The company has 145 million regular monthly users with around
8.1 million regularly paying subscribers who have bought into an
enhanced version of the service or who have used it to make calls
to landlines or mobile phones. Skype-to-Skype calls are free. The
company said paying users may also receive advertising, though that
may change over time.
"Driving international usage of Visa cards is a key priority for
Visa and users of Skype are more likely to travel and transact
internationally than the general population," said Alex Craddock,
head of U.S. marketing at Visa.
The company had experimented with advertising before, but in a fairly limited form.
In partnership with call advertising firm Marchex, the company
converted clickable Skype phone numbers of businesses into ads. The
businesses pay based on the number of calls they receive through
Skype, and can set a monthly budget based on the number of calls
they would like to pay for. This advertising is still ongoing,
according to the company.
But this is the company's first foray into display advertising
with marketers who are looking to promote particular products.
"We think this is an interesting opportunity for advertisers,"
Doug Bewsher, Skype's chief marketing officer, said. "This is a
premium placement to engage with our users."
Mr. Bewsher, who used to head the digitally focused agency
Publicis Modem, pointed out that though people are spending a lot
of time on today's socially oriented sites, ad placements on those
sites are typically small and out of the way, such as on
Facebook.
"What's interesting in our case is you can link our level of
engagements with a large, very rich, very shareable format," he
said, underlining the fact that the average user on Skype spends
around an hour and a half each month on the service. The ads will
also enable Skype calls within the ads, though it was unclear to
whom a user would make a call to in such a case.
Skype has become a highly popular service, largely because of
its free and relatively easy interface. Concerns about how ads may
affect that experience were considered as Skype began to build out
this advertising program. "Skype has built a very strong franchise,
and we've done that because we have a great user experience, and we
wanted to make the user experience paramount."
Users will see only one ad ad per day, though it was unclear how
often they may see the ad. The advertising program is designed as a
sponsorship, meaning that an advertiser will own the ad space for a
full day.
Interestingly, the company has partnered with another internet
startup, Meebo, to do the ad sales for Skype in the U.S., rather
than hiring its own sales force, much like its partnership with
Marchex.
"They have a lot of experience working with premium
advertisers," Andy Sims, Skype's director of advertising, said. "We
think of them as a premium play on the web. It matches our
strategy."
Meebo will also be bundling its own placements with Skype as
part of the selling strategy. "That to me is the real opportunity,"
said Carter Brokaw, Meebo's chief revenue officer. "More and more
brands are looking for franchise opportunities; a large enough
canvas to story-tell and they want to do it at scale."
Skype is looking to cash in on the hot IPO market, and hopes to
raise $1 billion in a public offering, which most likely will be
slated for later this year. Despite the software's popularity,
investors and analysts have raised concerns over its revenue
potential, as only a small portion of its users bother to pay to
use the service. Instituting large ad formats is clearly a move to
establish more revenue potential. The company booked $406 million
in the first half of last year, according to its S-1 filing with the Securities & Exchange
Commission.
