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Summary:

Google may control a large chunk of the mobile advertising market, but it is still trying to understand how to improve its performance, so it has funded a startup called YieldMo that specializes in mobile ads

Google’s dominance in online advertising is no secret — it controls an estimated 40 percent of the $42-billion market — and it has a similar share of the mobile ad market. But traditional tools like AdSense aren’t doing as well in mobile as they are on the desktop, which helps explain why Google Ventures just invested in a competitor to AdSense by leading an $8-million financing round in a New York-based mobile advertising startup called YieldMo.

According to YieldMo founder Mike Yavonditte, the search giant is so eager to figure out how advertising can be improved for mobile apps and websites that when he visited Google Ventures to describe what YieldMo does with advertising, “they basically said yes on the spot.”

While much of the mobile advertising market consists of ad networks and exchanges — which produce low-margin, commoditized banner and display ads — Yavonditte says YieldMo works directly with publishers and advertisers (including media outlets like Reuters and the New York Daily News) to create custom advertising units for specific spots on specific pages, and then tests and changes them on the fly by watching how readers interact with them.

YieldMo_NYDailyNews_articlemidpage (Android)

This kind of A/B testing can improve monetization by orders of magnitude, the YieldMo founder says. With the New York Daily News, for example, Yavonditte said the company’s advertising is generating “three to four times the CPM (cost per thousand) that they were getting with their own banner ads.” And advertiser Rosetta Stone told the company its ads performed better than either Google’s or Facebook’s during Black Friday and Cyber Monday.

YieldMo isn’t Yavonditte’s first foray into advertising, nor his first attempt at competing with Google: a previous company he ran called Quigo offered sponsored links, much like AdSense, and managed to compete well enough with Google that AOL acquired it in 2007 for $361 million. Yavonditte said many of his former colleagues from Quigo are now working at YieldMo.

The startup, which was launched last year, has raised $12 million in total (including the latest round) from investors such as Union Square Ventures and Rhodium.

Post and thumbnail images courtesy of Shutterstock / Eldorado3D

  1. Jack N Fran Farrell Friday, December 6, 2013

    Excellent concept, Google can rank individual pages within Apps or sites and recommend the most pertinent for user attention. How great is that.

  2. One thing is for sure, if Google doesn’t get cracking on native advertising (like Facebook, Airpush, and Twitter are) Google is going to bleed mobile ad share dominance in the future. AdMob, for example, has been falling behind (in terms of innovation at least) other ad networks throughout 2013. If Google as a company doesn’t brush up on what’s hot and where this industry is going, 2014 will be a very, very bad year for their digital and mobile advertising empire.

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