When Medialets launched the first rich-media ad unit in 2009 -- a shakeable iPhone ad for Dockers that used the smartphone's accelerometer -- it was billed as an exciting glimpse into the potential of mobile advertising and a harbinger for the wealth of ad dollars that were likely to follow. But mobile as an ad channel has remained comparatively small, partly because its complexity makes buying mobile ads difficult for marketers.
Three-and-a-half years later, the mobile-ad-serving startup believes it's markedly closer toward solving that problem as it signs a contract to be the worldwide mobile and tablet ad server for Publicis Groupe 's Vivaki division, whose technology is used by global media networks Starcom Mediavest and ZenithOptimedia and digital-marketing agencies Digitas and Razorfish.
The eight-figure deal is Medialets's largest to date.
Vivaki awarded the deal to Medialets after an extensive bid process that began in late 2011 when the agency network sent RFPs to a dozen ad-server companies. Four companies -- all of them startups -- proceeded to the final bid round with Medialets winning the deal "by a considerable margin," said Grace Liau, Vivaki's senor VP-platforms and ad operations.
For Vivaki, the advantage of having a preferred ad server is being able to provide insight into the server's technological development and, in turn, use a product catered to its clients' needs, Ms. Liau said.
Whether other holding companies will follow suit with similar deals is unclear. WPP's Group M, for its part, has no plans to name a dedicated mobile and tablet ad server, but is narrowing down its list of vendors in the interest of simplifying the inherently intricate mobile ad process, John Montgomery, chief operating officer of Group M said.
"There are so many things we still have to learn and develop in the mobile space in terms of tracking, privacy and what to measure," he added. "If you have a supplier who can add to or integrate with your technology stack or the technology you need, that would be one reason [to use them exclusively]."
The other benefit of simplifying the process is that it may lead to more mobile-marketing dollars.
While users' eyes have started turning toward their handheld devices, marketing dollars have not transitioned as quickly, and media companies and marketers alike are skeptical about the viability of mobile- and tablet-first business models, CEO and founder Eric Litman concedes.
He said the answer lies in simplifying the process. Medialets's technology allows for easy ad delivery across all display variations, Mr. Litman said. (According to Chief Operating Officer Richy Glassberg, there are more than 490 ad sizes across three operating systems and 12,000 devices.) By streamlining that process, Medialets hopes to allay any fears regarding mobile marketing and increase investment and creativity in the space.
Ms. Liau said Vivaki was especially interested in the promise of rich-media mobile advertising and selected Medialets in part for its expertise in serving those across phones and tablets. More established ad-serving companies involved in the bid "still looked at mobile-ad serving through the lens of display ad serving and that was a big problem, because mobile is a very different beast," she said.
Effective cost per thousand (eCPMs) for mobile rich-media ads were $0.74, one and half times more than non-rich-media ads, according to a recent study from another ad server, MoPub.
Based in New York, Medialets received $10 million from venture-capital firm Greenspring Associates on Nov. 5, bringing total funding to $28.4 million. Medialets is not cash-flow positive, but a company spokeswoman said it is approaching profitability.
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