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Published 03 December 2013 00:08, Updated 04 February 2014 00:07
Dale Carr’s LeadBolt is third behind Google’s AdMob and InMobi in terms of how often it is integrated into mobile apps. Photo: Louie Douvis
Australian entrepreneur Dale Carr understands that games such as Candy Crush Saga and Angry Birds are more than just a way for smartphone users to kill time on the train. The “app economy” is big business and Carr is in the thick of it with his start-up LeadBolt, taking on the likes of Google in the in-app advertising market.
Carr founded LeadBolt in 2010 and three years later he says the business is profitable and annual revenue is more than $30 million. About 75 per cent of that is returned to the app developers.
“LeadBolt keeps apps free and we do that by providing application developers our software platform that allows them to make more money [from advertising] than they would by just selling the apps in the app stores,” Carr says. “We do that by delivering over 5 billion impressions monthly across 40,000 apps in over 129 countries.”
Carr says LeadBolt is third behind Google’s AdMob and InMobi in terms of how often it is integrated into apps, according to AppRank data. The network is available for iOS, Android or Windows. Apps with LeadBolt advertising include Zynga’s Words with Friends, Outfit 7’s Talking Tom and Pandora Internet Radio. Advertisers include other games such as Candy Crush Saga, big entertainment brands such as Electronic Arts and Disney, and travel clients such as Hotels.com, Virgin, KLM and Expedia.
Last month Carr won Ernst & Young’s technology entrepreneur of the year and winner in the technology category for the Australian Export Awards.
LeadBolt targets its advertising by probability and is working on overlaying demographic information from other sources. The company has commissioned a study on digital privacy from the University of Technology to help establish best practice. “The mobile space in some respects is the wild west. . .it’s so new. You get aggressive networks taking whatever they can now because it’s a short-term play,” Carr says. “We’re a long-term play.”
Carr retains 100 per cent ownership but says he is open to the idea of taking on outside investment to accelerate growth if it made strategic sense, such as a partner that could help penetrate the Asian market.
Ultimately he expects to exit via either a trade sale or an initial public offering and he says he would consider the Australian Securities Exchange, especially given the success of the recent float of Matt Barrie’s Freelancer.
LeadBolt has 65 staff but intends growing to more than 100 in the next few months. The company is expanding into the adjacent office of its Bondi Junction building and also has a presence in Los Angeles and the Philippines. Globally, mobile games are expected to generate $9.6 billion in revenue in 2013, with 23 per cent coming from advertising, according to the PricewaterhouseCoopers Outlook report on media and entertainment.
“LA is the entertainment capital of the world and we had quite a few entertainment clients,” Carr says. “LA for us was a much easier entry in terms of getting a base without having to deal with the typical Silicon Valley scenario of people being whisked away on a wing and a prayer for new opportunities.”
The report suggests mobile advertising is one of the hottest growth areas in media, worth a projected $11.8 billion globally and $114 million in Australia in 2013 and expected to double over the next four years. However, Interactive Advertising Bureau figures suggest it will overshoot this forecast, as it was worth $110.7 million in Australia in the September quarter alone.
IAB research director Gai Le Roy says UK figures suggest in-app advertising accounts for 61 per cent of all mobile ad spending. While the majority of ads are for other apps, Le Roy says it will become more mainstream over time.
“In the early days of the web it was all ads for other websites and it slowly started to diversify. That will happen in the mobile space as well,” Le Roy says.
However, not all app developers are enamoured of advertising.
The co-founder of Sydney-based Flat Earth Games, Rohan Harris, says he deliberately kept advertising out of his iOS game TownCraft in order to make sure the experience was relaxing and distraction-free.
“We were approached by a few different ad companies but we felt it would disturb the flow and annoy players who felt that they were paying for the privilege of not having to see ads,” Harris says. “I was also worried it would make our game seem cheap.”
Game developer King dropped advertising from Candy Crush Saga earlier this year, opting instead for a strategy of in-game purchases – though LeadBolt still runs ads for Candy Crush within other apps.
A Forrester study released in October suggests that 47 per cent of US smartphone users ignore in-app ads and 43 per cent find them disruptive. However, only 25 per cent of smartphone owners and 21 per cent of tablet owners would rather pay for apps than see ads.