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Interpublic signals growing mobile advertising interest with Kiip investment

An ad is rarely a welcome interruption. But on devices consumers use to find information on the go, advertising can be an even bigger annoyance.

Because mobile devices command so much of our attention, advertisers are scrambling to figure out the right way to use them to get their messages out.

On Wednesday, ad agency holding company Interpublic Group of Cos. Inc. is announcing a small investment that signals its growing interest in mobile advertising.

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The advertising giant has taken a minority stake in Kiip Inc., a San Francisco-based start-up founded by Vancouver native Brian Wong.

The company delivers ads by creating partnerships with mobile applications and games. When users achieve something – finishing a workout on the Map My Run app, for example – Kiip offers a reward on behalf of one of its advertisers, such as a free song download courtesy of a car company, or a coupon for a free coffee.

"We're really aggressive in the kinds of relationships we're seeking with mobile partners," said Chad Stoller, managing partner of IPG Media Lab, a New York consulting agency that Interpublic opened in 2011 to help clients understand their audiences, with a strong focus on mobile. "Mobile gives us this incredible ability to understand who the customer is and what they might be doing next, or where they have been."

Interpublic also acquired Huge in 2008, a full-service digital agency with a large mobile practice that designed streaming capabilities for the HBO GO app. Last year, the holding company made a number of acquisitions of agencies that included strong mobile capabilities, including ChaseDesign, Frukt and Hellocomputer.

The Interpublic investment was part of the $11-million (U.S.) in Series B venture-capital funding that Kiip secured in July. It is a small investment for IPG; the terms were not released, but Interpublic was not the lead investor, meaning it accounts for a few million at most. But the deal is a signal that advertising agencies are seeking out more ways to serve clients in the mobile space. There is no exclusivity involved; Kiip will continue to work with non-IPG agencies, including other firms within the largest ad agency networks that have been clients in the past.

Kiip's sponsored offers typically have a 20- to 25-per-cent engagement rate – the percentage of people who saw the offer and clicked through, going on to enter their e-mail address or other information to redeem it. This is the money moment for advertisers, since data about consumers' profiles as well as their behaviour on mobile are highly coveted. Kiip's most successful campaign last year, for a consumer packaged-goods brand, reached a 56-per-cent redemption rate.

"It sends a massive signal to validate mobile in general," Mr. Wong said. "With the potential of mobile, there's a lot of spending that has yet to be unlocked."

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But advertisers remain shy, Mr. Stoller said, largely because the industry is still working to develop reliable systems for tracking campaigns on mobile to give an accurate measure of the return on marketing investment in this space.

"It's clear the attention is going to mobile," he said. "But the question is, what is it that's going to get people to start putting the money where the attention is? The more tools are developed, the more we understand the platform, the more likely that advertisers will come on board."

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