Leading Facebook ad company Nanigans is announcing that it has raised $24 million in Series B funding.
In this case, it’s is taking money from a big Asian investor — Chinese Internet company Cheetah Mobile. (Cheetah led the round, while Avalon Ventures and Wellington Management Company also participated.) Naturally, one of the goals is to accelerate Nanigans’ growth in that region.
Nanigans co-founder and CEO Ric Calvillo noted that the company already has an Asia-Pacific office in Singapore that’s doing “pretty well.” He also suggested that there’s still a particularly large opportunity in China — even though Facebook is still blocked by China’s “great firewall,” Calvillo said Chinese businesses are advertising on the social network to reach audiences outside China.
Until now, Nanigans had raised just under $9 million in funding — not much, when you consider that it currently manages $500 million in annualized ad spend, and has offices in New York, San Francisco, London, and Sydney, plus its headquarters in Boston and the aforementioned Singapore team. Calvillo said the company has been “essentially bootstrapped” thus far, covering its costs by building a profitable services business around its ad-buying technology.
Less than a year ago, however, the company began to switch from the default ad business plan (offering additional services and charging a commission on ad spend) to a software-as-a-service model. At this point, Calvillo said about 70 percent of Nanigans’ customers have moved to an annual subscription, and by the end of June, it should be up to 100 percent.
Why the shift? Well, Calvillo described the SaaS model, particularly one with a yearlong commitment, as “a litmus test” that determines whether customers are really buying the technology or just viewing you as “a glorified agency.” If you can convince customers to make the switch, then you’ve got more reliable revenue, and you’re valued more highly by investors — in fact, Calvillo said the transition was “what allowed us to do the round.”
And yes, while discussing the move, Calvillo repeatedly referred to Wall Street, so before I had to ask, he went ahead and addressed the IPO question: “If we’re going to do a round of funding and possibly a public offering two or three years from now, we need a strategy that works for a public company — and that has to be a SaaS model.”
Nanigans will also be expanding its tools beyond Facebook, a process that began last fall when the company added support for Twitter-owned MoPub. Calvillo said Nanigans clients have asked to use the company’s ad optimization and analytics technology with other types of advertising, both in display and social media.
Still, he pointed to a challenge in moving to new ad channels — ad-buying is often “siloed” between different teams within each company. So even if there’s an advantage in having one product to manage all of your digital ad spend, it also has to be “best of breed” in each category. He also emphasized that as Nanigans expands, its “number one priority” will continue to be improving the Facebook product and keeping up with shifts in Facebook’s ad platform.
“That’s why it’s taken us so long to be multi-channel — they have a very high bar,” Calvillo said.