Mobile technology (i.e., smartphones and tablets) is considered one of the most promising fields for advertising. Three years ago, research company eMarketer forecasted that in the U.S. alone, where the mobile ad market now fetches $2.6 billion, is expected to reach a staggering $11.8 billion by 2016. Experts have also surmised that by 2013, advertising on mobile platforms will grow by 100%, and even higher growth is expected in European countries including Britain, France and Germany.
- Start-up of the week / Vonetize helps you kick your cable habit
- Start-up of the week / Gift cards on the go
- Startup of the week / Zuznow, bringing the Web to your phone
It’s no surprise, then, that the past year saw the birth of numerous mobile advertising companies that focus on ad placement on apps and sites, and work to optimize their presentation to consumers. Sizeable mobile advertising firms like Millenial Media have also unveiled IPOs in the last year.
Among those firms is Taptica, launched in January by technology and media entrepreneur Kobi Marenko. The company's goal, in its own words, is to "connect advertisers with their most relevant audiences and help publishers maximize their full earning potential."
Unlike Google's AdMob, which sells ads based on the cost per click (CPC) model, or cost per exposure (CPM) model, Taptica relies on cost per action (CPA). In other words, the advertiser pays based on the number of users who complete a transaction, such as registering for a game, or filling out personal details like address and phone number on a registration form or providing a credit card number.
A company – for example, a travel agency or gaming company, or an agency that buys advertising for them – gets a budget from the advertiser, and in exchange for that budget it is obligated to attract as many users as possible who will download an app, buy a product or perform some other action after viewing the ad.
Taptica positions ads on more than 1,000 applications and mobile search engines. The company’s revenue comes from advertisers, who provide Taptica with about $2-3 per user. To maximize the number of users, Taptica employs a computerized system it developed itself: Of several versions of a banner ad entered into its system, Taptica matches the most appropriate version of the ad to the user, based on data such as that user's residence, interests (drawn from patterns of behavior using other apps on the device) and cellular provider (which may hint variables like socioeconomic status). The system also studies a user's response patterns and knows when to pull the ad if response rates are too low.
Taptica's activities are aimed at the U.S. market, because, Marenko says, they lead the global mobile ad market. Combined with Britain, the U.S. accounts for roughly 60% of Google's spending on mobile ads. Taptica has about 100 clients, including gaming firms like EA and popular game developers like FIFA and The Sims.
"The gaming sector spends the most advertising money on applications in the U.S.," says Marenko. "After gaming comes the tourism sector, with sites like Booking.com and Hotels.com. In third place are marketing companies, which use mobile advertising to offer coupons to its users. A lot of consumer choices are made on mobile devices, and companies invest in advertising so that customers can compare prices by scanning barcodes on their smartphones."
In addition to company president Marenko, Taptica also employs CEO Sigal Bareket and 14 other staffers. The company raised $700,000 in funding from Marenko himself, former JDate CEO Ehud Levy and entrepreneurs at Marimedia.