When you are putting up an ad you have your options. But above all what you want is optimal placement. What is my ad in proximity to? Is it hitting my target audience? With questions like these in mind you can’t just rely on your intuition. What you need is Grapeshot. Their safe and powerful keyword technology is taking online ads from annoying to possibly enjoyable.
With big names such as Chase, IBM, The Economist and many more trusting them as well as a new round of funding under their belt, CEO and cofounder John Snyder speaks with AlleyWatch about their funding as well as their future plans as a company.
Who were your investors and how much did you raise?
We raised a $8.5M round in a C round with over $4M coming from our first investor IQ Capital which has participated in every round since we took venture capital in since 2009. Albion Ventures joined the Board in April 2014, and continues to invest; whilst Draper Esprit are the new lead investors who priced this C-Round.
Tell us about your product or service.
Grapeshot is an advanced keyword technology provider that provides audience and keyword targeting and analytics solutions in open and private programmatic environments. Grapeshot builds connections for brands, publishers, buy-side and supply-side partners using our page crawling algorithm. Grapeshot’s core technology and product suite offers a fully customizable, transparent and scalable solution, giving our clients simple, integrated control over brand safe targeting. Grapeshot is integrated with all major programmatic trading marketplaces including AppNexus, MediaMath, Turn, and The Trade Desk. Grapeshot receives over 2.5M QPS, 3T classifications per month, recognizing 100+ languages and returning standard and custom segments in 25+ languages.
What inspired you to start the company?
The two cofounders build and sold their first keyword-driven software business in the 1990’s. They underpinned the search systems for BBC, Nokia, NASA, and other emerging websites and intranets in the first wave of the internet taking off, selling their core technology in 1997 for some $20m at the time. Post-acquisition they built the largest index of the internet – almost twice the size of Alta-Vista at the time when Google had a handful of employees, literally. The opportunity to spin-off the new search business from the parent company was blocked; so the two co-founders resigned together on the same day. So Grapeshot was born out of frustration, and the co-founders set to work on a whole new software system that could execute keyword analysis and advanced information retrieval for scale. This is why Grapeshot now processes keywords for 3 million + live consumer impressions per second – to help programmatic advertising find relevant, effective pages in which to place ads.
How is it different?
Until recently, display advertising involved advanced booking of websites, much like booking the TV ad slot or magazine back-page ad one or two months in advance. With the advent of real-time advertising, where the ad is booked via a live auction in 50ms, then need to understand where you are advertising becomes acute. You can no longer afford to spray ads around the internet when there is such toxic content on premium newspapers like the New York Times. Who wants to placed alongside terrorism, vehicle part recalls (if you are auto manufacturer), or a celebrity misbehaving with your brand values? No longer are you confined to one or few websites, but a fragmented world of websites across the globe all funneled into one large bidstream of 120 billion auction opportunities per day. Grapeshot looks at the keywords inside the pages where ads are about to be bid for – and helps buyers and sellers know exactly what is on the page before the trade is initiated and completed within the 50ms auction time window. Grapeshot is different because of its highly scalable keyword algorithms that make programmatic buying safe and easy at the granular page level – making the purchase of ads by website domain redundant.
What market you are targeting and how big is it?
Digital advertising is a $50B market and growing fast. It has overtaken print and the world of digital video is merging into programmatic trading systems, where even digital TV ads will be auction in real-time – overhauling the traditional methods of manual, inefficient advanced buying. With major advancements and shakeups also come risk – globally brands lost over $7.2B last year due to fraud per the latest WhiteOps and ANA study. We consider it a responsibility to the advertisers that we carry to help them address these fraud issues by offering brand safety solutions.
What’s your business model?
Trading on programmatic exchanges involves many data partners like Grapeshot helping to provide insight on the page URL, or more often the identify of the user (via cookie). User data is more valuable at $0.85 to $2+ for every 1000 ads traded that use that data source. Grapeshot is involved with context of the page, which carries a lower price cost of $0.15 CPM (cost per mille/thousand). Contextual data is not private or behavioural data, so can be used everywhere, and is not confined to controlled and regulated lists of cookies which some companies collect. So it can have huge scale. Grapeshot’s data is used across hundreds of millions of ads every day, and its programmatic revenue growing over 300% year-on-year in the US is based on ever wider adoption of keyword contextual data alongside other targeting/filtering techniques (such as targeting geo-location or known cookie lists of users)
How has your company developed through its 24 years?
Grapeshot has actually only been commercial since 2009, at the time we took our first venture investor IQ Capital and hired our first member of the commercial team. The company was technically founded in 2002 when the co-founders initiated a phase of fresh software writing from scratch – with the aim of outperforming their original software system sold in 1997. The experience of building a large index of the internet in 1999 helped focus Grapeshot on scale and efficiency. From 2009 the company focused on publishers – using keywords to define virtual sections like “Christmas” so that any Christmas contexts across the title could be packaged as a “Christmas special”. This helped publishers double up their revenue yields. Publishers like mail Online, Telegraph, The Economist and many more continue to use Grapeshot to this day. But buyside revenues from trading agency desks like Xaxis (WPP) dwarf the publisher business, as over 350 buying agencies serve over 40,000 advertising campaigns per month, using Grapeshot Keywords to more precisely target relevant ad inventory, improve campaign performance and deliver a contextually relevant experience for the consumer.
What was the funding process like?
There was a debate between getting US venture capital to lead the round, as we build out our US business, or go for a quick fundraise in the UK where Grapeshot was started and first grew out from. Growing a fast business with growth rates of 300% in our major markets requires attention to the business, and less distraction fundraising. So the Board went for the latter option, not least because the existing investors wanted to double-up.
What are the biggest challenges that you faced while raising capital?
Taking onboard existing investors requires a way to “price the deal”. It was vital to find a new investor to lead the round. So there was the typical merry-go-round of visiting a variety of venture capitalists to see what traction existed. Draper Esprit had looked at Grapeshot at the time Albion ventures came on-board in 2014, and were quick to seize the opportunity.
What factors about your business led your investors to write the check?
Stuart Chapman, Founding Partner, Draper Esprit said: “We are delighted to join Grapeshot at this stage. The technology is world class, and with Kurt joining John and the team, this represents a real opportunity to build a global leader in real time, contextual search and analytics. ”
What are the milestones you plan to achieve in the next six months?
We aim to open new offices globally. First stop is Chicago. Second stop West Coast US and Australia. Meanwhile, our new integration with AOL will add further vigour to global revenue acceleration. Specifically, in the US we aim to engage Publishers leveraging the our legacy experience helping European media sellers make more money from matching their content to the most relevant advertising messages.
To support the opening new offices, we are focusing on strategic recruiting objectives in order to yield significant returns in performance and business outcomes. We aim to be a top-performing global recruitment organization that coordinates resources in a way that complements the organization’s overarching business goals to achieve efficiency, agility, and influence.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Growing your business with more customers and more Average Revenue Per Customer are the two dimensions to growth. Capital is useful once you show that trajectory, as you need to backfill with more talent in your team to service the customer traction and build out your revenues at an ongoing high-rate of growth or indeed even faster acceleration.
Where do you see the company going now over the near term?
Grapeshot is building out a presence in Chicago, San Francisco and Los Angeles in the US market – the largest market of real-time advertising. However the opportunity to assist the marketeer in understanding their customers and what drives consideration, purchase and revenues means Grapeshot is increasingly helping brands understand their customers’ journeys, using the keyword signal to unwrap what is relevant and of interest to each and every consumer they know.
Where is your favorite bar in the city for an after work drink?
My personal favorite is Frances Tavern because my uncle, eight times removed used to frequent the Tavern. His name is George Washington and his statue stands proud outside the Federal reserve, adjacent to our office in Wall Street. The Grapeshot team inducts every new member joining our NYC in the Dead Rabbit where they take down a Flagon. We also frequent Jeremy’s Pub, which has become the local hangout for the myriad of advertising and technology companies that have joined us down in the Financial District. I am proud of the legacy of the English and Irish on American History and NYC drinking locations today!
