Santa Monica mobile advertising company NearWoo gets your cell phone to show advertising from businesses near you – wherever you are. It’s called location-based advertising, and the business model has led to rapid growth.
In four months, NearWoo has gone from zero advertisers to more than 4,000 and it recently signed a deal with Google Inc. that will allow it to sell the Internet giant’s ad spaces to businesses, particularly retailers, whose ads will pop up when a potential customer is in the neighborhood.
Jason Crilly, co-founder and chief executive of NearWoo, said the Google partnership is significant for the company because it will open the way for local businesses to advertise with publishers using Google’s New York ad exchange business, DoubleClick.
“We’re going to help them be able to self-serve and get ads into Google’s properties,” Crilly said.
He said it can cost up to $5,000 for a business to purchase mobile ads and that it often requires working with a large ad company. But NearWoo offers less expensive options.
In simplest terms, location-based advertising works like this: When a person is using a smartphone and is on the Web or using an ad-supported app, and walks near a bakery, that person may see a banner ad pop up from that bakery.
Sheryl Daija, chief strategy officer of trade organization Mobile Marketing Association in New York, said location technology is a subset of mobile advertising.
“Marketers are taking an interest in mobile right now,” Daija said. “There’s such a huge shift in mobile. Certainly, the dialogue has shifted from: ‘mobile is an afterthought’ to ‘mobile is core’ to their marketing strategies.”
Research firm eMarketer in New York expects U.S. mobile ad spending to hit almost $9.6 billion this year, more than double from last year’s mobile ad spending of $4.36 billion.
Zero to 4,000
NearWoo was founded in 2012 by Crilly and Holden Steinberg, who serves as the company’s president. The company was originally named PageWoo Inc. but changed its name in August.
The husband-and-wife team started the business at Westwood-based accelerator StartEngine and after graduating in 2012, launched the advertising platform in August 2013 with a staff of seven. Now it has 21 employees who work in its new office in a high-rise a few blocks from the Santa Monica Pier.
The company has raised an estimated $2 million from Karlin Ventures in Brentwood, TenOneTen Ventures in Los Angeles, Windsor Media in Ontario, Canada, and Eytan and Gil Elbaz, creators of Google AdSense.
NearWoo makes its money by charging local businesses $10 a month for each neighborhood they want their ads to appear in, although the first neighborhood is free. So if an owner of a small business wants to advertise in 10 nearby neighborhoods, that owner would pay $90 a month. The advertiser can be expected to get 1,000 views a month from each neighborhood.
The advertiser’s banner ad will be displayed on a potential customer’s smartphone only when that person is browsing the Internet or using a mobile app in that neighborhood.
Steinberg said a business can advertise in as many neighborhoods as it wants and change the number of neighborhoods as often as it likes.
NearWoo sells the mobile ads through several other ad exchanges such as San Francisco-based companies Smaato and MoPub.
One objective of NearWoo is to match the ad with the corresponding mobile content.
“If you’re a real estate person, then we’re going to put your ads on Trulia and Zillow and other things that would be relative to what you’re doing,” said Steinberg.
The company has been able to gain attention of local businesses through email marketing. The company also depends on its website and social media channels to attract new business.
The small business sector for mobile advertising is a huge potential market, said Alistair Goodman, chief executive of location-based digital advertising company Placecast in San Francisco.
Goodman said many companies, such as mobile ad company Airpush Inc. in West Los Angeles and Moasis Global in San Francisco, are working in the same space.
“There are a number of companies like NearWoo and Airpush and Moasis that are going after that market,” he said. “The challenge is, how do you cover the market sufficiently?”
But thanks to its Google partnership, the company will now be able to give local businesses a longer list of websites and mobile apps that can display its banner ads.
Goodman said he expected location-based mobile ads to be beneficial for local businesses.
“For small businesses, it’s particularly important because they have trading areas that are generally very focused on their neighborhoods,” he said. “They want to reach consumers in those neighborhoods, and in that way, they don’t want to be paying for advertising to people who are not near their stores.”
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