In many ways, Keek is the ideal case study of how social media success doesn’t always translate into financial success.
The service, which lets people share 36-second videos – called “Keeks” – has been wildly successful with more than 65 million users. The Toronto-based was billed as “Canada’s Instagram” and it enjoyed such strong growth that it was able to raise $30-million along the way.
Keek’s 64-year-old CEO, Issac Raichyk, was hailed as an example of an older entrepreneur who could enjoy success in a world dominated by 20-somethings.
In that respect, it was a huge success.
The problem, however, was Keek had a difficult time monetizing its traffic to capitalize on its popularity. In the six months that ended Aug. 31, 2013, Keek lost $13 million. That’s almost twice the burn rate the company had during the previous fiscal year, when it lost $15 million.
After a much-speculated $100-million financing failed to materialize last year, the company agreed to sell itself to Primary Petroleum Corp., a Calgary-based listed junior energy company. Raichyk was replaced as CEO by Primary’s Mike Marrandino.
That seemed to mark the end of a spectacular but short run as an upcoming and coming social media service.
But Keek is still around, and it looks like it may have discovered a way to make money.
According to MediaPost, Keek will begin hosting advertisements in the U.S.
Keek will partner with Twitter’s MoPub and Google DoubleClick AdExchange for Web-based inventory. “We project about 10% of revenue will come from the real-time marketplace offering real-time bidding and programmatic, and 70% through advertising networks,” said Keek senior vice-president Bill Blummer.
It is left to be seen whether Keek can financially successful but it does illustrate that being popular doesn’t necessarily equate to driving revenue.
One of Keek’s problem as it exploded was the lack of a strong business plan to reap the benefits of having lots of users. It was a classic example of a startup that figured it would eventually find a way to make money.
In that sense, Keek was behaving in the same way as many other social media networks who adopted a build-it-and-we-will-make-money-later approach. Case in point is Twitter, which is driving significant revenue growth through advertising, while e-commerce is on the horizon.
While the future is still uncertain for Keek, the upside is it has another chance to become a business rather than simply a popular service.