Social media marketing platform Thumzup Media Corp. is crediting a unique fundraising strategy for the significant growth of its user and advertiser base this year.

Using Thumzup, participating brands or businesses can pay customers to create and post ad content on their personal Instagram accounts. It is currently raising capital under as a Regulation A+ offering and recently announced it has raised more than $750,000 in subscriptions to this offering, bringing total funding to more than $4 million.
The Sawtelle-based company, which is trading on the OTC Markets Group under the symbol TZUP, reported that its advertiser count has risen to 140 from six at the end of last year and that the number of weekly posts in June through its platform increased to 1,200 per week, up from 34 per week in January.

The strategy behind Thumzup is to connect customers with the opportunity to promote local businesses on Instagram and earn money on the side. 

Businesses and brands set their own compensation rates, advertise the offer to customers with signs or email notices and let Thumzup take it from there. Compensation rates can range from $1 per post to $1,000 per post depending on how much a company wants to spend on its marketing effort, and users get involved by downloading Thumzup’s application, which is currently available in Apple Inc.’s app store and the Google Play Store.

After beginning development in late 2020, Thumzup launched its test application and brought on its first beta client in 2021. Since then, it has been working on software development and programmatic testing for its dashboard. The Thumzup app launched commercially in January.

Thumzup has seen its user count grow to 730, compared to 97 at the beginning of the year. A user is defined as a unique account that has downloaded the app and made a post that’s eligible for payment.

Chief Executive Robert Steele said that he was inspired to start Thumzup because he saw lack of effort to democratize social media marketing and advertising in the same way that Uber Inc. and Airbnb have democratized ride- and house-sharing.

Through a new payment opportunity for social media marketing on personal accounts, he said, Thumzup provides consumers with another gig-economy opportunity. 

“We feel that the effectiveness of traditional ads that show up on your Facebook feed or your Instagram feed are not as useful as they used to be,” Steele said. “People tune them out, so with Thumzup we get real people to talk about brands and products that they love, and that’s really effective.” 

The company repeatedly cited a 2015 report from Nielsen Company LLC that found 83% of respondents felt that recommendations from people they knew were the most credible form of advertising. Steele said that Thumzup offers businesses a unique opportunity to advertise their services or products within trusted social circles by having their features posted on personal Instagram accounts, and that everyday people and micro-influencers get a higher response rate to posts than professional influencers do.

Other companies that support businesses looking to reward customers for creating their own ad content include Extole Inc., Spitche and Mention Me Ltd.

Steele previously co-founded Santa Monica-based Rightscorp Inc., a copyright enforcement software company. He also founded Steele Consulting, where he served as president for several years, and software company iBrite.

Thumzup charges a 30% markup, meaning that a company that is paying out a total of $1,000 to customers for ads would ultimately pay Thumzup $1,300 for its services and the support of its platform. Thumzup approves payment to the customer after ensuring the post is of quality, meaning that it is “commercially viable” content that is not negative, vulgar or created by a bot or spam account.

Steele said that most of its clients so far have been from the restaurant or retail sectors. L.A.-based clients have included retail store Hallowed Ground, wellness center CryoZone and restaurants such as Tavern on Main and Belles Beach House.

“Part of the reason why you haven’t seen more businesses do these types of promotions is because they have no way to regulate the quality,” Steele said. “We’re providing value to the advertiser because there’s a quality-control mechanism … the user has given the advertiser permission to text-message and to direct-message them, so when they make a post that is not suitable to be paid, then the advertiser can communicate with (the customer) and coach them.”

Thumzup is raising a $9 million equity crowdfunding round at $4.50 per share. According to its most recent report to the Securities and Exchange Commission, the company is not yet profitable and has generated minimal revenue. For the first quarter of this year, Thumzup earned $1,770 in revenue with $722,752 in net losses, which it stated was primarily due to administrative costs and research and development expenses.

“Historically, the path to immense success for companies like Facebook has often involved initial financial losses on marginal revenues, as their primary focus was on user growth and key metrics,” a Thumzup spokesperson said. “Similarly, Thumzup is currently prioritizing growth in vital areas, specifically expanding their platform’s advertiser base and increasing the number of individuals monetarily rewarded for their social media posts.”

Steele said that Thumzup plans to support payment for sponsorship on additional social media platforms, as opposed to solely on Instagram, and to allow customers to be rewarded for video ad content. Right now, the app supports payment for the creation of photo content only. It is also looking to work with more e-commerce retailers and uplist its stock from the OTC to the Nasdaq or the New York Stock Exchange.