Retargeting platform AdRoll announced a $70 million funding round, led by Foundation Capital.
The San Francisco-based company, which had previously raised $19 million, has expanded rapidly since launching in 2007 and become a leader in the retargeting space. AdRoll plans to use the investment to beef up its existing platform for mobile, and expand hiring at its headquarters as well as new offices in New York, Dublin and Sydney.
AdExchanger checked in with AdRoll CEO and founder Aaron Bell and President Adam Berke.
AdExchanger: You’ve just received $70 million in funding. Any new investors?
AARON BELL: There’s (Institutional Venture Partners). They’re a leading late-stage growth fund. It’s funded companies like Twitter, Dropbox, Marketo and Omniture. They have an amazing late-stage reputation and are known for their entrepreneur-friendly style.
I’ve known Eric Liaw, who’s going to be joining our board as an observer, for a number of years and he’s always been a great adviser. He has a brilliant mind for metrics, finance and scaling. He’s been very helpful for us.
We also have other late-stage investors such as Performance Equity, Glenmede and Northgate. They are funds that also make later-stage public investments. So they’re helpful in guiding us through the next stages of our company.
Have any investors used this as an opportunity to take money off the table?
AARON BELL: No, the $70 million is going entirely to the company.
How specifically will you use these funds?
AARON BELL: We’re going to continue to build the best platform for retargeting. We feel that retargeting is the ideal entry point into a broader vision. We want to be the one place that marketers go to better understand their customers and reach them wherever they may be.
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We made a couple of small acquisitions last year. They were Userfox and Bitdeli. That speaks to that vision of collecting, analyzing and acting on data. We want to continue to be out there.
We’re also doubling down on the service and support options for our enterprise customers. What we’re doing is rapidly moving upmarket and we have a high-performance product that we can sell to bigger customers with a shorter time to value.
ADAM BERKE: The primary focus around the raise is that we have an amazing core business that we don’t want to ignore by any stretch. We think that there’s a lot of runway in our core business of retargeting, both in the US and internationally.
We’ve just opened up our first international offices in the past year. Dublin is growing extremely rapidly. We have plans to have a staff of about 100 there by the end of the year. We just opened Australia a couple of weeks ago. We have plans to get that office to around 20. We want to continue that international expansion of our core product.
How do you differ from your competitors?
AARON BELL: Our competitors, for the most part, in the retargeting space are focused on large big-box enterprise retailers. At AdRoll, we serve every single vertical. We serve customers of all sizes. Our history has been about making our platform work for mid-sized and smaller companies.
That means that we have a platform that scales really well and is highly usable, but has an incredible cost structure. In advertising, if you have a great cost structure, as you move upmarket, you have better performance. You’re able to serve customers better.
Where are you seeing the most growth?
AARON BELL: Enterprise and international are really driving our growth. Our fastest growing customer segment is actually our enterprise segment. That’s customers who spend over $20,000 per month. That’s now our fastest-growing segment. Basically, that’s proof that that concept of moving upstream is working. That’s where a lot of the growth is coming from.
We just opened our first international offices in Dublin and Sydney. (Sales staff are) basically going into these markets which are fairly greenfield and marketers haven’t had a lot of options there. As we translate the website and the application and marketing materials and hire local language sales and account management, we’ve seen those international markets also scale.
You have 15,000 customers now and you’ve said your goal is 1 million. How will that happen?
ADAM BERKE: We’re adding a little over (2,000) advertisers a month these days and that pace is accelerating. You can see the curve to get there. There are certainly some stepwise functions that need to happen and we think that we’re tackling that by opening new markets because of our mobile offering. We’re now able to sell into app developers and all of these new categories.
Certainly as we being to expand internationally, we see another step function emerge because a lot of the problems that marketers face in other regions are similar to the problems that marketers face in the US.
Now that we have an established product, brand, onboarding process, and training program, we can plug and play in these new markets and see stepwise functions as we go into these greenfield opportunities where mid-size marketers in Europe haven’t had good options for performance advertising and performance display advertisers.
What are you offering for mobile?
ADAM BERKE: A big part of this round is around the investment in moving from helping businesses act on a single device to helping them act on their customer data across devices. It’s a nontrivial technical problem to be able to collect data and act on it across your desktop machine as well as your Android device as well as an iPhone as well as an Amazon tablet and then bringing all of that back into a sensible user-friendly experience for an advertiser.
Because we serve a very broad customer base – small, medium and large – that means that we have to be very flexible. That means that the interface needs to be usable for the different levels of sophistication and doing all of that when you’re starting to move into this increasingly fragmented world becomes a real challenge.
What are the technical challenges?
AARON BELL: It is hard to display advertising scale and perform across 15,000 advertisers in hundreds of different verticals and of different sizes. That’s not an easy technical problem. You need great predictive algorithms. You need great usability. You need all sorts of different things on the tech side.
What are you seeing with Facebook Exchange?
ADAM BERKE: In general, we’re seeing Facebook grow at an outpaced rate compared to other inventory sources. Our customers are still seeing fantastic performance on Facebook.
We’re also investing heavily in other Facebook products as they roll them out. Facebook has been innovating rapidly and we’re trying to be the biggest company that brings that to a broad market as it relates to our core strategy and as we’ve done for other inventory sources as well.
Is there going to be an AdRoll IPO soon?
AARON BELL: We’re setting up is a 100-year enduring company that has a huge impact down the road. At some point in the future, that will likely mean going public and funding round like this one with more flexibility so that when we choose to go down that road, we’ll be ready.
However, right now, we’re just focused on international expansion and the product innovation that we were talking about earlier. We’re going to use the resources that we’re bringing in now to be really aggressive in those areas.
