As iOS and Android have matured, the mobile ad units on both platforms have had to evolve, becoming richer and more interactive. The tiny banner ads that earlier mobile advertising startups like Google AdMob pioneered are falling to the wayside as mobile video ads and rich interstitials have taken off.
One startup, Vungle, has built an entire business around native mobile video ads in high-definition, and they're picking up a $6.5 million Series A round from Crosslink Capital for it. Also participating are Google Ventures, AOL Ventures, 500 Startups, SV Angel, Maynard Webb, Scott McNealy and Tim Draper, bringing Vungle's total funding to $8.5 million. SoftTech VC was also part of the round as well.
Since last year after graduating from San Francisco's AngelPad, they've grown to reach 2 billion cumulative video views and now have 35 employees in offices across San Francisco, London and Berlin. They recently poached Wayne Chan, one of the co-founders of Kabam, which is a 600-person midcore mobile and social gaming company, to become vice president of engineering.
They are part of a newer wave of startups in the mobile advertising space like Mopub. The older generation of mobile ad companies is consolidating, with one notable deal this week as Millennial Media picked up Jumptap in an acquisition.
Naturally, a lot of Vungle's clientele is in the gaming space with marquee indie studios like Cut The Rope-maker Zeptolab. In gaming, they face a ton of competitors like Flurry and Tapjoy and others, which have also built networks for mobile game trailers after pivoting from earlier products.
But Vungle focuses on a shorter format, with 15-second high-definition videos. They also have an in-house creative team that works with advertisers to make the catchiest ads.
"We want it short and snappy," said CEO Zain Jaffer. "They need to fit into the flow of the app, with placement in the part of the user flow."
Jaffer said that while this was an inside round, with participants from previous funding rounds, he said there were a few external offers that they considered. He said they went for Crosslink as the lead because they work with companies at all stages from seed to publicly traded companies like Pandora.
"We're at a crazy inflection point, where people are starting to spend more time watching video on their phones," he said.
The company initially charged on a CPI, or cost-per-install, basis, which is standard for mobile app advertising. But they've since shifted toward ads that users complete.
The company's round of funding will go toward expanding the team and its technology platform.