DoubleRecall turns paywalls into advertising dollars

Pay walls are often dead ends for publications and consumers. But a new advertising startup is turning them into branding opportunities that give consumers access to premium content and provide advertisers a way to engage users and build up name recognition.

DoubleRecall, a Y Combinator company graduating today, is unveiling its advertising platform for the web and on mobile apps. Publishers who want to offer premium content or in-app purchases can insert DoubleRecall ad units, which require a user to read a short message and type in a few highlighted words provided by the advertiser to gain access. The process is simple and unlocks the rest of an article for a limited amount of time or provides a user with an additional level or virtual goods in an app.

The power is in getting people to type in information, which ratchets up their recognition of the sponsor. And it allows brands to subtly associate their name with certain ideas. For example a soft drink can have users type in their brand name and the word “skinny” to gain access. DoubleRecall, which first launched this platform in Europe last year, said the ads boost name recognition by 11 times over traditional methods. That makes DoubleRecall valuable for brand advertisers, who are willing to pay a premium for ad tools that are engaging.

The company said the ads can fetch a CPM, or cost per thousand impressions, of up to $120; around ten times that of a traditional banner ad. That makes this lucrative for publishers and developers who are looking to squeeze more money out of their products. And it allows them to engage a wider audience — engagement rates are 90 percent — without chasing them away with a traditional paywall.

“It’s like killing three birds with one stone,” said Julien Coustaury, co-founder of DoubleRecall. “Advertisers are happy with more bang for their buck; publishers are happy with monetizing without a pay wall; and readers can get premium content without paying hard cash for it.”

It’s not just about avoiding the pay wall. DoubleRecall also provides a social ad at the conclusion of the story that allows a user to retweet the brand’s message, reply to the sponsor or favorite them. They can also click through to the advertiser’s website. DoubleRecall says the click-through rate is 12 percent on these ads. And the social feedback can help advertisers tweak their campaign on the fly.

DoubleRecall is already working with Press Enterprise, Addmired and Impremedia and has lined up sponsors such as Mercedes and Ford (s f). You can see a demonstration of how the ads appear by reading some of the stories in the latest news section of CNN Money(s twx).

I think this will be an intriguing idea for a lot of media and mobile publishers. There are a lot of companies looking at pay walls right now, but they come with a trade-off in the loss of eyeballs. The New York Times (s nyt) lost 24 percent of its page views when it installed its metered pay wall and though it’s making more money through subscriptions, the whole effort appears to be revenue neutral. And as my colleague Mathew points out, pay walls also open the threat of free competitors stealing away users.

If DoubleRecall can scale up and maintain its performance, the platform could be a boon, helping generate revenue while appealing to the largest audience. But are there enough advertisers out there looking to do brand advertising through DoubleRecall? And will consumers grow tired of these ads? We’ll have to see, but if the ads are that good at engaging users and leaving a lasting impression, then they may be worth it. This could be very helpful for mobile developers, who are looking for ways to monetize their apps. While the market is shifting to freemium, many developers are still struggling to make money through advertising and in-app purchases. Having another tool to monetize content in a light weight way could provide some added revenue for developers.

DoubleRecall got its start in Slovenia and expanded across Europe before being selected to Y Combinator. It is now based in Palo Alto, Calif. and is working on building up business in the U.S. The company is another example of some creative thinking in mobile advertising, something we’ll be talking about at GigaOM’s Mobilize conference in San Francisco on Sept. 26-27.