Mobile Ad Optimization Startup AppStack Raises $1.5M From Eric Schmidt, Google Ventures And Others

Mobile web and ad optimization startup AppStack has just closed a $1.5 million seed round from Google Ventures, Eric Schmidt’s Tomorrow Ventures, 500 Startups, Gary Vaynerchuk, Don Dodge, Foresight Ventures and Punchbowl founder Matt Douglas.

It’s not a huge surprise that Google Ventures and Eric Schmidt are involved in the financing, as AppStack is Google’s biggest reseller of mobile ads, according to founder Steve Espinosa. What the startup basically does for a $60 monthly fee is provide small to medium-sized businesses with hosted mobile websites in addition to optimized Google mobile AdWords ads for those sites.

AppStack, which won “Best Business Model” at this year’s Launch conference, has amassed over 2,500 SMBs on the platform in a little over three months. And the company is on track to generate $1 million a month in revenue by the end of this year, Espinosa tells me.

What differentiates AppStack from ready-made mobile site competitors like Duda Mobile is its novel Google mobile ad optimization component, which takes into account AppStack’s granular network data in order to better target customers and campaigns. For example, AppStack has discovered that people who search for the key words “haircut and color” are more likely to call a store for directions than people who search for just “haircut.”

“You want a mobile website because you want mobile customers, you don’t want a mobile website for nothing,” Espinosa says, “And we’re the only company helping people take advantage of mobile ads.”

Espinosa explains that the AppStack onboarding process is simple, easing in even the most Normal of business owners, “We can make a website out of a phone number,” he says, “All I need is your phone number and how many miles (radius) you want to target.”

Espinosa believes in the AppStack model so much that he gave early customers a free trial initially; 75% converted into paid clients, as they discovered they could purchase a high-conversion “lead” for under $10.

Why so cheap? “There’s not a bunch of people targeting mobile phones,” Espinosa says, with glee.