Mogreet gets $4M for mobile video advertising platform

Black Diamond Ventures backs mobile ad start-up amid boom in mobile advertising

It's not often that mobile ads get my attention. In fact, almost never. You could call it ad apathy. But with millions of eyeballs on mobile devices every minute, it's hard to ignore the potential to get messages across. After all, people spend more time on mobile phones than any other medium, including TV, which is about five hours a day, one report showed.

It's no wonder, therefore, that venture capitalists continue to pour money into services that can come up with creative ways to get people to perk up and take notice during these times. 

Mogreet, which delivers video campaigns to mobile devices, announced Wednesday that it's raised $4.1 million in a Series X funding, led by Black Diamond Ventures, and participation from DFJ Frontier, Ascend Ventures, Bryant Park Ventures and Draper Associates, which is Tim Draper's personal investment fund. This brings the total round to $14.1 million.

Mogreet plans to use the funds to expand internationally and to help consumers easily share content with one another on their mobile phones, with a new service called moShare. 

At its core, the Los Angeles-based start-up, which was founded in 2006, essentially helps brands reach its consumers with a video ad on mobile devices. Video ads on mobile have higher conversions than regular text ads, said James Citron, founder and CEO, in an interview with me. 

Mogreet works with a number of large customers, such as big retailers, like Bloomingdales and Gymboree, or with large media companies, such as Fox Broadcasting, the producers of Glee. In the case of Glee, fans can text "Glee" to 9444 and get updates on the program. Glee promotes the texting campaign on its shows. When a Glee fan texts in, he or she will receive an MMS (multi-media messaging service) with a link to a video campaign from Glee, as well as a link to share the update to their Facebook friends. This MMS comes from Mogreet. Because an user is opting in for these updates, the video views are very high. About 95% of the video campaigns are viewed, said Citron.

The average CTR (click through rate) for the MMS campaigns is also between 10% and 30%, Citron added. "Every advertiser knows that if they deliver video, it's the most engaging way to engage with their audience," said Citron. "Conversion is three times higher than plain text."

Mobile video economics

Mogreet gets paid per message sent, which works out to be a very low CPM (cost per thousand impressions) and a flat-rate license fee. The fees range from $50,000 a year all the way up to a few hundred thousand a year and the partner terms run between one and three years, said Citron.

Mogreet works on most mobile devices because it uses MMS, as roughly 290 million Americans can receive such messages. Only 40% of mobile users can receive a text link with a video through SMS, and even fewer people can see videos through app-based solutions.

In addition to its mobile video ad service, Mogreet is introducing moShare, which is a share button similar to the Facebook Like, Twitter, Google+ and LinkedIn share buttons you see at the top of this story. The moShare button is designed to help people share videos and articles to mobile devices. Just hit the link and type in a phone number and the article or video will automatically be retrofitted to be viewed on a mobile device. 

The moShare addition was built because Mogreet realized that the content that was most shared and viewed was typically breaking news stories. To that end, the company wanted to help people share those stories to mobile devices. Like most share buttons, moShare is free to publishers. 

Overall, Mogreet appears to be on a roll. Of course, you can't raise $4.1 million if you're not on to something. Citron won't reveal revenue figures but says that revenue grew a little under 500% from 2010 to 2011. His forecast is to increase that growth rate this year. The number of videos distributed has grown by 1000%.  

Mobile video and advertising market

The mobile ad market is clearly attractive to investors. Consider Millenial Media, a mobile advertising company that generated $103.7 million in revenue last year. The company went public last week and doubled its market cap to $2 billion. 

The U.S. mobile advertising spending is estimated to have reached $1.45 billion in 2011, up 89% from 2010, according to a January report from eMarketer. This year, mobile ad spend is expected to grow 80% to $2.61 billion. This is far more optimistic than comScore's prediction of $2.5 billion by 2014. 

As the mobile ads explode so does the venture-investment activity.

Recently, Adelphic raised $2 million for its mobile advertising service. Last September, Adfonic raised $7.5 million for its mobile ad platform while InMobi, another mobile ad network, raised $200 million from Softbank. Let's also not forget the major players Apple and Google in the space, both of whom bought their way into the mobile ad frenzy. Back in January 2010, Apple bought Quattro for $275 million. This came a few months after Google bought AdMob for $750 million at the end of 2009.