Having “incubated” rich media mobile ads firm Celtra in 2006 while he finished his graduate studies at Babson College, CEO Mihael Mikek has seen the pre-smartphone days when SMS ads were all the rage. Eventually the mobile market began to take off and after grabbing $7 million in funding since 2010, the Boston-based company has enhanced its mobile rich media ad offering and expanded to over 50 people today with offices across the U.S. and an engineering team in Ljubljana, Slovenia.
Moreover, Mikek says that his company is profitable and experiencing 400% year-over-year revenue growth in 2012. And, recently the company announced a rich media ad that provides the consumer with the ability to find a local, store location within a mobile display ad – see the release.
AdExchanger spoke to Mikek about his company and mobile momentum, in general.
AdExchanger: Are rich media and mobile coming together around real time bidding or programmatic buying?
First of all, rich media and mobile, it's not very clearly defined what it is. Usually, when you are talking about HTML5 ad formats, you are talking about formats that don't take you out to a landing page and can actually provide interactivity in the ad -- that's what's usually called rich media.
Real time bidding and programmatic buying are definitely the future but only about 10% of the market on desktop -- and on mobile, it’s even less.
Big advertisers still buy directly with brands they trust. For instance, all this real time bidding and so on makes a lot of sense for selling the long tail traffic. If you have valuable inventory on Bloomberg or New York Times, there are still a lot of deals done directly.
We do more direct deals because they are higher value, higher CPMs, and therefore the rich media serving is not an issue. Nevertheless, today, our clients work with major ad networks and some of the traffic is coming through real time bidding engines. Celtra has been certified to run on most of the leading platforms out there in the market. We work, on one hand, with the buy-side platforms who are getting traffic from real time bidding engines. And then, we also work with companies such as Nexage.
For the time being, if I look at our volume, a small percentage of impressions is flowing through real time bidding.
Everybody likes to talk about how mobile has “arrived.” What's your take on the state of mobile advertising today?
First of all, very soon, mobile will not live in a separate silo from desktop. It will all just be digital. The reason is - if you look at Apple in Q3 this year, 90% of all devices that they sold were running a mobile OS and have touchscreen – and, only 10% of devices are Macintosh computers.
When you think about this explosive growth of mobile and how people are using those devices because of all the trial services and so on, it's not about, "Okay, people are using mobile versus desktop." What I see here is we are just facing the evolution of computing. Computing is becoming mobile. I'm predicting that very soon, we'll see the convergence of OS platforms.
And very soon, we'll see a new operating system that will be developed for touch screens that will power all devices from desktops to notebooks to tablets and so on. This software will pretty much look like the mobile software of today.
It’s a very interesting period. There are a lot of opportunities because software will need to be rewritten for new devices.
There's one other thing - one of the problems in digital is that there is a lot of duplication where you could be using three devices at the same time. I think, to a certain extent, there's a challenge for advertisers on how to get the same results out of digital that they were getting from traditional mediums. People are multitasking and I think we all have a problem with attention spans as a society.
In regards to your new store location rich media ad, do you see it as a solution to “showrooming” for big box retailers – what are your thoughts there?
I'm a big believer in online shopping. It will get easier and easier to do transactions on mobile devices. On the other hand, obviously, there are certain types of things that you don't buy online, and you still want to touch things physically.
There will always be businesses in the physical world that will want you to go there and visit them - perhaps some companies will do much more business online, but they will still use their store as a part of the marketing strategy because they want people to connect with their product. For them, it becomes like a showroom - or marketing.
How does sales work at Celtra? Are you working through partners, platform partners that resell your technology, or is it all sold through a sales team?
It all starts with the sell side. Before you can sell anything to an agency, it's about a built-in presence and reach. We develop our ad products such as Ad Creator so you can easily create with them and run them everywhere. And, we go to publishers and we make sure that the publishers have support so that they can run our formats.
Obviously, all those big publishers, they have direct sales teams. We get paid by publishers who are selling ads directly and using our technology to create, serve and measure rich media campaigns.
In addition to publishers, we work with all the major ad networks, companies such as Jumptap, Mojiva, Millennial and many other networks. Some of them use Celtra for designing, building and selling rich media ads. Some just certify with us and when agencies come to them with buying rich media campaigns, they can say, "Okay, we support Celtra." That means that they take Celtra tags, Celtra ads. This is all on the sell side.
On the buy side, we're working with 8 to 10 of the top media agencies in the U.S. We have a team that's going to agencies and doing everything from educating them where it's going to run to how it needs to be designed. We want to influence their buying decisions when they are planning. When they are making plans, we want to make sure they plan rich media and they also prefer us as a vendor.
Usually, they will send out the media plan. They say, "We'll buy rich media," or they recommend three vendors and we want to be one of them. And sometimes, agencies are paying us directly. Today, it's about half now. We are seeing a little bit more than half of the revenue coming from the sell side and another half from the agencies. That's how we are getting paid. It's all a CPM-based transaction model.