Rich-media Web advertisement company, Spongecell, has just announced a $10 million Series B round of funding Tuesday.
Safeguard Scientifics, Inc. led the round in the New York City-based Spongecell.
Spongecell is behind the growing interest in making the Web banner ads that usually just populate a page but are easily, mentally censored out by the savvy online surfer, into rich-media ads that move and are interactive.
Spongecell can seamlessly incorporate multiple actions in a single ad unit, providing consumers choices with how they want to interact with the ad.
Personally I am not a big fan of ads that do more than populate the page since it is distracting from the real reason I am on a particular page, advertisers want to be as noticeable as possible and Flash animation offers a higher probability that someone will click on the banner. Even though the concept of animating ads is nothing new, Spongecell has proven to be effective in its advertising opportunities since, last year, the company attracted angel investors such as Google chair Eric Schmidt.
Spongecell said that the new capital will go toward expand smaller product lines, like video ads, and eventually move into mobile ads.
Prior to 2008, Spongecell raised $3 million and was focusing on selling an event management widget that never gained much traction, then pivoted toward new media and advertising products where the company has been able to gross near $10 million.
The company was founded in 2005 by a team composed mostly of Carnegie Mellon Computer Science graduates and has taken in past funding from a group led by Halo Venture Partners, including The Interpublic Group of Companies and the Pilot Group.
Past campaigns from Spongecell also allowed for deeper user engagement such as sending a reminder to subscribers' phones and text messages the day of the event and even push reminders onto subscribers' Outlook or Google calendars.
While the company did not disclose current revenues, in 2009, the company told Vator it brought in $1.2 million in revenues.
“In order to support our growth within this fast-moving marketplace, we looked for a partner that offered us more than just capital,” CEO Ben Kartzman said about Safeguard in the company blog.
Safeguard Scientifics, Inc. (NYSE: SFE) has been proving growth capital for entrepreneurial and innovative life sciences and technology companies since 1953. Safeguard usually targets life sciences companies and technology companies in new media. The company stock was trading near $17 Tuesday morning.
Video advertising has quickly become the go-to area for online revenue since more people are looking for places that house all the content they want to watch on-demand.
While advertising, in general, is expected to increase 20% to $31 billion in 2012, according to eMarketer, online video is expected to grow more than twice as fast, or 52%.
With these strong projections, several companies in the video ad world have seen more substantial investments in the last few months, including Unruly, a five-year-old social video advertising platform. Last month, Unruly, announced a $25 million Series A investment from Amadeus Capital Partners, Van den Ende & Deitmers and Business Growth Fund.
In November, online video ad network BrightRoll announced a $30 million Series C round funding, with Trident Capital as lead investor and Scale Venture Partners, Adam Street Partners, and Comerica Bank also participating. Senior Managing Director at Trident Capital Evangelos Simoudis will join the BrightRoll board.
And back in August, video ad engagement company Innovid announced a $9.5 million round of funding led by Sequoia Capital, with participation from existing investors Genesis Partners and T-Venture (Deutsche Telecom). The round brings Innovid’s total raised to date to $17 million.
In coming months, Spongecell will launch some new products, including pre-roll video and dynamic ads.