CEO Kartzman Sees Growth For Spongecell, Continuing Fragmentation For The Industry

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SpongecellBen Kartzman is CEO of Spongecell, a creative ad technology company.

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AdExchanger.com: How much has the company changed - or not - in the last year?

BK: We've significantly expanded the team - 35 today. And, we're starting to look at a bigger opportunity here - not only on the product side, but also the global sales opportunity for us, too.  We've got more clients, and those clients being big brands domestically.

It's interesting that you added the “how much has it changed or not.”

Part of the core mission and product hasn't changed all that much in that we've stayed focused on building a technology platform that allows ads to be very professional, curated by creatives, yet can be built in a short amount of time.

I think we've stayed true to the mission and will continue to focus on enhancing the product, but at the same time build the architecture so it can scale.

What trends have you noticed on the client-side in the past year?

People are starting to realize that display is working for them, and it's a part of the media mix that is increasing.

For example, a client that that ran 10 or 15 million impressions with us last year is now running 30 or 40 million impressions. Part of the increase is obviously Spongecell just getting bigger, and grabbing a bigger part of the “pie,” but another part is our brands are starting to see that display works, and thus they're putting more dollars into it.

Can you be specific about what the success metrics are that are being used specifically on your platform?

First, we really try to stay away from the click‑through. We just don't believe in it. If you're a brand advertiser the click is not the metric that's going to tell you a whole heck of a lot about how well your campaign performs. We are starting to push things like time spent and engagement time.

We have our hover intent technology that is a determinant of how somebody's interacting with the ad unit. Are they actually inside the ad unit? Are they spending time watching the video? Not just did their mouse enter and leave, but are they actually watching it and making choices?  A user can have deep interaction with our ad units and spend several minutes in our ads without ever having to click.

Is that affecting the way you sell to marketers or the way they buy? Are you moving away from CPM pricing, for example?

It's still very heavy on the CPM side for us. We do have some engagement‑based pricing that we look at and we explore with different clients. But even when we do that, it often gets back into a CPM.  CPM still makes sense in that it's still the de facto the standard in display media buying. Media players obviously have a lot on their plate, and with all this new technology, certain things stay constant, I suppose.

Do you see a new engagement type of pricing coming down the road?

The thing that's probably more important and relevant to the marketer is not how it's priced or what methodology is used to price. I think what's more important is the attribution. So what's actually getting credit for the work that it does? I think we're still in the infancy of attribution modeling from a display perspective. I don't think that “last click” should be so important to the marketer. If you go into view‑based attribution, well that's better but then you're potentially rewarding the network that found the user.

One element of engagement‑based attribution is not getting talked about. It’s the theory that if the user is spending more time engaging with a rich media display ad unit which they see only once versus exposure to 9 views of a standard flash execution, there should be a higher percentage of attribution allocated to the richer execution.

That’s more of what the marketer cares about. “How is my media working for me? And how can I more effectively measure that?” That's a better, more important gauge than the type of pricing model.

How is the marketer doing “attribution” today – even cross-channel? Are they partnering with companies? Are you able to help them?

It's wide open. There are a lot of ways to attack it. I think when you look at attribution from a brand perspective, I think it's really about “How well was my creative received? Did it increase brand metrics?” Or if we're talking about conversion, “Did it drive an increase in sales?”

I think it will be up to the marketers to find a way to aggregate all of their media and understand the influence of each of the distinct channels to understand the attribution. But at the same time it's up to the technology folks to help make that a lot easier than it probably is.

In regards to your new round of announced a couple of weeks ago, what will the funds be used for?

We’re using the new funds for expansion. We're going to open an office in Europe and there's more coming on the product side. We've been pretty successful on our product roadmap so far this year, and there's a whole bunch more that we want to do.

Looking at the channels which Spongecell addresses today, any future plans you can share?

For us, we're obviously just addressing display as we know it on the desktop web but we believe that what we're doing will work on all screens and has an application on all screens. There obviously are different nuances to the technology, but as all screens start to become more prevalent, our advertisers will be looking to us to help them accomplish their marketing goals and to do it across all the channels that they're making media investment on.

Mobile or online video?

It's interesting. Video, to us, is the same as display. I can understand how the market research companies want to segment that out, but if an advertiser's buying display and they have video and they're running video in that display, we've got a very robust video product. Does that count as display, rich media, video? Some combination of the three? To me, it's all the same.

Is social important to Spongecell?

Social is important to us. We want to do as much as we can within the confines of what's allowed. Ultimately, social is a critical part of the fabric of the internet and of web usage. One of the ways we're making display more relevant is bringing all that content that people are used to engaging with on the web and pulling it into that display experience. I think it makes for a much more familiar as well as eye catching experience for the user.

Is there still a publisher business for Spongecell? How does it work?

We still work with publishers. And, it's still a good part of our business.

We provide our toolset to our publisher partners and give them the opportunity to offer a more engaging unit that theoretically increases the value of their display inventory. We're able to do help them deliver on enhancing the value of their inventory without any extra work.

What is surprising you right now about the digital ad business in general?

It continues to get more and more fragmented. Everyone's always talking about consolidation and that every year things are going to consolidate. But every year it just gets more and more fragmented. I think it’s going to continue.

I also think one of the great things going on in this country is entrepreneurship and that it is taking a much more prominent role for young people who are considering what they do next.

It's not just, "Hey, I've got to go get this job at this big company." It's, "Hey, I can actually start something, and there's all these great little incubator programs." There was a guy that worked at Spongecell a couple years ago. He always wanted to start his own thing. He's done a bunch of different, cool stuff since leaving us and he's going at it full force.

I think a lot of smart people are realizing that entrepreneurship is a great path to creating and building a career. I think the more entrepreneurs we have, the more companies that are going to be created. It's disruptive, and with disruption comes fragmentation. I don't know that that's such a bad thing.  I actually think it's a great thing.

Follow Ben Kartzman (@benkartzman), Spongecell (@spongecell) and AdExchanger.com (@adexchanger) on Twitter.

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4 Responses to “CEO Kartzman Sees Growth For Spongecell, Continuing Fragmentation For The Industry”


  1. Great take on engagement - actions like hovers and specific manipulation of creative elements have intrinsic value just as a click does. The sooner this type of activity is attributable, the sooner CPMs will reflect it. And not just for rich media...

  2. Steve Latham says:

    Ben- Good overview of issues brands and agencies are struggling with from a measurement perspective. Hopefully some of them will read your interview :-)

    When advertisers measure media performance appropriately, everybody wins.

    @stevelatham

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