New research says VCs love ad platforms – Europe accounts for nearly half of all investment

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More than $580m was invested into online advertising companies in the first half of 2008, according to new research to be released today, obtained exclusively by TechCrunch UK. Europe accounted for $258m of this, or 45% of the total.

The research has been put together by venture capital house Advent Ventures and will be revealed in a speech today by partner Paul Fisher in a speech at 2pm at the Ad:Tech conference in London. It was put together using data from Venturesource, RealDeals and proprietary research.

Fisher will point out that this $580m figure is pretty remarkable, since European VC typically only accounts for around 20% of the USA on an industry-wide basis. Although the Advert research only counts for the first half of this year and there is no informatoin on what happened last year to compare it to, the research appears to show a great deal of strength in the European market for advertising models.

Advent found that the largest sub-sector of investment both by value and volume was into online advertising networks. This includes traditional networks like Adconion which raised $64m as well as next generation widget ad networks like RockYou which raised $35m. Founded in 2004, Adconion Media Group is an independently owned, performance-driven online ad network which delivers online ads using its proprietary technology that it claims provides better results for advertisers and optimal revenue for publishers. Backers of Adconian include Index Ventures and Wellington Partners.

RockYou (originally named RockMySpace) creates and distributes widgets where people can express themselves, thus creating a stealth ad network. As a result RockYou has over 10 million registered users and gets over 150 million widget views from over 200 countries per day. RockYou’s main competitor is Slide. RockYou has backers which include First Round Capital, Lightspeed Venture Partners, Sequoia Capital and Partech International.

The second largest sector Advent turned up was ad technology platforms like AdJug (ad exchange) OpenX (ad serving) Coull (video ad serving) and KeyBroker (campaign management). UK-based Coull has a video platform which enables video owners to identify and tag objects within online videos, and customise user experiences around interacting with those objects to drive consumer engagement with brands.

The largest two deals were also European: ECI Partner’s investment into i-level, and Index and Wellington’s into Adconion.

Advent’s research doesn’t include Qype as it was announced too late to qualify as a first half investment, however, it has invested in British company Fizzback to the tune of $5m in February this 2007. Fizzback offers “real-time” customer engagement tools via email, SMS or mobile email. It’s also invested in Zong, a mobile payment system for monetising Web audiences. Zong has $12.5m in total funding from Newbury Ventures and Advent.

Advent also turned up “five investments” into companies which are measuring advertising effectiveness although isn’t revealing specifically which companies it noticed, other than to say “we are very interested to see European companies tracking, measuring, analyzing, and quantifying online advertising effectiveness.”

What’s the message startups can take away from this? The simple message is that if you build an advertising platform you may well attract investment, however, other media/tech startups relying on advertising (that’s all the consumer social networks BTW) will do well to look closely at these emerging ad platforms and see how best they can work with them.

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