Sweden's Widespace Targets U.S. to Tap Rising Mobile Ad Market

  • Success requires finding niche in market led by Web giants
  • Software startup seeks to add to $17 million raised so far

Widespace AB’s software helps Coca-Cola and Disney pinpoint the right potential customers in Europe for mobile ads and tracks success to get the companies more bang for their money. Now the Swedish startup is seeking funding to take on Google and Facebook Inc. and carve out a niche for itself in the U.S., the world’s largest ad market.

The company already has business in 10 European countries -- reaching millions of viewers a day. Its technology lets companies target consumers just when they receive their paychecks, advertise vacations when the weather forecast is particularly bad, and push out ads about homes for sale to nearby smartphone users.

An expansion to North America, which accounts for almost half of the world’s mobile ad revenue, would require investment and resources to allow Widespace to compete with the likes of Google and Facebook, co-founder Henric Ehrenblad said in an interview at the company’s Stockholm headquarters. The two Web giants alone collect about 55 percent of U.S. mobile ad spending, according to EMarketer, and Widespace would also vie with companies Twitter Inc. and Yahoo! Inc.

"There are a lot of smaller players that play a significant role, so Widespace will be in a large competitive set if they enter the U.S. market," Cathy Boyle, a senior mobile analyst at EMarketer, said in a phone interview. "That’s not necessarily a bad thing, those individual companies can all make significant revenue, but there are just a lot of them playing for that remaining share of dollars. It’s very, very competitive."

Widespace has raised about 150 million kronor ($17 million) since its start in 2007 from venture-capital firms including Northzone, which backed Spotify Ltd. and Russian online classifieds provider Avito AB. Revenue this year is expected to jump as much as 45 percent to about 45 million euros ($48 million) and after years of expansion Widespace is set to reach a profit next year, Ehrenblad said.

"We’re in a market growing by 40 to 50 percent a year and our share should grow more than that if we make the move now," he said. "I’d prefer to have another $10 million in the bank before we do the U.S."

Targeted Campaigns

American adults spend almost three hours a day with digital media on their smartphones and tablets -- a golden opportunity for advertisers and a market worth billions of dollars for companies such as Widespace.

Companies almost doubled their spending on mobile ads to $19 billion in the U.S. last year, according to EMarketer. Still, mobile devices accounted for just 11 percent of the total ad budget as advertisers still focused more on pre-Internet mediums such as print, radio and TV. Mobile ads are expected to make up almost 30 percent of the total advertising spending of $226 billion in 2019, EMarketer predicts.

Widespace worked with Tui AG’s Finnish travel agency Finnmatkat to boost the number of last-minute trip bookings. It helped create ads triggered at certain times, for example just before potential customers received paychecks and on days when the weather forecast was for rain and below-average temperatures. For Swedish home builder Aelvsbyhus, Widespace helped develop an ad allowing mobile users to see interior and exterior images of houses and their locations within a defined radius of the phone.

"Millions of players focus on the cheapest click you can buy, the blinking kittens that pop up -- the stuff we don’t like," Ehrenblad said. "Google has search advertising and Facebook is all around the social side, but when it comes to targeted branding with different formats, that’s where we come in with both scale and reach."

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