Smaato CEO: ‘Location Tells Much More About a User Than Anything Else’

Founded in 2005, San Francisco-based Smaato provides a platform for mobile app publishers to monetize their operations through in-app marketing. In July, the company rolled out a demand-side platform that helps companies such as Yahoo, AOL, and Google choose which traffic they want to buy from ads.

Street Fight caught up with the company’s CEO, Ragnar Kruse, to talk about his company’s origins, the new platform, and the way location and emerging technologies are shaping the future of advertising.

Tell me about the origins of Smaato. Where did the idea for the company come from?
I’m a gadget guy, and in 2005 I saw that there were, I think, 20 million smartphones sold the year before, and I realized that all phones will become little computers. Computers need software — so let’s build some software.

A couple months in, we realized there needs to be a different way to monetize apps than through selling them for 19 or 29 dollars, which at that time was about the average price. So we came up for the idea to have advertising within apps to monetize them.

Who are your main clients and what do you do for them?
Today we are an ad exchange and SSP, and we provide a full platform for publishers — for app developers purely on mobile — to monetize for advertising by connecting to every advertising platform in the world. We have more than 400 tech platforms now connected to us.

All our clients are publishers and developers. Developers could be the Outfit 7, Talking Tom, could be Weather.com. We have as a total more than 100,000 app developers who have signed up, and any given day we have about 20,000 apps, which we monetize on a global basis, and we run up to 10 billion ads per day.

So these are our clients. We connect them to the demand-side platform. So it’s not the advertisers — it’s the buying platforms. These are the companies such as Google, Turn, MediaMart. It’s also all the ad networks, such as AOL and Yahoo. We have signed more than 500 agreements, and about 400 of them are live.

Can you break down the suite of tools that the Smaato Demand Platform (SDX) comprises?
We started with tools that help our publishers to monetize. We then started rolling out our Smaato demand platform, which actually is a platform that allows the demand partners to more efficiently buy our traffic. One of the big problems when you connect all those tech platforms is you produce a lot of traffic, and this traffic costs money.

What our platform, our SDX, really offers is you basically can put in any kind of parameter to filter down to exactly the traffic, impressions, and users that you actually want to receive with your platform. So it’s reducing the waste you normally have.

For example, there are platforms who only buy in-app traffic, so why should they get any mobile traffic? So they’re able to reduce this buy to only in-app. Maybe they only buy inventory in specific countries, so only in certain countries. They can say, “Only send me New York traffic.” In the platform, they put in lat/long for New York and they only get traffic that comes from users in that area.

Another part of the platform is a self-service platform that allows IT partners to connect to us and self-service any kind of testing and so on, which is reducing the setup timeframe. So we have programmatic partners who were able within 1 or 2 days to connect to our platform, do all the testing, and make sure that both platforms are counting the same numbers.

Another tool that we launched with SDX is our smarter analytics for demand partners. That allows demand partners to visually get a tool that allows them to break down our traffic, our publishers in many different dimensions. We can take any parameter that we usually have in programmatic to then visualize that inventory. What that means is, you can say, “How much traffic is available in the US?” And you can click on US, and it only shows you the US. You can say, “Show me only in-app traffic.” It will show you only publishers and their apps and their ad placements. Then you can say, “What do you have available on video?” You click on video, and you can see how much inventory and which inventory is available for video.

How big a role does location-based marketing play within the adtech industry these days?
One of the big differentiators between online and mobile is that in mobile location plays a much bigger role. Location tells much more about a user than anything else. Location helps to better understand users, put them in categories, and categories allow advertisers to better understand the categories of audiences that they want to target.

Location is an important data point and if advertising is using that smartly, it’s more relevant. What we all want to see within advertising is that it’s less and less spam and is more and more relevant to the end user.

What technology has most changed adtech in the last couple years? What technologies do you see emerging now that will be revolutionary going forward?
I think what we’re seeing are several trends that are playing very well together.

All the hardware cost has gone down heavily, and then those hardware costs are provided through cloud services. You have more and more cloud service providers who provide you this much lower-cost hardware around the globe, so that means you’re able to use lots of CPU power in the shared environment across the globe.

Another is there are newer tools that allow to process much more data in real time. You’re now actually able to work with streaming data. So data flows in and you capture this in a platform; it’s not a database. The result is now you’re able to handle much more data in real time. These are technologies that are just a few years old, but now we have this CPU power that’s available globally and now you have this streaming data and that allows you to work much more smartly.

Next is using machine learning and artificial intelligence to work with this data and make predictions. Then you can analyze the results of those predictions to make much smarter decisions across all of this data.

Those trends will allow us to do much better advertising going forward, as more advertising will be digitally trackable, and we’ll be able to work with those results to improve ROI. So we’ll see more and more relevant advertising. The advertiser will be able to leverage the data we’re getting to make smarter targeting decisions.

Joseph Zappa is Street Fight’s news editor. This interview has been edited for length and clarity.