Money Matters

This Fast-Growing $60 Million Company Is All About Tiny Ads

(Source: www.inc.com)

As plenty of startups know, making money off apps can be a losing game.  Liftoff has been proving the opposite for the past five years.

The Palo Alto, California-based mobile marketing platform specializes in mobile display advertising. In other words, it helps facilitate ad placement for advertisers inside of apps. So, imagine playing a mobile game, and a little banner ad or interstitial prompt suggests downloading a retailer’s app or buying its latest hot-selling pair of leggings. That might be Liftoff’s handiwork in action, since the company creates and buys ads on behalf of brands.

And business has been good. With customers like CBS Sports and RetailMeNot, its three-year revenue growth surged 16,980 percent to $59.6 million in 2016–helping it land at No. 8 on this year’s list of the fastest-growing private companies in America.

Liftoff’s key innovation is that it only gets paid when the ads actually work. “We like to say we help advertisers de-risk their spend,” said co-founder and CEO Mark Ellis, who referenced the company’s policy of only charging clients when web users actually convert into customers or sign up for a company’s offerings. “It puts us on the same side of the table with [advertisers],” he says.

Moving to mobile

Liftoff launched in 2012, four years after Apple debuted the App Store and thereby accelerated the craze for all things mobile. Ellis and his co-founders, Harry Robertson and Phil Crosby — all alums of video-management company Ooyala — saw the writing on the wall. “We had the benefit of working together for many years,” Ellis said. “Each in our own way, we experienced firsthand the challenges of mobile companies that are trying to scale.”

CREDIT: Courtesy Liftoff

Their move was well timed. Mobile apps had become mainstream, their creators were increasingly monetizing through advertising, and established brands were intrigued enough to move money into the nascent medium. Marc Andreessen wrote in 2007, “I’ll assert that market is the most important factor in a startup’s success or failure.” With 2.2 million apps now living within Apple’s App Store alone, Liftoff’s choice of market has proved prescient.

The way forward

But after half a decade, it’s fair to ask: Is Liftoff’s target market still just as hot? In North America, owning a smartphone is the default, and it may feel like mobile innovation is done remaking the world. Meanwhile, growth in mobile advertising has been primarily reaped by Google and Facebook, rather than the programmatic display inventory that Liftoff depends on.

Perhaps that’s a blessing in disguise, in terms of what it says about advertisers’ needs, since Liftoff’s value proposition is bringing the ROI and accountability of search or social advertising to the banners and interstitials that smartphone users have become so accustomed to tapping past.

Indeed, despite the high level of smartphone saturation in the U.S. and most other developed countries, the number of engaged users still up for grabs continues to widen. Globally, unique mobile users grew by 5 percent, up 222 million, over the course of 2016, according to a joint report by creative agency We Are Social and social media management company Hootsuite.

What’s more, high-speed 3G and 4G connectivity rates increased by 9 percent year-over-year, with the result that more than half of the world’s mobile connections can now be considered “broadband,” adds the report. Total data traffic around the world now exceeds 7 billion gigabytes each month, with the average smartphone accessing nearly 2 gigabytes of data every month.

Accordingly, Liftoff is an international company. In addition to its Palo Alto headquarters, the company has offices in New York, London, Singapore, and Tokyo. “We’ll certainly be opening one more office before the end of this year, and then we’ll look to do a few more next year,” Ellis said. He explained that the particular interest in the Asia-Pacific region “is because both the world’s population disproportionately resides in APAC, but also, in terms of mobile usage, they rival North America, in terms of ad dollars being spent.” That, he added, equates to more mobile users: “We naturally want to be in the most compelling markets.”

More Info: www.inc.com

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