This company serves product ads on existing content, driving revenues for publishers and advertisers alike
Online advertising has gone from bad to worse. A report posted on Hubspot found that only 2.8% of those surveyed thought the the ads they saw on websites were relevant to them, while another 54% said that they simply did not trust banner ads.
Banner advertisements and other forms of revenue generation are facing an uphill battle for relevancy as ad blockers and general ambivalence at irrelevant ads are making life harder for publishers and advertisers alike.
Now one small company out of Dubai thinks that they might have found a solution that can turn around the struggling industry, breathing new life into a sector that is ripe for change.
The company was founded in early 2014 by Mahmoud, a serial entrepreneur who started coding at the age of ten. He is joined by COO Ahmed Hassan and CTO Ahmed Abdallah. Together, they lead their team of 14 that mostly consists of full stack engineers and data scientists.
What the AdRelated team has created is a machine learning product capable of picking up on context and keywords from the article to display an unobtrusive, natural looking carousel of product options that the reader can click on and go directly to the site where they may make the purchase.
Based on affiliate commissions, the company shares the revenue with the publisher for a hopefully win-win proposition.
They can optimize the ads being shown based on the CTR (click-through-rate) or other parameters. The process of making the ads is done automatically, with their system crawling the e-commerce advertiser to create the ads for the carousel.
One of the pluses that Mahmoud says helps them with publishers is that their carousel does not compete with existing banners, causing no harm to the current revenue. “It creates a new space, meaning that they don’t have to remove any of the banners that they have on the site,” he explains.
Whatever space they take they create as a carousel, making the number of products that can be shown limitless.
There is an automated ranking for the carousel, dictating the order in which products are shown to the reader. They take the relevancy of the product, CTR, and the commission that they are making, and throw all of the factors into their algorithm when deciding which sequence the products are displayed in.
While having started their business in the Middle East market, they have rapidly branched out to regions across the world. So long as they have access to the inventories in the local stores, then they can plug them into their system.
AdRelated is already working with big western retailers like Neiman Marcus, Macy’s, Bloomingdale’s, Sak’s Fifth Avenue, and Nordstroms.
Dubai is home to AstroLabs, the only Google Entrepreneur hub in the Arab world and an important partnership as the ecosystem continues to build itself as a major player in the global tech scene.
“This is the best place to launch a startup in the entire region,” Mahmoud tells Geektime. He says that he is seeing significant process in moving the UAE into a hi-tech center in what he hopes will become the Silicon Valley of the Middle East.
“What Dubai is doing is unique in the ME,” explain Mahmoud, “They are pumping money into incubators and bringing in talented professionals.”
There is a question of why the small UAE with its commercial center in Dubai appears to be taking off so quickly while other parts of the Arab world are still working to catch up.
“Amman and Cairo have a lot of talent,” says Mahmoud. “Unfortunately, they generally think of serving companies in the Gulf since that’s where the money is. This model is very common for startups in the region.”
For companies and professionals looking to launch their businesses, Mahmoud believes that it is simply much easier to accomplish this in Dubai where the system is more established. He notes that concerns over credit card penetration and logistics are big problems in many parts of the Arab world.
Most of AdRelated’s R&D is in Cairo where there is a high concentration of educated talent, and they are starting to recruit across the region, looking to spots like Saudi Arabia for help in building their team. “It’s growing organically,” he says.
Looking towards the future
According to Mahmoud, AdRelated has already been approached with four acquisition offers so far. He says that they have turned them down since they believe that they can really build what they have into a big and successful company that can compete on the global stage.
During their recent trip to Silicon Valley in late August, Mahmoud tells Geektime that they had caught attention for their approach in revolutionizing the advertising space. One of the highest compliments that Mahmoud recalled was when they were told that they were solving for the most important variable in advertising, that of making people buy something at a certain point in time.
“We are shortening this process,” says Mahmoud, explaining how AdRelated addresses the fundamental purpose of a successful advertisement. “If you look at the interaction with traditional ads, it’s a very long journey. We are showing the right product to the right people at the right time.”
The crew is in the middle of incorporating in the U.S., and are opening an office in Silicon Valley, with plans to branch out to New York and then on to the United Kingdom. Part of their push for expanded capabilities has been their acquiring a small ad company that has a lot of publishers in their network, making their clients theirs from day one of acquisition.
Mahmoud says that they are looking to go for a Series A funding round in Q3 of 2016. For now, they are operating their business, working with some 200 e-commerce sites, and using government funding as well as angels from Google, Microsoft, and Oracle to help push growth.
Stacking up to the competition
Competition at this point is not about product recommendation, but traditional advertisers as well. Outbrain, Taboola and other content marketers are also indirectly in the market. They need to educate a lot of people as a part of their sales process, showing how others can monetize their content.
They have an advantage against companies like Taboola that have minimum unique visitor requirements to use them. However, AdRelated has found that they have much higher conversion rates since they are working with smaller sites that have dedicated audiences who are really interested in the specific topics that are related to the products being offered on their carousels.
Because they work on revenue share commission, Mahmoud explains that this model is far more economically viable than a CPC model since it does not cost them anything to give publishers the code. This allows them to throw out a much wider net at a lower cost.
AdRelated has created something that is both simplistic and revolutionary in its approach. Native advertising that encourages visitors to click on interesting content that leads them to a site that talks about a product, hopefully increasing their chances of purchasing something appears to be the name of the game now — albeit with an uncertain future.
What the guys at AdRelated are essentially making is existing and relevant content shoppable, and this could be a very good thing. They have the vision and talent to continue their growth, making them a viable contender as they jockey their way to the top.
While there are arguments to be made that the longer sales funnel will eventually bring a hotter lead, this company is attempting to remove some of the steps and utilize existing content for driving sales.
I have some concerns about how AdRelated will fare against the dreaded or loved (depending on your perspective) ad blockers that have cut into so much business. Mahmoud says that for now they are able to overcome some of these blockers, but have plans for a more comprehensive solution in the future.
There is also the added challenge that even interested visitors are so ambivalent to ads at that they just ignore them completely.
The industry as a whole is going through a period of change as it faces some hard facts. There is likely to be greater calls for accountability on ad budgets, performance is still likely to remain key, and they will need to find ways to earn back the interest and trust of visitors.
That AdTech is going to stay a relevant and essential part of business is a given. Whether or not it will look the same in five years is a different story.