VentureBeat

Even though social networking companies serve tens of millions of users, there’s still bizarrely little advertising on the most popular sites. Many big agencies and brands have experimented, but they’re still looking for better ways to target the users they want.

The latest company hoping to serve these advertisers is Appssavvy, a startup that sells direct advertising space on social media applications like Flixster, MesmoTV, and Playfish — most of which have a presence on major sites like Facebook. The company announced today that it received $3.1 million in second round funding.

New York-based Appssavvy joins a field of peers hoping to score social media ad dollars. Companies like SocialMedia, Lookery and Social Cash have also been selling advertisers on new and innovative ways to add branding to social networking sites. But Appssavvy likes to distinguish itself as a consulting firm, working with its clients to devise a more custom, targeted end product.

Examples of Appssavvy campaigns include Sony’s sponsorship of Facebook’s Wedding Book application to promote its film “Made of Honor,” a custom Facebook application built for Kohl’s back-to-school season, and ads for the TBS show “My Boys” on the MesmoTV application… on Facebook. Okay yes, all of their examples are from Facebook, but Appssavvy says it can also hook brands up with apps for the iPhone, MySpace, Hi5, etc.

Despite the seemingly thin client base represented on the startup’s site, it did land a deal with NBC Universal at the start of the month that gave it exclusive ad-sale rights on NBC News’ iCue website. iCue is a social network targeted at students that lets members watch NBC archive footage, join related discussions, and play relevant learning games.

Even if Appssavvy can bag other big names, it still faces a tough market for social media campaigns, which have yet to gain major traction on Madison Avenue. In fact, one study suggests that half of these campaigns are already set up to fail.

Still, that didn’t dissuade Appssavvy’s recent investors. The round was led by True Ventures and also included About.com founder Scott Kumit.

Appssavvy, a sales company that helps advertisers cull through the thousands of social network applications hitting the web to find the right match, is close to releasing a dashboard tool to make the process that much easier. The New York-based company, which we’ve covered before, sees itself as a bridge between app developers in Silicon Valley and advertising agencies on Madison Avenue.

And so far it seems to be doing pretty well. After only seven months’ in business, it already represents 100 developers with over 300 applications, including 15 of the top 20 applications on Facebook, such as movie-app Flixster and television fan app MesmoTV. It also is working with 15 advertising agencies, including Universal/McCann and Palisades Media Group. The company claims to reach 50 million users on over 2 billion webpages. Examples of successful campaigns include skinning an app called Weddingbook with ads for the Made of Honor, and placing Adidas sponsorships on an app named Sneakers.

Developers of social network apps have managed to lure in millions of users. Ad agencies and their clients are eager to get at those users, but sorting through the thousands of applications now available on Facebook is a time-consuming process, as is determining how to integrate a brand into a pre-existing app.

The new dashboard-like media planning tool, which will be released in the coming weeks, will give an advertiser that targets, say, 18-34 year old males interested in sports, a quick shortlist of the apps best suited to it from among the 300 apps Appssavvy represents. Appssavvy has partnered with companies like DoubleClick and Sometrics to also provide backend analytics to help advertisers and agencies judge how well a campaign is running.

The company currently has a 12 person team, half of which is dedicated to sales. Right now, the great majority of Appssavvy’s business is in Facebook, meaning the company focuses on delivering advertisers to the 16 to 34 year olds interested in entertainment, apparel, and retail, but the company’s chief executive, Chris Cunningham, is eager to expand to new demographics. “We are neutral when it comes to social networks. I’m pulling for LinkedIn to open up its API. The more companies that do that, the better our business will be.”

While apps are certainly a growing market, with an eMarketer report forecasting $40 million in widget and apps ad spending in 2008 (up from $15 million in 2007), companies like Appssavvy are in a delicate situation. Not only are they facing competitors – like SocialMedia and Lookery for example — who are also staking out a place as social media app ad networks, but app developers like RockYou are already forming their own ad networks.

The economy may also come into play. Nearly all social networking is currently brand advertising (e.g. “Converse is a totes hip company!”). If an economic recession is long, nervous advertisers typically shift their budget from brand advertising in favor of direct response advertising (e.g. “Click here to buy some Converse right now!”), putting many social media marketers and their attendent middlemen out in the cold.