CEO Kartzman Says Spongecell Increasing Engagement, Interaction In Display Advertising

Ben Kartzman is CEO of Spongecell, an advertising technology company. You have pivoted the company on occasion to find new opportunity. Can you talk about what you learned with each pivot and how it informs what you’re doing today?

BK: At Spongecell we have a culture of being agile and iterative – whether it’s our business model or software development methodology, we pride ourselves on being ahead of the market and simultaneously adapting to what clients are buying. It’s common knowledge among entrepreneurs and investors that the business model you start with will probably not be the business model you succeed with. Our most recent pivot, to our interactive advertising product, has been one that we knew we would make as it had been on our product roadmap since the inception of our company. As our business grew we kept getting more and more requests from clients to take our functionality and pull it into display ads. We finally obliged, and 18 months later due to nice quarter over quarter growth we have decommissioned our old products and are now 100% focused on our advertising solution.

What problem is Spongecell solving for display advertising? Is this a brand or DR solution?

We’re actually both. Brands look to us to drive engagement beyond the click from standard flash banners. DR advertisers look to Spongecell to drive conversions in-banner. By providing measurable engagement across a broad set of functionality we believe Spongecell is offering one of the first Performance Branding solutions at scale. We work with advertisers to implement the best application of our functionality and build the perfect mix of DR and branding for their campaign.

We hope Spongecell offers a solution to an industry plagued by long production times, heavyweight ads and meaningless metrics. Advertisers can have Spongecell units built in a couple of days that will run on almost any placement / publisher and drive interactions that actually mean something to their business. Whether it’s having a user download a coupon, fill out a registration form, watch a video or browse products (all without clicking, by the way), Spongecell provides meaningful interactions that helps advertisers drive more ROI for their advertising dollar.

Recently Facebook said they would eliminate standard format display ads in favor of more of an integrated approach. How does the Spongecell model fit with this move by the social media giant?

Facebook signaled their belief in interaction and engagement over the impression and click, something we couldn’t agree with more. We hope to make available the same social interactive functionality, and more, across every impression on the internet.

Who are your clients? (either generally as in ad networks or specifically, naming the clients) How does the pricing model work?

Anyone advertising online and looking for a proven way to drive engagement is our client. That means agencies, brands, networks, DSPs, anyone. We’re already working with a number of top tier agencies including Universal McCann, OMD, Initiative. We also consider ad networks and publishers our clients and service them much in the same way we work with agencies. We typically sell on a CPM, although in some cases we do look at CPE or CPA.

And the competitive set? What do you see as points of differentiation?

Our competitors include companies who are making standard display more effective. We don’t see the traditional rich media players as competitors because we’re not a rich media company (our ads are lightweight, don’t expand, and can run on almost any site/any placement). Spongecell’s focus is on providing value to consumers and advertisers within the constraints of non-interruptive units. Our clients cite our array of capabilities including our focus on social media, our ability to build ads incredibly quickly (in less than a day) and our ability to optimize and update ads without having to re-traffic when asked why they chose Spongecell.

Is an engagement pricing metric the future for display?

We’re definitely believers in it. Engagement pricing has the potential to offer advertisers who can’t track conversions online to adopt a performance model that is more closely aligned to their business than clicks.

In terms of funding, do you anticipate seeking investment in the future?

We’re profitable and growing rapidly quarter over quarter so investment isn’t a requirement for us right now. That said, we may be making an announcement in the next few months so stay tuned.

What are your thoughts about attribution models for display these days? Does anything work?

It’s important for advertisers to measure the success of their spend using metrics that are aligned with their business goals. While they have their place in attribution models, we’re not big believers in click or view based attribution. On the other hand, interaction and engagement based attribution addresses their shortcomings; as it doesn’t suffer the cookie overload problems of view and is a much more statistically significant sample than click. Interaction attribution, especially a strategy that weights interaction types based on their desirability to the brand, is uniquely positioned to drive metrics that are aligned with a businesses goals.

Publishers are under a lot of pressure these days to drive revenue. Can Spongecell products be seen as something important for publishers, too?

Some of our best clients are publishers. We help them to deliver unique, cost effective solutions for their advertisers. In a broader sense, publishers can benefit from our interactive units because they drive attributable interaction in a user friendly environment that keeps users on-site. We’re currently working closely with folks like IAC to explore these types of Engagement Marketing opportunities.

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  1. With the exeception of perhaps the one day turnaround on templatized ads, not sure how Spongecell is any different than PointRoll, Eyeblaster, Eyewonder, Interpolls, Flash Talking, DCLK, and every other rich media solution that provide engagement beyond click through.