Facebook ad network SocialMedia raises cash

Socialmedia, which offer a marketplace for applications on Facebook to promote themselves by bidding for links, has raised half a million dollars.

The funding for the Mill Valley, Calif. company comes from Charles River Ventures and angel investors.

Called Appsaholic, the self-service marketplace lets Facebook application companies pay for links within other applications already on Facebook.

It is one more ad company in a quest to make money from from Facebook’s fast-growing community, now nearing 40 million users.

Other companies, like FB Exchange, are also offering ad networks on Facebook to help applications make money, that sells ads to other apps.

However, FB Exchange and the others don’t provide a self-serve marketplace.

If, say, Wal-Mart were to launch an app that features its employees of the month on users’ profiles, the company could use Appsaholic to buy ads promoting it across other applications.

To start making money, a Facebook app developer embeds code on their own app that serves the ads — which are really just paid links. Others can bid for these paid links in a live market. The price a bidder pays is determined not only by the market demand for the links, but by how many ad click-through’s their own application gets, and how fast it is growing in Facebook.

So if Walmart’s own application is popular, it pays less for the ads; if not, it pays more.

Winning bidders pay sellers through Paypal.

While revenue is still small, Yesterday, Appsaholic paid out ten thousand dollars to applications, chief executive Seth Goldstein tells us. Besides Appsaholic, Socialmedia has its own, successful applications, including Happy Hour and Food Fight.

The company also plans to expand to Myspace.