term customer relationship management social database to better understand their audience, pinpoint their most influential fans and reach out directly to committed fans.