Today we’re pleased to announce RRE’s investment in Pontiflex, an innovative New York City company whose technology changes the landscape for Cost-per Lead (CPL) performance advertising. Pontiflex announced today the close of their Series B round, a $6.25M round in which RRE was the lead investor.
Over the past year we’ve been thinking a lot about how the Internet is going to get monetized more effectively. The challenges in online advertising are well known today, but truthfully there are have always been issues for marketers who want to spend money online. Impression-based advertising has always been difficult to effectively place, track and optimize, although there are a dozens of interesting technology companies trying to do so. The great revolution was, of course, Google’s cost-per-click search model, but even that is developing problems for a range of advertisers.
Today, I see three primary reasons why advertisers spend money online. Two of these are relatively well served by existing advertising modalities and the third was not, prior to Pontiflex.
- Branding. Impression-based display advertising (CPM) is likely to continue be an important part of the mix for brand advertisers, as it fits the traditional approach of putting creative in front of an audience in a transaction-agnostic way.
- Transactional. Much of online advertising is related to specific transactions, and CPC search marketing is a powerful mechanism for this, as the targeting funnel catches customers right as they are looking to make a purchase.
- Customer acquisition. This third bucket has been poorly-served by the online advertising world thus far. I can think of very few advertisers who don’t want to bring customers into their business, yet today they are forced to use diffuse methods to acquire customers online, hoping that impressions or clicks will flow into a relationship with an interested customer.
It is this third category that Pontiflex serves via its CPL model. Pontiflex is a company we’ve been following for quite some time. Zephrin, Roshan and Geoff are industry veterans who built Pontiflex from the ground up to be a technology company that solves problems they saw in a lucrative but problematic segment of the online ad world – lead generation. From my point of view, they have made two critical insights that result in an important company going forward:
First, they recognized that while lead generation was an important method of customer acquisition, it wasn’t practicable for mainstream advertisers without a major rethinking of the lead-gen paradigm. Prior to Pontiflex, the majority of lead generation was what the company calls “sales leads” – high-value leads in particular areas where multiple advertisers would be willing to buy the same lead (e.g. mortgages). If I filled out a form on a financial website to see mortgage rates near me, my information was sold to multiple mortgage lenders who would then try to convert me. I hadn’t opted into a particular lender’s message – I just indicated that I was in the market.
The Pontiflex insight was that advertiser-specific opt-in leads (“marketing leads”) could make sense if (and only if) a real technology platform was built to automate and clear the entire process. Few leads are priced as highly as a mortgage lead, and as a result the majority of the lead-gen market was built in a way that couldn’t collect mainstream opt-in leads in a cost-effective way. Pontiflex’ flagship product, AdLeads, changes all that. No longer does each ad placement require a specific technical integration and gone is the opacity that has overlaid this market. The Pontiflex platform is purpose built to enable large, scalable campaigns with minimal setup or technical resources required.
The second critical insight was that CPL advertising represents a blend of branding and direct response characteristics, and that it can expand the playing field dramatically relative to the current state of lead generation. Many of Pontiflex’ customers use CPL ad units (which are themselves performance-based) as a way to build brand engagement and brand loyalty. These ads are often invititations to consumers to engage with a company’s brand via an email newsletter, online community or other modes of outreach. Every customer an advertiser gets from Pontiflex is one who has voluntarily opted into that advertiser’s brand or product. It is both brand-building and hyper-targeted, giving brand advertisers a powerful, scalable new way to engage with their customers online.
I have joined Pontiflex’ board, where I’m excited to work with the founders, Scott Johnson from NAV and Brian Hirsch from Greenhill SAVP on what we all believe is an important, next-generation advertising technology company being built here in New York.