Traffiq raises $10M to manage online ads

In the midst of one of the most challenging advertising climates in years, venture capitalists continue to pour money into the sector, backing startups that claim an edge in tracking digital media ad campaigns.

In the last two weeks, firms have disclosed $20 million in investments in companies that provide services to match advertisers to media outlets. Traffiq, a New-York based startup that runs an exchange for buying and selling online ads, announced it raised $10 million in a Series B funding round announced last week from Grotech Ventures, Greenhill SAVP and Court Square Ventures.

Investments in advertising-related startups add competitive pressure to what’s already a heavily funded space. So far this year, investors have backed more than 30 companies developing various services to streamline the process of buying and selling ads, measuring performance and managing campaigns across multiple mediums, including Internet, television and mobile phones.

Traffiq’s distinction, says Brian Hirsch, Greenhill managing director, is to focus on spreading ad campaigns across a broader number of websites and offering tools to measure the effectiveness of each advertising venue.

“Instead of spending $1 million for four websites, that $1 million is now spent distributing ads across 50 or 100 sites,” Hirsch says. “To do that you need technology because [an ad agency] can’t step up research and staffing to manage that.”

Under Traffiq’s business model, publishers pay the company a commission for ads sold on their sites. Particularly in today’s difficult economic environment, Hirsch observes, publishers are willing to pay for tools that help them secure higher advertising rates.

Mark Kahn, CEO of Traffiq, notes that “many publishers have high-value inventory that is going unsold.”

At the same time, Kahn says, many agencies and advertisers have little control over the placement of their ads, because some ad sales networks do not report that information. Publishers using Traffiq’s system include, Scripps Network, Shopzilla and PriceGrabber. A number of advertising agencies are also using the service.

Investors see digital advertising as a large enough market to support multiple players.

Traffiq’s funding announcement last week came amidst a typically busy period for advertising startup investments. The same day, MediaMath, a New York-based provider of a digital media-buying platform, announced that it raised $10 million in new VC funding and $2.5 million in debt financing. Safeguard Scientifics led the venture round, and was joined by QED Investors and European Founders Fund.

A few days earlier, Extreme Reach, which runs a network enabling advertisers to deliver and track their video campaigns across TV, Web and mobile channels, announced that it has secured an additional round of growth capital. Investors in the round, which was of undisclosed size, include Village Ventures, Greycroft Partners and Long River Ventures.

“There are lots of companies at different pieces of this ecosystem,” says Grotech General Partner Steve Fredrick, who, along with Hirsch, recently joined Traffiq’s board of directors. Traffiq’s edge, he says, is that it’s “a fully transparent system for the advertiser, regarding where their ads are going and cost of each.” —Joanna Glasner