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Pixalate tunes into $18.1M for fraud prevention in television, mobile advertising
Pixalate raised $18.1 million in growth capital for its fraud protection, privacy and compliance analytics platform that monitors connected television and mobile advertising.
Western Technology Investment and Javelin Venture Partners led the latest funding round, which brings Pixalate’s total funding to $22.7 million to date. This includes a $4.6 million Series A round raised back in 2014, Jalal Nasir, founder and CEO of Pixalate, told TechCrunch.
The company, with offices in Palo Alto and London, analyzes over 5 million apps across five app stores and more 2 billion IP addresses across 300 million connected television devices to detect and report fraudulent advertising activity for its customers. In fact, there are over 40 types of invalid traffic, Nasir said.
Nasir grew up going to livestock shows with his grandfather and learned how to spot defects in animals, and he has carried that kind of insight to Pixalate, which can detect the difference between real and fake users of content and if fraudulent ads are being stacked or hidden behind real advertising that zaps smartphone batteries or siphons internet usage and even ad revenue.
Digital advertising is big business. Nasir cited Association of National Advertisers research that estimated $200 billion will be spent globally in digital advertising this year. This is up from $10 billion a year prior to 2010. Meanwhile, estimated ad fraud will cost the industry $35 billion, he added.
“Advertisers are paying a premium to be in front of the right audience, based on consumption data,” Nasir said. “Unfortunately, that data may not be authorized by the user or it is being transmitted without their consent.”
While many of Pixalate’s competitors focus on first-party risks, the company is taking a third-party approach, mainly due to people spending so much time on their devices. Some of the insights the company has found include that 16% of Apple’s apps don’t have privacy policies in place, while that number is 22% in Google’s app store. More crime and more government regulations around privacy mean that advertisers are demanding more answers, he said.
The new funding will go toward adding more privacy and data features to its product, doubling the sales and customer teams and expanding its office in London, while also opening a new office in Singapore.
The company grew 1,200% in revenue since 2014 and is gathering over 2 terabytes of data per month. In addition to the five app stores Pixalate is already monitoring, Nasir intends to add some of the China-based stores like Tencent and Baidu.
Noah Doyle, managing director at Javelin Venture Partners, is also monitoring the digital advertising ecosystem and said with networks growing, every linkage point exposes a place in an app where bad actors can come in, which was inaccessible in the past, and advertisers need a way to protect that.
“Jalal and Amin (Bandeali) have insight from where the fraud could take place and created a unique way to solve this large problem,” Doyle added. “We were impressed by their insight and vision to create an analytical approach to capturing every data point in a series of transactions — more data than other players in the industry — for comprehensive visibility to help advertisers and marketers maintain quality in their advertising.”
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Sensor Tower makes its first acquisition with deal for market intelligence company, Pathmatics
Mobile app market intelligence firm Sensor Tower has made its first acquisition. The company this morning announced it’s acquiring Pathmatics, a market intelligence company which will now combine its paid digital and social media platform with Sensor Tower’s business. Deal terms were not detailed but include an undisclosed growth investment from Riverwood Capital into Pathmatics.
The acquisition will allow the companies to offer an expanded set of digital and mobile advertising insights to their respective customers, including new social insights for TikTok, YouTube mobile and Snap this year, powered by Sensor Tower.
The companies also will introduce digital TV (over-the-top) insights, expanded coverage for mobile apps and ad insights, and will extend Pathmatics’ social and digital coverage globally.
The deal follows Sensor Tower’s first significant fundraising last year, with $45 million also from Riverwood Capital. Though Sensor Tower had been profitable since its launch, now serving more than 350 enterprise-level customers for its app and ad intelligence products, it chose to raise the additional capital in order to further grow its business, with investments in hiring, marketing, infrastructure and other expansions.
With Pathmatics, it’s buying a company that’s also been on its way up. The company had seen over 100% year-over-year growth for its own market intelligence business since launching in 2011. It now has over 250 brands, media and advertising agencies as customers, as well as over 7,000 users of its platform, representing over 200% software-as-a-service growth since 2018.
The two businesses are teaming up at a time when digital advertising is also on the rise, in part due to the shifts in the market attributed to the pandemic. As more businesses began operating online last year, advertisers increased their digital ad spending by 12.7% to $368 billion, per eMarketer. And digital advertising will account for 58% of media spending in 2021.
We understand Sensor Tower acquired both the IP and its more than 60-person team from Pathmatics as a result of the acquisition. The entire team will join Sensor Tower, with the executive suite now being a combination of both companies’ leaders. Sensor Tower co-founder Alexey Malafeev will remain as CEO while Gabe Gottlieb, CEO and co-founder of Pathmatics, will become chief strategy officer.
Historically, Pathmatics had provided brands and agencies with all creative used by advertisers, spend and impression, and path to publisher and viewer, to help them reduce waste from their budgets, improve their own marketing and predict their competitors’ next move.
Going forward, both sets of customers will be able to opt into the other company’s solutions, including mobile, social media and digital insights. Longer-term, the two companies will work together to bring more products to the market for their over 600 combined customers across 50 countries. Among these is a plan to add Pathmatics’ Facebook, Instagram, Twitter and other digital ad intelligence capture into Sensor Tower, as well as an effort to augment Sensor Tower’s data set with ad insights beyond app installs.
These features will make the product a better fit for larger brands looking into all aspects of the competitors’ campaigns, ranging from how they’re advertising for app installs to how they’re building brand awareness.
The deal officially closed on May 17, 2021, Sensor Tower says.
Santa Monica-based Pathmatics had raised $7.7 million to date from Upfront Ventures, BDMI and Baroda Ventures.
“As the global economy increasingly shifts to digital, it’s imperative that companies can understand and
navigate the entire digital landscape — from mobile to web and desktop — using accurate and insightful data,” noted Ramesh Venugopal, principal at Riverwood Capital, in a statement about the acquisition. “The combination of Sensor Tower and Pathmatics presents a unique and valuable offering to customers allowing them to take advantage of a broad range of datasets with increased focus on consumer privacy and deep digital insights that leaders in every industry will need,” he added.
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Millennial Media’s Paul Palmieri launches Tradeswell, a startup promising to fix e-commerce margins
A new startup called Tradeswell said it’s using artificial intelligence to help direct-to-consumer and e-commerce brands build healthier businesses.
The company is led by Paul Palmieri, who previously took mobile advertising company Millennial Media public and then sold it to TechCrunch’s corporate parent AOL (now Verizon Media). Afterwards, Palmieri founded Grit Capital Partners, but he told me he decided to join Tradeswell as a co-founder and CEO because he was so excited about the vision.
Palmieri said that just as Millennial helped independent app developers get smarter about advertising, Tradeswell gives upstart e-commerce companies the data they need to compete with “the big platform behemoths.”
It’s no secret that a number of direct-to-consumer companies have struggled to make a profit due to challenging unit economics. Palmieri suggested that one reason for this is the fragmentation of their tools and data.
“If you’re selling something like Campbell’s Soup, you want to figure out, how is your tomato soup business and your chicken soup business?” Palmieri said. “Today, brands are saying, ‘How’s my Amazon business? How’s my Shopify business? How’s my Shopify business on Instagram?’ ”
So rather than relying on those platforms for data, Palmieri suggested brands want an independent platform that they trust to bring everything together, “where it’s a combination of a Bloomberg terminal plus a trading platform.”
Tradeswell’s AI focuses in six key areas of an e-commerce business: marketing, retail, inventory, logistics, forecasting, lifetime value and financials. Palmieri suggested that in some cases (like ad-buying), Tradeswell will replace existing software, while in other cases it will integrate.
“Think of us as a neural AI layer, where [a brand] might have different platform relationships, which are the fingers, and we’re the AI brain,” he said. “We’re giving brands insights and forecasts: If you make this change, we anticipate XYZ will happen.”
In some cases, like the aforementioned advertising, Tradeswell can also support full automation, so that merchants don’t have to worry about “setting up and tearing down hundreds of campaigns.”
The key, Palmieri said, is that the platform has access to the business’ full financials, so it can optimize for net margins, rather than simply driving the most impressions or clicks or sales.
While Tradeswell is only coming out of stealth mode today, it’s already been working with more than 100 brands. For example, Steve Tracy of Red Monkey Foods and San Francisco Salt Company said in a statement that the startup’s “unique, comprehensive, algorithmic approach has helped us grow sales, identify commercialization opportunities and forecast far more accurately.”
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Bear and bull cases for Unity’s IPO
Eric Peckham is the creator of the Monetizing Media newsletter and podcast. He was previously TechCrunch’s media columnist.
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In the first part of my outline on the company, I explained the scope of Unity’s multidimensional business, its R&D efforts and competitive positioning, and its grand vision for interactive 3D content across every industry.
In the conclusion, I’ll dig into Unity’s financials and how it is marketing its public listing before turning to discuss the bear and bull cases for its future.
Key data points from Unity’s S-1 filing
- Revenue grew 42% year-over-year from $381 million in 2018 to $542 million in 2019 with operating losses of $130 million and $150 million respectively. It hit $351 million in revenue by June 30 this year. That pace suggests a 2020 total around $700-$750 million (+30% year-over-year).
- The company has gross margins of about 79%, although costs are overwhelmingly centered in R&D and sales and marketing, which account for 47% and 32% of revenue, respectively.
- The company has cumulatively lost $569 million up to this point, including a $163 million net loss in 2019.
The geographical source of Unity’s revenue in 2019 was:
- 34% EMEA
- 28% U.S.
- 21% APAC — excluding China
- 12% China
- 5% Americas — excluding U.S.
Unlike many other Western tech companies, Unity operates freely in China.
In Part 1, I explained each of Unity’s seven main revenue streams. During the first half of 2020, revenue by segment broke down to:
- $216.9 million (62%) from Operate Solutions (products for managing and monetizing content), the “substantial majority” of which is from the ads business.
- $101.8 million (29%) from Create Solutions (products and consulting for content creation), two-thirds of which is from Unity Pro subscriptions.
- $32.7 million (9%) from Strategic Partnerships and Other (Unity Asset Store and Verified Solutions Partners).
The S-1 discloses that less than 10% of overall revenue is from “newer products and services, such as Vivox and deltaDNA” (referencing key 2019 acquisitions for its Operate segment).
Some takeaways from this data:
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Streaming service Quibi sells out of its $150M in first-year ad inventory
Jeffrey Katzenberg’s mobile-only streaming service Quibi hasn’t even launched, but it’s already sold out of its $150 million first-year advertising inventory, the company announced this morning. The service, which officially debuts in April 2020, added new advertisers Discover, General Mills, T-Mobile and Taco Bell, which join Quibi’s existing lineup of ad partners Procter & Gamble, PepsiCo, ABInBev, Walmart, Progressive and Google.
In addition to being an advertiser, T-Mobile only days ago announced a partnership with Quibi, as well.
The streaming service had cited T-Mobile’s “impressive 5G roadmap” as one of the reasons it went for the deal, but T-Mobile’s advertising contribution probably didn’t hurt either.
For an entirely unseen product, it’s notable that Quibi is already sold out for year one. That speaks to its ability to sell brands on its core concept — a sort of Netflix for the mobile era, where higher-quality content is chopped up into smaller bites (or “quick bites”), and viewable no matter how you hold your phone.
Advertisers are offered either a six, 10 or 15-second pre-roll spot before the Quibi content streams. And unlike on YouTube, where some of the ads can be skipped after a few seconds — or removed entirely by way of subscription — Quibi’s ads won’t have a “skip” button. Quibi also hints at a unique offering for advertisers, saying that it will be “experimenting with a number of other innovative ad formats.”
In addition, Quibi is tackling one of the issues advertisers have with YouTube, where a brand’s message is often run against extremist content. YouTube has tried to fix the problem with better controls, and brands have at times left YouTube. Some brands even got together to form a global alliance for “responsible media,” which basically means they’re ready to more formally fight this problem.
It’s no surprise, then, that these companies are willing to help boost a potential YouTube competitor — one which promises they won’t find their ad played ahead of child exploitation or white supremacist content, among other things — as has been the case on YouTube, at various points.
However, what may be most responsible for the early ad sales is Quibi’s founder, Jeffrey Katzenberg. He’s not someone the industry is willing to bet against at this point.
“We are seeing a tremendous response from advertising partners who recognize the value of Quibi’s premium, brand-safe, mobile platform that is focused on the highly coveted millennial audience,” said Meg Whitman, CEO, Quibi. “The world-class brands that are partnering with us in advance of our launch is remarkable, and it speaks to the opportunity in front of us,” she said.
Quibi announced in June it had already booked $100 million in ad sales, with $50 million to go. But even if it hadn’t sold out, Quibi still would have been a go for launch — Quibi is backed by $1 billion in funding, and was reportedly going to double that.
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Mobile advertising startup Databerries raises $16M
Databerries is announcing that it has raised $16 million in Series A funding — money that will help the Paris-headquartered company launch in the United States.
The startup describes its approach as “real life targeting.” It works with brick-and-mortar retailers to direct their ads at consumers who have been to their store or a competitor’s store… Read More
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Mobile data startup Zeotap raises €12M
Zeotap, a startup that helps telecom companies sell their data to advertisers, announced today that it has raised €12 million in Series B funding (that’s just under $13 million). Co-founder and Chief Product Officer Projjol Banerjea told me that while there’s “decent data” available for online advertisers targeting desktop users, things are shakier on the mobile… Read More
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AppLovin is selling a majority stake to Orient Hontai Capital for $1.4B
Mobile ad startup AppLovin announced today it has agreed to sell a majority stake of the company to Chinese private equity firm Orient Hontai Capital for $1.4 billion.
We first reported that AppLovin was in talks with a Chinese company for a $1.5 billion acquisition back in August. In his blog post announcing the deal, co-founder and CEO Adam Foroughi wrote:
While this deal is a tremendous… Read More
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Mobile ad startup AppLovin in talks for $1.5 billion acquisition
Mobile ad startup AppLovin is in talks with a Chinese buyer for an acquisition of around $1.5 billion, according to multiple sources with knowledge of the company. We have not confirmed the identity of the acquirer. The deal is not yet finalized and details may change. Founded in 2012 by CEO Adam Foroughi along with Andrew Karam and John Kyrstynak, San Francisco-headquartered AppLovin operates… Read More
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Pokémon Go will soon get ads in the form of sponsored locations
After having become one of the most viral mobile applications of all time, Pokémon Go will soon include advertising, according to its developer. In an interview with the Financial Times, Niantic CEO John Hanke said that “sponsored locations” would provide a new revenue stream, in addition to in-app purchases of power-ups and virtual items. In other words, retailers and… Read More
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