Foundry Group bets $8M that isocket is the "Admeld of premium advertising"
From the outside, online advertising seems simple: Publishers sell ad space, advertisers buy ad space, consumers ignore ad space.
But behind the scenes there’s a tangled web of ad tech companies which slice, dice, buy, sell, target, retarget, and optimize these ads in the micro-seconds between when a consumer visits a Web page and the ads are served.
The weird thing is, most of the adtech “innovation” around ad exchanges, SSP's, DSP's, RTB’s, and private exchanges has focused on “non-premium” or unsold “remnant” inventory. It’s big but only represents only about 25 percent of total display ad spending. The remaining 75 percent of the market known as “premium,” “direct,” or “guaranteed” inventory was sold the old fashioned way, with a real life human making sales calls and zero technical sophistication.
Three-year-old isocket is one of the first companies attempting to automate the sale of premium display ads. It’s regarded by many in the industry as the most successful (founder and CEO John Ramey called it an “18 month lead”). Today, venture capitalists agree: The company announced $8 million in Series A funding led by noted adtech investor Foundry Group, with participation from Costanoa and previous investors DFJ, SoftTech, Accelerator, Quest, and Blumberg Capital.
The company also announced the launch of BuyAds Pro, an agency-grade self-serve ad buying platform. It also hired former Yahoo VP Business Operations & VP Operations Finance Mark Liao as its CFO. Seth Levine of Foundry Group and James Beriker, former Yahoo VP of Advertising and current CEO of Efficient Frontier and Dapper, have joined the company’s board of directors.
More than 1,500 premium publishers, including AOL, Reuters, and Gawker, as well as thousands of advertisers like Salesforce, BMW, and NRA, use isocket’s platform. Before isocket, professional media buyers who didn’t want to facilitate ad buys over the phone and email were simply out of luck. The new product, BuyAds Pro, brings the simplicity isocket’s BuyAds.com previously offered to one-off purchasers.
“There’s no reason buying a premium online ad should have 900% more overhead cost than buying a comparable TV ad, and our mission is to fix that," says isocket’s CEO. The company claims that its one click ordering system offers in minutes what used to take days of manual effort and an average of $41,000 in overhead costs.
Newly-hired CFO Liao calls replacing the premium ad-buying with APIs and Web apps, the next big opportunity in online advertising. “When direct ad buying and selling get easier, the tide will rise for everyone – advertisers get digital access to higher quality, guaranteed inventory, while publishers are able to properly monetize their best inventory," he says.
Foundry Group’s involvement, and more specifically that of Levine, is a ringing endorsement of isocket’s early progress. The firm has made numerous successful adtech bets, including those in Admeld (acquired by Google in 2011 for $400M), Federated Media, Triggit, Medialets, and Feedburner. Levine and others in the industry have referred to isocket to “the Admeld for premium advertising,” which is a lofty, if not premature, comparison.
Prior to closing its financing, isocket recently grew its team from 10 to 15 members, including the additions of Liao, as well as Admeld’s Casey Saran and Rubicon Project’s Lisa Backman. Ramey predicts doubling this number in short order, including significant engineering hires and the formation of the company’s first ever sales and marketing team, complete with a requisite New York office.
Expect the budgeting departments at leading publishers and advertisers to be thrilled with the additional automation of the ad buying process. On the other hand, forcing change on an industry led by people whose very job-security is tied to resisting it can be a tall order. Both publishers and advertisers employ teams of staff that would rather their premium ad sales not become commoditized.
Isocket will likely encounter increasing competition from both new and incumbent companies. Giants of the “remnant” ad tech space like Rubicon and OpenX have made their own attempts to move toward programmatic direct advertising with little success, in many cases because they attempted to repurpose existing technology for this alternate use rather than developing new systems from the ground up. New companies such as ShinyAds have also attempted to duplicate the early success of isocket as well.
The above notwithstanding, if BuyAds continues to take off the way Ramey and Levine project, don’t expect anyone to concede the market to them. Online advertising, like anything else, will continue to seek the path of least resistance. In the case of premium ad buying this means automation.