Tapjoy Inc. has landed $21 million in financing led by Rho Ventures, which it will use to expand its distribution and publishing services for social and mobile applications.

All existing investors, including InterWest Partners, North Bridge Venture Partners and D. E. Shaw Ventures, also participated in the funding round, which brings the company’s total funding to more than $40 million. The new capital will be used to fund Tapjoy’s efforts to grab market share in application distribution and monetization on Apple’s iOS, Google’s Android and Facebook platforms.

The funds will also enable Tapjoy to further invest in application media licensing and incubation opportunities.

Since its last funding round, Tapjoy has rolled out alternative payment services for social developers and a turnkey virtual goods storefront for mobile developers.

The company’s distribution services include the cross-platform viral notification channel Social K-Factor, the cross-application promotion bar AppStrip and a pay-per-install advertising network.

Tapjoy’s clients and partners include GameDuell, Tapulous, Glu, Pinger, Playdom, Kayak, Barnes & Noble, MTV, Bing, Fandango, Groupon and Intuit.

Mobile Commerce Daily’s Dan Butcher interviewed Shannon Jessup, vice president of global sales and marketing at Tapjoy, Santa Barbara, CA. Here is what she had to say:

How will Tapjoy invest the new funding?
We plan to use the funds to continue to expand our product lines and technology capabilities, specifically on the iOS, Android and across emerging application ecosystems.

We will also continue to expand internationally, including opening new international offices and hiring in our existing Tokyo and London offices, as well as hiring in our U.S. headquarters.

We will also use the funds to further invest in application media licensing and incubation opportunities.

What is Tapjoy’s growth strategy going forward?
Currently we are investing heavily to maintain our lead on the iOS and Android platforms as the leader in virtual goods monetization and pay-per-install distribution.

We will continue to partner with relevant companies on emerging platforms as opportunities arise. International expansion will also be a key driver of our growth in 2011.

What is the current state of mobile applications and advertising to drive downloads? What is the outlook for 2011 and beyond?
Pay-per-install advertising is currently the most cost-effective and scalable method of promoting mobile applications on the  iOS and Android platforms.

Moving forward, as free-to-play applications become more ubiquitous, more games will become accessible to consumers, fueling the growth of the entire industry.

As more and more application developers embrace the freemium model and adopt virtual goods monetization, the use of PPI advertising will subsequently rise.

Final Take