Persado, an ad-tech spinoff of digital marketing firm Upstream that specialises in “persuasion marketing”, has picked up a round of $15 million, which it will use to establish a new headquarters in New York to add to its London base; invest in R&D; and persuade ad agencies and brands to use its technology to help sharpen their digital media efforts. Current customers already include Skype, Badoo, the mobile carrier TIM plus several other tier-one carriers that Persado says it cannot disclose. Bain Capital Ventures led the funding in this Series A round, with participation also from TL Capitol.
Some $34 million has been invested in Persado to date. Upstream has invested around $19 million of its own funds to create and launch Persado as a division, which was invested gradually between 2010 and 2012. When the division was spun out at the end of 2012, another $15 was invested at that time. In this current round, $14 million came from Bain with the last $1 million from TL Capitol.
As background, persuasion marketing technology, as conceptualized by Persado, works like this: a brand (or its media agency) creates a piece of marketing or an advertisement that is text-based, which can be email, SMS, display or search ad-based; the ad unit gets run through Persado’s algorithms, which have been developed to pinpoint certain criteria to make the ads more actionable and engaging (“applying mathematics to emotion, product and language” CEO Alex Vratskides tells TechCrunch); and then the ad continues on its way to its originally intended destination.
The end results look something like this:
and like this:
Persado CEO and founder Vratskides, who was also the founder and CEO of Upstream, told TechCrunch that the company has created algorithms that crunch together lots of data on how well different types of ads perform. This information — a kind of big data play in itself — is then used to “read” the original text in the ads and effectively edit it to use more of the word and phrase cues that have proven successful in those past ads.
This is not to say that the whole process is devoid of human interaction and is solely based on machine learning: Vratskides notes that people usher through initial ads from each client, although over time, Persado’s technology learns and increasingly “edits” content on its own.
The concept is another development in the area of ad-tech that provides customization that would have originally been the terrain of people: because of the sheer proliferation of digital ads on websites, mobile apps, emails, texts and more, that kind of role is becoming less feasible for a human to process each and every time.
Others that work in a similar (but not the same) realm include OneSpot, which has a platform that automatically turns non-ad content into ads. Affectiva, meanwhile, uses machine learning at the other end of the transaction: to gauge people’s emotional response to ads, in order to help create more engaging experiences.
The predicament of too many digital ads and too few people on the ground to improve them is partly what attracted Bain to Persado.
“The creation of the most effective marketing messages is a universal problem and a highly manual process for digital marketers today,” said Bain Capital Ventures partner Deepak Sindwani in a statement. “Persado solves this problem through its unique data science, software, and information service, systematically generating the best messages across all online marketing channels, for any product and any customer, at any time. We are excited to partner with Persado to pursue this enormous market opportunity and build the next great company in online marketing.”
Vratskides himself started the company out of what he called “frustration” over how so many of the ads he saw running through Upstream simply did not have what it took to really engage customers.
“When it comes down to marketing messages that verbalize to consumers, these days there are just creative people who stare at the ceiling and come up with messages to convey offers,” he told TechCrunch in an interview. “What we offer is a way to sell with science.” Vratskides claims that when compared against the control (i.e., original) ad, those that have been optimized by Persado can see increased click-throughs of 100%.