Adelphic raises $2M, unveils mobile advertising service

Matrix Partners invests in start-up trying to ignite the mobile advertising space

It's tough enough that consumers have banner blindness on the Web. It's even harder to get their attention on a mobile device, unless of course the ads jump out at you, like Shrek does (see image).  However effective, this of course would be totally annoying, not to mention a little frightening.

But technology is getting there slowly, but surely. And, venture capitalists continue to pour money into the space to back teams that know how to crack the mobile advertising code. 

Adelphic Mobile announced Tuesday morning that it's raised a $2 million seed round of funding from Matrix Partners to improve the ability for advertisers and marketers to target users on mobile devices.

The company was founded by Changfeng Wang, a pioneer in the Internet advertising space as the chief scientist at Engage, which went public during the Internet bubble years. Wang was also at Enpocket and Quattro Wireless. The other founder is Jennifer Lum, who worked as VP of advertising operations, at Quattro Wireless, which was bought by Apple in 2010 for $275 million, and at m-Qube, which was bought by VeriSign. 

In mobile today, the "standard way people buy ads is through characteristics that don't align with their objectives," said Lum, in an interview with me. Basically, today, marketers can target mobile users based on the device they're using, or the carrier they're subscribed to, or their location. But marketers want more information than that. 

"What we're bringing to marketers is finer granularity," said Wang. "We look at variables that are predictive, such as pages that have been viewed or the way applications are being used, or the products that have been purchased on the mobile phone." 

Getting at this information has been a big challenge for marketers. 

"We felt these problems first hand at Enpocket and Quattro," said Wang. "There's a growing interest on behalf of advertisers to buy mobile ads, but there's a disconnect with how marketers can buy and publishers can sell those ads."

One of the biggest reasons why this information has been a challenge to obtain is because the current leaders in behavioral targeting are more familiar with cookie-based technology, which is used for the Web, but not for mobile, Lum explained.  

Cookie-technology does not work on mobile, said Wang. 

Big, fast and growing

While mobile ads may be far from perfect, it's not stopping marketers and advertisers from putting money to work. 

The mobile advertising market is a very nascent market. But it's growing like gangbusters.

Marketers are expected to pour about $2 billion into mobile ads in 2012, up 80% from $1.45 billion in 2011, according to eMarketer.

Those figures are expected to grow at 25% or more over the next five years. And, these projections, not surprisingly, may be underestimated. One study done in mid-2011, estimated mobile ads to hit $4 billion in 2015, about half of what eMarketer expects. 

Given the amount of money moving onto mobile, it's not surprising to see the amount of money being funneled into the space. 

Last year, Softbank invested $200 million in inMobi. Adfonic raised $7.5 million last fall. Another mobile ad start-up, Millenial Media raised $27.5 million a year ago, for a total of some $60-plus million in funding, since being founded in 2006. Then there's companies like newly-minted Kiip, which is hoping to help marketers and advertisers better target consumers playing social mobile games. Last August, Kiip raised $4 million in funding.  

Going for both the chicken and the egg

While Adelphic has a challenge in building critical mass in either its ad partners or publisher partners, it's reaching out to both in parallel.

Adelphic is currently working with a handful of customers on both the marketing side and publishing side. On one hand, Adelphic is working with publishers so they can provide this new behavioral data to advertisers. And, on the other hand, Adelphic is eduating marketers and advertisers on the type of data they can start collecting from publishers. 

At the moment, CPMs (cost-per-thousand impressions) are not at Web rates, said Wang. But with the improvement of targeting, he and Lum hope to change that.   

(Image source: mobilemarketer.com)