AdRoll Raises $70M Led By Foundation As Ad Tech And Retargeting Hit The Big Time

AdRoll, a pioneer of online advertising retargeting (the technology that pushes you ads for products that you have viewed online previously), is today announcing a major round of funding: $70 million, which AdRoll plans to use to capitalise on the current surge of interest in ad tech as a way of getting better return on dollars invested in digital marketing. The round is one of the biggest for an ad tech startup in the last year.

Aaron Bell, CEO and co-founder of the company, tells me that the Series C financing will be used for acquisitions, to expand its product (mobile is a key focus), and to grow its footprint globally. The company had a revenue run-rate of $100 million in October 2013, and Bell says that it’s on track now for $150 million, with some 15,000 customers using its technology, “those who are interested in reaching customers wherever they happen to go,” in his words.

This new round was led by existing investor Foundation Capital, with participation also from several new investors such as Institutional Venture Partners (IVP), Northgate Capital, Performance Equity and Glenmede; as well as existing investors Merus Capital, Accel Partners and Peter Thiel. Eric Liaw of IVP is also joining AdRoll’s board as a board observer.

The funding brings the total raised by AdRoll to $89 million.

AdRoll and its investors are not disclosing the company’s valuation in the wake of the new funding, but Charles Moldow, a general partner at Foundation who has helped advise the company for years now, says that it puts AdRoll on par with other major ad tech companies on the market today such as Criteo. As of right now, publicly traded Criteo has a market cap of $2.17 billion.

The ambition, Bell says, is to be as central to the process of buying online display ads as Google’s AdWords is for search ads. “We were inspired by Google AdWords,” he says of AdRoll’s founding in 2008, “back when ad tech wasn’t cool.”

Bell calls himself a “technical CEO,” in that he himself got an early start in the tech world as an engineer. A native of Redmond, Washington, Bell started working at Microsoft aged 16 on Exchange before eventually matriculating at Stanford and then working on artificial intelligence (including this system used in the Space Shuttle).

“I was drawn to ad space because of the global scale and the thought of how you could apply machine learning to it,” he says. A key interest for him, he says, was to find the next “breakout technique that brought companies into online advertising that had never considered it before.”

That is essentially what AdRoll has done. Whereas Criteo has built a retargeting business around working with large, global clients, AdRoll’s specialty has been to build and package this technology into a product more accessible by small and medium businesses. That continues to be a major focus for the company — borne out also by some of its recent acquisitions, such as email marketing firm UserFox back in January. But it’s also setting it sights wider and higher.

Bell says that its new office in New York, led by Neil Coleman (a former exec at Google and Say Media), is one of its fastest-growing. This is one indication of how AdRoll is moving in closer to Madison Avenue.

And the other two big areas where you can expect more to come is in the area of mobile and social.

On the mobile front, AdRoll got its start largely as an online product but right now a lot of the focus in the wider ad industry is on how retargeting and ad tech in general can be applied to ads that are viewed and clicked on smartphones and tablets.

That’s fuelled a fair degree of M&A — witness Twitter’s acquisition and expansion of MoPub; moves from the likes of Facebook, which earlier this year also started to roll out its retargeting services on mobile; and completely new entrants as well (such as Telefonica partnering with the Blackstone group to use assets from MobClix to launch Axonix, a new mobile ad tech network).

It’s also led to AdRoll already doing quite a bit in the space:  for example, the company has been working with different travel search engines on a mobile implementation. “Let’s say you are browsing a travel search engine and then window shopping and leave site,” Bell says. Now those visits can lead to specific ads when you are browsing on devices.

Social is another key area where AdRoll may be more active in the future. Think here not just of social networks like Facebook and Twitter that have already started to play their hands in retargeting (and working with AdRoll in the process), but the likes of Pinterest, which has yet to do anything just yet. For the record, no comment from Bell on Pinterest except to note that “We’d love to work with them.”

Both Bell and Moldow would not say what AdRoll may be doing in terms of potential M&A except to note that it is looking “at some companies in the mobile space.”

Moldow believes that right now is a key moment for ad tech startups. Those looking for funding to grow may be positioning themselves as core services, but sometimes they simply repeat functions that others may do better and at a bigger scale.

Without a doubt, AdRoll hopes to be in the former category: “We’ve raised a lot of money now because of our ambitious product vision,” Bell says. “We want every client to be able to make advertising decisions online based on data. We’re working hard to build a company that will be around 100 years from now, an enduring, standalone company.”

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