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DataXu Raises $27M For Real-Time, Data-Driven Ad Buying

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DataXu, a startup that sees itself at the head of a “programmatic marketing revolution,” has raised $27 million in new funding.

DataXu was founded by MIT aeronautics and astronautics engineers who teamed up with tech entrepreneurs to create software that optimizes ad buying across multiple exchanges, which they launched at the TechCrunch 50 conference in 2009.

Its demand-side platform now supports bidding on display, tablet, smartphone, video, and Facebook Exchange ads, and 80 percent of its customers are running campaigns across multiple channels. CEO Mike Baker said that with DataXu’s ad buying and analytics software, companies can “understand consumers and engage them literally across the whole web.”

The round was led by Thomvest Partners, a firm led by Peter Thomson, a partner at Thomson Reuters. Previous investors Atlas Venture, Flybridge Capital Partners, and Menlo Ventures also participated in the round, which brings DataXu’s total funding to $65 million.

Over the past year, the company says its business model has made a big shift, with enterprise software sales growing 700 percent year-over-year and now accounting for the majority of the DataXu’s revenue. Baker said it was always the goal to become a software-as-a-service company, rather than a company that focuses on buying ads, but when it first launched, “Marketers said, ‘We don’t want software, we want you to buy a campaign.'” That’s changed as the company and the industry have matured.

More broadly, Baker said that programmatic marketing, which focuses on automated ad-buying through DSPs, is reaching a “tipping point.” It was originally designed to fill remnant ad inventory that publishers couldn’t sell on their own, but it now includes an increasing amount of premium inventory, too.

That may seem to run counter to the current discussion around native advertising (a slippery term that refers to ads that feel custom-built and integrated into a specific site), as well as the more conversational ads that are emerging on social networks. But the bottom line, Baker said, is that digital media platforms like Google and Facebook “tend to favor APIs over armies of sales people.”

“When it comes to native advertising and this sort of thing, we’ll continue to see new ad units left and right, and even brand new channels that are emerging,” Baker said. “The common denominator is an API that allows programmatic marketing platforms like DataXu to integrate an automated experience.”

DataXu will use the new funding to continue technology development and global growth, he said — the company already has 11 offices in eight countries.