Mixpo raises $4 mln to kill the banner ad

Startups focuses on bringing video advertising to local market

If there was one resounding theme at the AlwaysOn OnMedia conference this week, it was how static banner ads were increasingly ineffective, outdated dinosaurs. Seattle-based Mixpo is one of the companies trying to innovate around those ads with video. Just this week, Mixpo, which offers a software as a service to allow local publishers to exchange their static banner ads with video ads, raised $4 million from Madrona Venture Group, Growthworks and Yaletown Venture Partners.  

"There hasn't been much innovation around display ads, except at the big media companies that can create those rich-media banners," said Anupan Gupta, CEO of Mixpo, at the OnMedia conference in Manhattan this week. This is particularly the case for local advertising, which Gupta estimates is in the single-digit billions annually, given that some $12 billion in advertising goes to local ads.

Mixpo doesn't get involved in producing the videos, it gives its clients, such as NBC Local Medfia, Tribune, and Freedom Communications, the ability to mash-up images, video and text to create an entirely new banner experience. Basically, it's an easier and more cost-effective way for local publishers to sell a video advertising offering to their local merchant clients, such as auto dealers and local spas, as well as national chains that advertise locally.

Anything for local publishers to "up" sell to their advertising clients is definitely attractive. With advertising declining rapidly, who wouldn't want other solutions to keep prices stable? Gupta said the video advertising could be sold for up to 50% more to advertisers. At the moment, local advertisers pay roughly $8 to $10 CPM rates, he added.   

But how effective are these ads? "The overall engagement rate is much higher than click-through rate banners," said Gupta, who added that the ads are designed to be more "actionable" and longer, meaning they can run for 30 seconds - a lifetime online. 

While Gupta wouldn't release any figures on how effective the ads are, I believe they probably are. I'd imagine it doesn't take much to improve the engagement rate of banner ads.