StrikeAd intro video

By | StrikeAd | No Comments

Our portfolio company StrikeAd recently released a new video describing what they do. I may be biased, but I think it is a great video, and well worth watching to learn more about the company and the latest trends in mobile advertising or to see a good example of how a well shot video can effectively introduce a complex product and lend gravitas to a business.

StrikeAd video

I’m sorry to post a link rather than an embed. I’ve spent 25mins trying to get the embed to work and I only have 30mins set aside today for blogging.

Startups flourish when new technologies take the first 3-5% of a market – case study mobile advertising

By | Advertising, Mobile, StrikeAd | No Comments

Startups appreciate in value most quickly when consensus starts to build that the market is tipping in their direction, and this is when the high multiple exits occur. Looking at the mobile advertising industry over the last few years suggests that tipping point is around 3-5%. It’s an old cliche that for the first ten years of this century every years was supposed to be the year of the mobile, then the iPhone and Apple app store arrived and the mobile internet finally took off.

After the arrival of the iPhone mobile inventory sky-rocketed and revenues at the leading mobile ad network, Admob (a DFJ investment), went in the same direction. Their success led to a $750m acquisition by Google towards the end of 2009 and Apple responded by acquiring Quattro, the second player in the market for $250m at the beginning of 2010.

The latest news in the mobile advertising industry is of course the Milennial IPO on March 28th (2012) – their market cap peaked at $1.9bn, but has since fallen back to $1.4bn.

As you can see from the charts below (courtesy of AllthingsD) mobile advertising was 3% of the total online ad market in 2010 and rose to 5% last year.

The first wave of successful exits in a new market are about growth in that market. After that the attention turns to dynamics within the market as competing models start to emerge. That is the thesis behind our recent investment in StrikeAd which seeks to exploit and accelerate the trend towards mobile advertising being bought in real time over exchanges, instead of over ad networks.


New mobile advertising data – market growing fast, Google and search dominate

By | Advertising, Mobile, StrikeAd | No Comments

US Mobile Ad Spending, 2011-2016 (billions and % change)eMarketer released some new data yesterday with the most detailed breakdown of the mobile advertising market I’ve seen to date. eMarketer have a history of being amongst the most bullish on this market. They were the first company to predict that 2011 mobile ad spend would top $1bn in the US, and they are predicting big growth again for 2012. Their new figures predict US mobile ad spend will reach $2.6bn in 2012, 80% up on the 2011 figure of $1.45bn (which was significantly higher than the $1bn eMarketer had forecast). Moreover, as you can see from the inset chart there is significant growth still to come.

For those of you who are sceptical about analyst forecasts eMarketer published a table which shows how different firms see the mobile advertising market. The eMarketer figures are roughly 2x the lowest estimates.

The new information for me was which companies have the leading market share and how the market breaks down between different advertising formats.

Search accounted for 45% of the market in 2011 ($653m) and the share of search is expected to rise to around 50% in the coming years. Google dominates search with around 95% market share. I’m not sure I’ve ever done a mobile search with a search engine other than Google.

Display was 31% of the market in 2011 ($445m) and the share of display is expected to rise to 37% over the next five years. Google also has the largest market share in display, but at 25% their position is not unassailable. Millennnial Media (who recently filed for IPO) and Apple’s iAd are equal second, each with around 18% market share.

If you’ve been reading this blog over the last week or so you will have seen that DFJ Esprit recently invested in StrikeAd, which plays in the display segment of the mobile advertising market. The interesting sub-trend within that market is the shift towards exchange traded media. As far as I’m aware there are no analysts forecasts for how mobile display splits between exchanges and ad networks but from our work we estimate that around 10% of mobile impressions are currently exchange traded, but we expect that to rise to around 50% of impressions over the next year or two.

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Advertising is becoming less effective, bringing product quality and service to the fore

By | Advertising, Conversocial, StrikeAd | 3 Comments

This chart (data from Comscore, published on shows that younger people are more ‘ad-blind’ than their elders, as shown by immediate recall. To me this is evidence that advertising works less well than it used to. It is interesting that delayed recall is better for millenials, and I think that probably reflects greater loyalty to brands that have genuinely impressed. Millenials are people born in the 1980s and 1990s, now aged 13-31.

If advertising is less effective then companies will be forced to turn more to product quality and service to build their brands and drive sales. This is clearly good news for us as consumers, but there are a couple of interesting business trends that come too. Firstly there is a call for innovations to improve product quality and customer service, most obviously using social media and leveraging mobile, and secondly there is a call for innovation that will help reverse the decline in advertising effectiveness (better targeting, more relevance etc.).

Two of our recent investments at DFJ Esprit play to these trends. Conversocial helps major brands like Groupon and ITV leverage improve their customer service using social media, and StrikeAd allows for real time targeting and campaign optimisation for mobile ads.


(our portfolio company Conversocial helps h

  • Innovative service plays – like Conversocial
  • Advertising will have to get more effective – StrikeAd
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Our recent £2m investment in StrikeAd

By | Announcement, DFJ Esprit, StrikeAd | No Comments


News broke last week of our latest investment – a £2m Series A in mobile advertising startup StrikeAd. As the world’s leading mobile demand side platform (or DSP) StrikeAd enables agencies to plan, execute, and measure mobile advertising campaigns at scale and with high efficiency. We spoke with a number of agencies in the run up to this investment and it was amazing how many of them have them have significant budgets to deploy on mobile, but lack the tools to execute the campaigns.

The idea of mobile advertising isn’t new any more and as many of you will know there have already been a couple of significant exits from this market – including DFJ investment Admob which was acquired by Google for $750m in 2009. StrikeAd is different from Admob and the other large mobile advertising businesses because it is not an ad network. The ad network business model is to buy inventory from publishers and sell it onto advertisers at a markup, usually without disclosing the margin they are making. Over the last couple of years on the web publishers and advertisers have started to eschew the ad network business model, preferring to connect directly via ad exchanges. Ad exchanges allow for better targeting and realtime buying which results in more efficient spend for advertisers and higher rates for publishers. This trend is now coming to mobile, and DSPs, of which StrikeAd is the market leader in mobile, provide the sophisticated software and supply connections that advertisers need to target and execute their campaigns in realtime.

So from a market perspective StrikeAd stands to benefit both from the growth in mobile advertising and from the shift within the mobile advertising market from ad networks to exchanges. My favourite stat on the coming growth in mobile advertising came from Mary Meeker’s Internet Trends 2011 presentation last October – in 2010 8% of time spent on media was spent on mobile, but only 0.5% of ad spend was on mobile. Improved devices, larger screens, and above all the growth in m-commerce will drive convergence in those figures.

StrikeAd also has a great team with a long history in AdTech. I’ve known founder and CEO Alex Rahaman for seven years now and in that time he helped grow a UK ad network called Unanimis and sell it to Orange, and also there led the spin out and finance of a very large open source adserver and exchange called OpenX. Alex and his team have been a delight to deal with since he first came to tell me he was setting up a mobile DSP and all through the investment process. Addtionally, Thomas Falk, who could well be Europe’s most successful adtech entrepreneur, provided the angel funding and is an important part of the team.

Finally, a quick word on the product. StrikeAd manages a complicated technical infrastructure that processes huge volumes of data at very high speeds. The software processes over 20bn ad impressions per month, combines them with third party data sources for targeting purposes, bids on the impressions if appropriate and serves ads if the bids win. Total round-trip time from ad impression called to adserved has to be less than 100ms to maintain a high quality experience for the smartphone user. Campaigns are targeted on a wide range of parameters, including demographic data, location, time of day, and device type, and they are optimised for a wide variety of outcomes, including click through, app download, click to call (and even click to call where the call lasts longer than a specified time). All of this is presented to the advertiser (normally via their media buying agency) in an intuitive user interface. In short, this is heavy duty software, and not the sort of thing that can be knocked up by a couple of hackers overnight.

We’re excited by the prospects for this business. Revenue momentum is strong and hopefully StrikeAd will quickly become a substantial company.

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