Financial Times Profiles Quattro’s CEO and CTO

June 23, 2009

Hallowe'en calls that cast a spell

By Rebecca Knight

 

 

After Andrew Miller and Eswar Priyadarshan sold m-Qube, their US mobile media management business, in May 2006 for $281m, they set out to start a mobile advertising company.

Their record with m-Qube ensured early success in attracting money and people for the initiative. They raised a cool $6m from Highland Capital Partners, a venture capital firm, recruited some top engineers in the mobile technology field and rented office space near Boston.

The only problem was that they did not have a proper plan. They knew the space well: m-Qube's business had been to enable mobile content providers to bill for their products – such as ring tones – through wireless carriers. But they realised they did not know how to sell mobile ads.

"It was paralysing," says Mr Mill­er, 40. "We weren't bold young entrepreneurs at that point; we weren't charging ahead blindly. It was almost as though we knew too much about mobile technology – how carriers worked, the current state of the market, what the perceptions were."

That changed on Hallowe'en night. Mr Miller and Mr Priyadarshan were separately "trick or treating" with their children, while trying to stay abreast of a basketball game between the Miami Heat and the Chicago Bulls on their mobile phones. However, the text was garbled, and the so-called up-to-the-minute scores were anything but. They had an epiphany: they could not sell mobile ads until the mobile internet became frustration-free for users. "The reality was, folks were looking for content on the mobile internet and having a poor experience," says Mr Miller. "We realised, ‘This is the gig'."

Today Mr Miller and Mr Priyadarshan are chief executive and chief technology officer respectively of Quattro Wireless, a company that helps web page publishers build and manage the content of their mobile phone internet sites, and then support that content through targeted advertising. Clients include Microsoft, Sony, Kmart, Toyota and American Express. The company, now based in Waltham, Massachusetts, pro­jects sales this year of about $20m, four times last year's.

"Our premise is an engaging experience monetised by advertising," says Mr Miller. "The idea is that if [websites] have good, premium content that helps you save time, waste time and have fun. Users will be engaged and will value ads on those pages more, and be more likely to click on them."

The two founders were in agreement about where the company would go from there. This was no surprise. They had first met after Mr Miller was recruited to m-Qube – which had been found­ed by Mr Priyadarshan – to help change its business model. Mr Miller's ideas were re­­sisted at first by some managers, but were always in sync with Mr Priyadarshan's. Togeth­er, they persuaded the senior management team towards the aggregator model that led to m-Qube's meteoric revenue rise and eventual sale to VeriSign.

When it came to Quattro, "we knew that mobile ads weren't going to happen until the mobile web happened", says Mr Priyadarshan, 46, who came to the US from Bangalore, India in 1982.

Quattro had to build its own tool that would translate web content on to the mobile phone. The result, called The Juicer, puts a site's wired content, including rich media such as videos, on to the user's mobile, making a company's mobile internet site as attractive to use as its wired site.

It was expensive to build the technology in-house, but "nothing existed in mobile, so we couldn't just build one part and license another", says Mr Priyadarshan. Of Quattro's 75 employees, about 50 have worked with him before at companies such as Open Market, Adobe Systems and Sun Micro­systems.

The founders quickly put together an in­ventory of customers including Univision, Playboy, Sony, the National Football League and CBS News. "The user-experience and the quick load times were so much better than [publishers] thought it could be," says Mr Miller, formerly CEO of WatchPoint Media, an MIT Media Lab interactive TV spin-off.

In addition to The Juicer, they built from scratch an advertising platform for the mobile internet, including technology that provided analytics about consumer behaviour. "[The technology] is all about targeting and optimisation – showing the right ad to the right user on the right type of device," says Mr Miller.

Then came the really hard part: persuading advertisers to spend their money on mobile. The growing adoption of smartphones – which tend to have bigger screens and Qwerty keypads – makes mobile web surfing less exasperating for users, but it is still a leap for some advertisers to allocate much of their budget to mobile.

More than 10 per cent of US mobile subscribers own a smartphone, according to industry data. "There was a lot of education [of potential clients] that needed to take place and there is more to be done," says Mr Miller.

The click-through rate – a measure of the number of users who click on an ad, divided by the number of times the ad appears on screen – on mobile ads is higher than wired internet ads. CTRs for the mobile internet average 2-5 per cent, while the wired internet ads have an average CTR of 0.2 per cent, according to the Interactive Advertising Bureau.

Quattro's targeting capabilities are a big selling point. "We can go into agencies and say we have 25m unique users, 9m of whom are men who live on the East Coast who like sports, and that's exactly who you want to reach," Mr Priyadarshan says.

In March, the company closed $10m in its third round of funding, led by Highland Capital Partners and Globespan Capital Partners. In total, the company has raised about $28m and is still majority-owned by those two VC firms. It will use the latest funding to continue international expansion and improve its technology.

"It's a cool industry to figure out – but it's hard, because it's changing every day," says Mr Priyadarshan. "There is no resting because the moment you do, you fall behind."

Smart way for advertisers to target mobile customers

The global economic downturn has put a lot of pressure on the advertising industry, but mobile advertising has held up relatively well. "The recession has been our best friend," says Andrew Miller, chief executive of Quattro Wireless.

Lately, consumer electronics, packaged-goods, and fast-food marketers have been joining entertainment companies in making a bigger push for customers on handheld devices. Last year, Quattro had on average 70 campaigns in a month; this year, the company has about 600 campaigns a month.

"Brands are looking for a smart return by targeting [customers] they want on their mobiles, and mobile is measurable," says Mr Miller. "We can send a report to [a] chief marketing officer that shows we're reaching the audience the customer is hoping to reach."

Eswar Priyadarshan, co-founder and chief technology officer, says: "We can reach customers who live in only certain countries, or only ones with smart phones, or who use certain carriers, or we can reach them only on Thursdays before a movie release.

"We also enable them to kick off their campaigns and with analytics, to see what's working and what's not . . . If you target and it's not working, it's really not working."