Betaworks Tries to Solve the Mobile Ad Unit Problem

Startup Factory Pivots Tapestry, Places Focus Completely on Advertising

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Betaworks -- the startup factory responsible for hits such as Dots, Chartbeat and Bitly -- is throwing its hat into the advertising game, hoping it can build a better mobile ad unit.

Ads on the mobile web range from small and indecipherable to overbearing and difficult to click out of. So far only companies like Facebook and Pandora have come up with workable solutions. Their non-banner formats and extensive reach are good enough for advertisers who have few other options.

Now, Betaworks is taking an underperforming product, shutting down its consumer interface and turning it over to advertisers. Tapestry, which lets users make their way through stories via screen taps, will now make and distribute stories for brands. The 18-month-old company will be Betaworks' first solely focused on advertising.

"The biggest problem when you talk about banners and most mobile experiences that we look at is that they are still built with a click mentality," said Betaworks CRO Janet Balis in an interview.

Tapestry ads encourage consumers to make their way through narratives, which will be placed on websites of top publishers, including Vogue, the New York Times and New York magazine.

"It's early days for mobile advertising and I believe that ad formats designed to tell stories will be the winners," said Michael Zimbalist, Sr. VP-ad products and R&D at The New York Times, in an email. "Tapestry does just that," he said. (The New York Times is an investor in Betaworks.)

Showtime already experimented with Tapestry's ad unit, using it to pitch its show "The Affair" with the publishers named above and others. Tapestry creates the ads and places them on publisher websites. Advertisers pay a creative fee ranging from $5,000 to $10,000, and a cost-per-thousand impressions. Tapestry may at some point allow advertisers to create ads themselves.

The early results are promising, according to Mr. Zimbalist. "In one campaign, users spent about three times longer with the Tapestry ad than the average interstitial," he said.

For its Showtime campaign, Tapestry claims a 13% engagement rate, a completion rate of 54% and an average time spent of 44 seconds. But the true test for Tapestry will be how these ads perform over time. New ad formats often spark consumer curiosity, leading to high initial engagement rates that eventually drop.

Built-in support
By operating within Betaworks, Tapestry will be in a better position than a typical ground up mobile ad-tech startup. It will be able to tap into connections made by Betaworks publishers within the advertising industry.

It will also have easy access to those publishers, including Digg and Bloglovin', both of which are already running Tapestry ads. "The thing that a lot of companies share in Betaworks is that they don't want to do the traditional, throw a banner up and put ads," said Tapestry general manager Andrew Dumont.

"We don't have any traditional display across any of the properties," said Ms. Balis.

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