Online advertising is big business. A study by consulting firm Ernst and Young last fall projected a 16-per-cent increase in Canadian online ad sales in 2011, to $2.6 billion. But it’s a big business that small businesses can’t always get a piece of easily.
Buying online ads can be daunting for smaller companies, and serving those smaller customers is often time-consuming and unprofitable for online publishers. That’s the conundrum Shiny Inc., the Toronto-based operator of a service called Shiny Ads, set out to resolve.
While working at a small digital publisher, Shiny founder and chief executive Roy Pereira noticed a large number of first-time advertisers looking to buy small amounts of advertising. With customers who wanted to spend perhaps $100, though, it was hard to serve them and make money.
Smaller advertisers have thus been left on the sidelines, says Carmi Levy, an independent London, Ont.-based technology analyst. “It takes a fairly unique set of skills to leverage online advertising for business advantage, and these are skills that many smaller, less tech-savvy organizations simply do not have.”
What Mr. Pereira wanted was a self-serve interface to handle small-ad orders with a minimum of human intervention. The giants of online advertising – Google Inc. and Facebook Inc. – offer this. Most other websites don’t. Mr. Pereira looked for something that would allow others to do it, but in 2009 he couldn’t find anything, so he set up Shiny Ads to fill the gap.
While Shiny Ads is designed so those without a background in advertising can understand it – minimizing industry jargon such as “cost per impression,” for instance.
Before San Francisco-based CBS Interactive adopted Shiny Ads about a year ago, it was hard for the company to reach smaller advertisers, says David Chiang, vice-president of monetization.
“This self-serve tool allows these users to come on board, buy the inventory, take a look at it, see if it performs well for them,” he says. In many cases, he says, those buys are leading to closer relationships and bigger deals with those advertisers.
Like most of Shiny Ads’ customers, CBS Interactive “white labels” the product, meaning that while Shiny’s servers process the transactions, the process looks to the advertisers using it like part of CBS’ website.
Revenue comes from a straight percentage of ads sold – there are no setup fees and no monthly fees, Mr. Pereira says.
Shiny Ads’ customers, most of whom are in the United States, include advertising trade magazine AdWeek, CBS News, technology news publishers ZDNet and CNet, and Kijiji Canada, a unit of eBay Inc.
Mr. Pereira is no stranger to start-ups, having launched his first – a company making Internet server software before the Internet was big – straight out of university in the early 1990s. Having learned from that experience that he “really didn’t know what he was doing,” he worked for several other companies, including industry giant Cisco Systems Inc., before launching Shiny Ads.
For a company founded in the early part of the great recession, funding was the first big challenge. In 2009 the venture capital and angel investment scene in Toronto was essentially dead or dormant, he says, so Shiny Ads relied on consulting revenue to bootstrap product development.
When the company finally obtained about $500,000 from two angel groups – the Maple Leaf Angels and York Angel Investors – and some individual investors in March 2011, it was able to drop the consulting “cold turkey” and focus on the product, which Mr. Pereira says brought an immediate surge in sales. “All of a sudden doors opened that we didn’t even know were there,” he recalls.
At the beginning of this year Shiny Ads raised an additional $400,000 in a second funding round involving the original investors and Toronto-based Intertainment Media Inc., which develops technology for online marketing.
Funding has been overtaken as a challenge by staffing. With Web and mobile businesses doing well in Toronto, finding people with those skills has been tough. The company is fully staffed with eight employees at the moment, Mr. Pereira says, but “the next time we want to grow I know it’s going to take three or four months.”
While Mr. Pereira isn’t revealing revenue numbers, he will say that the company is bringing in about six times as much money each month as it was a year ago. It also plans to market other products to help online advertising buyers and sellers. The first two of these are almost ready and likely to be launched in the next month, the founder says.
Besides being a promising niche for the company, what Shiny Ads is doing should make online advertising more accessible to small businesses, Mr. Levy says. “It allows these previously under-served advertisers to compete more effectively against organizations of any size.”