Adfonic recently announced a new round of funding. Here Viktor Malachard, CEO, Adfonic, discusses the recent raise, trends in the mobile ad market, the viability of RTB in the mobile channel and what we are likely to see from Adfonic over the coming months in terms of development and expansion.

Can you give some overview on the recent funding round?

We have recently raised an additional £4.7 million in funding. The investment, made by our existing investors, will support the company’s continued growth in Europe, North America and Asia-Pacific, increasing headcount from 40 today to over 100 in 12 months’ time. Gordon Shields, the leading telecoms and environmental entrepreneur and investor, is one of the two major backers in this round of funding.

As a European-based ad tech company, has it been difficult raising money from European VCs?

Due to the size of this funding round, we expected VC investment to be the main option. Following meetings with many of the leading VC firms we had in fact a number of offers alongside those from our existing angel investors. However, after a lot of consideration, we decided to stick with our original investors.

As you would expect, a range of factors contributed to this decision including the ability of the founders to retain the level of control to drive growth and deliver on the business plan; and the fact that we had enjoyed a very successful and productive relationship with our investors over the last two years.

How difficult is it to scale an ad business in the European market?

We’ve grown very successfully across Europe over the last 2 years. The self-service nature of our platform has allowed us to scale the business on a global level relatively easily and we’re now strengthening our presence in local markets both in Europe and globally with the opening of new sales offices. We opened our Paris office late last year, Seville earlier this year, and we have more local European office openings planned soon to support our growth across the region.

Will you be looking to build out tech - or opening new offices?

We’ll be continuing to drive our growth strategy, with a focus on international expansion, further enhancing the platform capabilities and recruiting across key business functions.

We’ll have several new local offices in operation across Europe, North America and Asia-Pacific by the end of 2011. We’ll also be making a series of hires across our ad ops, product development, engineering and marketing functions - headcount is set to rise by 150% over the next year.

And of course, we’ll be continuing to invest heavily in product development to ensure the availability of new tools and functionality to maximise advertiser and publisher performance.

Where do you see the big growth markets over the coming 12-24 months?

There’s going to be significant growth across the globe largely driven by the penetration of smartphone devices and tablets but I’d single out South America, Western Europe and Asia-Pacific as the markets that will experience the strongest growth. Our funds are being used to scale up across these regions and better serve local markets.

How evolved is the mobile ad channel? Are advertisers and agencies still reluctant to put large amounts of budget through the mobile channel?

Advertising budgets have always followed the consumer, and it is clear that with the growth figures the mobile ad industry is now experiencing, the move towards mobile is gathering pace. The IAB reported a 116% growth in ad spend last year and huge increases are predicted on a global level over the next year and beyond. As with any emerging channel before it, there is naturally a big discrepancy between the amount of time that we’re spending on mobile devices and the percentage of ad budgets that are allocated towards the channel – and this represents a huge opportunity. We’ve seen a a significant rise in big brands spending on mobile over the last 12 months and interest is continuing to grow at a fantastic rate.

Is there still concern in the marketplace over tracking and reporting?

This has been one of the biggest barriers to mobile advertising adoption to date and we’ve been pretty vocal about the requirement for greater transparency within the industry to track and report the effectiveness of mobile ad campaigns. Advertisers need to see the evidence that their mobile advertising campaigns are delivering effective ROI for them if they are to invest greater portions of their budgets in mobile. At Adfonic we offer full post-click measurement including the ability to track app installs and measure conversions post-click on mobile sites.

Adfonic is operating in a fiercely competitive space. How is the company differentiating itself from other European ad networks and SSPs, like Madvertise, Smaato?

Adfonic is competing on a global scale and as for all high growth markets there is strong competition. We’ve grown 10 fold in the last 12 months, which speaks for itself, but there is room for multiple players.

Given the lack of transparency in mobile, is the channel still very much DR-focused?

As a performance marketplace DR is the primary driver behind the 3,000 campaigns we’ve got running per month. However with rich media formats becoming more standardized brand $ are coming in too.

There's been lots of industry chatter about RTB in mobile. Do you think it is a viable buying methodology at this stage? Without the cookie, what variables can you use to value and buy mobile impressions in real-time?

The first thing RTB does for mobile is provide a more efficient technology for buyers to access inventory - this alone makes it viable. RTB standards (such as OpenRTB Mobile, which we've implemented) ensure that it's easy for impression data to flow to buyers for decision-making purposes, even without cookies involved. At the moment this data is mostly publisher-driven, but can include detailed geographic and demographic data when publishers make this available. Clearly, as the data ecosystem for mobile evolves, sophisticated demand-side systems will start to value impressions based on further aspects such as historical usage patterns and behaviours.

Are we likely to see more from Adfonic in the RTB space in the coming months?

Yes. Adfonic was a launch partner for the first mobile RTB exchange that debuted earlier this year, and we continue to work closely with standards groups and our partners to move the technology forward. RTB on mobile is still in its infancy but is rapidly becoming an important part of the mobile advertising value chain which we see as part of the evolution that allows us to provide more and more advanced tools to our advertisers and publishers.