thought he was joining a fast growth mobile technology company when he became StepLeader Digital’s CEO in 2012.
Three years later, he’s finally getting that opportunity.
A year after StepLeader began its pivot from a developer of mobile apps for local television stations to a mobile audience insights firm on the edge of the Internet of Things and Ad Tech movements, the Raleigh startup has raised an oversubscribed $750,000 round and lined up major customers for a first-to-market analytics software that lets app publishers (like local broadcasters) target mobile advertising to consumers. It's sold under the new brand Reveal Mobile
New to invest in Reveal Mobile are Durham's IDEA Fund Partners and Alerion Ventures, a year-old fund in Charleston, S.C. In a news release issued today, Alerion’s Wiley Becker says that Reveal has a wide-open opportunity servicing the thousands of app publishers who don’t have access to the mobile audience data of major Internet companies.
“Reveal Mobile levels the playing field, allowing any publisher to compete,” says Becker, a former principal for Square 1 Ventures in Durham.
Three investors—ExitEvent parent Capitol Broadcasting, River Cities Capital Fund and Bull City Venture Partners—have reupped on the company, which just a year ago was losing customers and laying off most of its 32-person staff, an experience that caused uncertainty about the future and a lot of heartache.
It's still in business today because Handly handled the situation with conviction.
“Brian quickly cut expenses to match the decreasing revenue and talked with all our customers to ultimately determine the new path forward,” said David Jones, a Reveal board member and investor with Bull City Venture Partners, in an email earlier this year.
“Brian continually heard from customers that being able to better understand and segment their mobile audience was important and they were ‘blindly’ spending on mobile without knowing much about their mobile audience,” Jones said.
When asked why he continued to invest, the answer was simple. Handly was "an incredible leader/entrepreneur who knows the online ad market better than most," and the platform was "first of its kind," said Jones.
From StepLeader to Reveal
When Handly, a seasoned advertising technology veteran and serial entrepreneur, joined StepLeader in 2012, it had recently spun out of Capitol Broadcasting Co. and was on a growth path. After several bad years for local TV stations, it was an election year and politicians were buying more ads than ever.
“A lot of stations went from the worst years they ever had to the best ever,” Handly told me earlier this year. But that soon meant that many stations were for sale.
In a matter of months in 2013 and 2014, Gannett bought Belo Corp., Tribune Broadcasting bought Local TV Holdings and EW Scripps merged the broadcast holdings of Journal Communications, majorly consolidating the local TV industry in the U.S. Those companies became big enough to have their own mobile development groups, casting aside vendors like StepLeader. Though revenue had climbed in 2013, it was stagnant in 2014. As competitors began to go out of business, StepLeader set to work serving the customers still left while analyzing the changing market and industry and its technology and staff.
In June 2013, a small team started experimenting with new technologies (ExitEvent wrote about those experiments
in March 2014). One was iBeacons, the low energy low-cost sensors that detect a Bluetooth-enabled smartphone when it moves into close proximity. More than 4.5 million are projected to exist in the U.S. by 2018, providing tens of millions of data signals daily.
Handly's team purchased about 1,000 beacons and installed them within businesses in several industry sectors—they thought they might build a beacon management software. For car dealerships, for example, beacon data helped determine the intent of the customer—whether it be browsing for cars (staying in the lot and showroom), making a deal (entering the finance office) or getting a repair (visiting the service department). Eventually, they built a software that let existing apps detect beacons. When they turned it on for the first time, they saw thousands of beacons already in existence and trackable, and that got the team thinking about a different play that leveraged its existing customer base.
Combining beacons with big data
Beacons are constantly transmitting data about the whereabouts of people—what if StepLeader could leverage that exact locational data along with public data and other insights that can be drawn from app downloads on mobile phones to target advertising on mobile the same way that advertisers do online. Targeting could help to overcome key problems in mobile advertising—the small screen size, which limits the number of ads; the lack of cookies, which makes it difficult to track audience behavior on devices; and the competition from Facebook, Twitter and other advertising giants, which have built-in audience data they can use to target users with ads they're more likely to be interested in viewing.
"Nothing against Facebook, but they can't be the only player in this space," Handly says.
But beacons wouldn't be effective alone. The team developed an algorithm that tracked publisher app (like say WRAL's news app) opens by GPS coordinates to determine a user's zip code, then layered Census data to infer level of home ownership and household income. When the app is open, it can also track commute times to certain locales that could provide information about the person's workplace or social activities. Another data signal can also tell what other apps are downloaded on a user's mobile device, which helps make a gender inference and determine a user's interests and political leanings. A software development kit was created to combine all of these data signals into an ad-serving platform that could be built into existing apps to deliver the right ad to the right mobile user at the right time.
For example, if you're a woman who frequently visits a nail salon on the way home from work, you might see an ad for a salon when you scan the headlines on WRAL's app in the afternoon at work.
Early results are compelling
Last September, the company closed $500,000 from its existing investors (who also invested $4.4 million in venture capital over the prior two years). Then in March, the team renamed the company Reveal Mobile, the name chosen by new CTO and Big Data guru Jared Dean because the company reveals mobile data “that’s previously been unseen by the majority of app publishers,” says Matthew Davis, the company’s vice president of product marketing.
Some early tests with WRAL showed a click through rate well above a standard advertising campaign.
“As soon as I saw the data, I was like ‘Holy cow,’” Handly told me late last year.
The company’s access to hundreds of apps and tens of thousands of unique users through its existing customer base gave it fertile ground to launch the new company. Today's news release says that app publishers that have used Reveal's platform in private beta have seen advertising performance increases of 175 to 477 percent, with revenue growing 50 to 200 percent. Its early partners include Capitol Broadcasting and WSI, a division of The Weather Company, along with hundreds of other mobile applications. For politicians, it's promising reach to the most likely voters in any political district.
Reveal makes money from license fees and/or a percentage of ad sales through partnerships with ad-serving networks. Here's a pitch Handly gave to Steve Case during the Rise of the Rest Tour
Patents were filed late last year, with feedback from the IP attorney that he’d never seen a space as open as this one during patent research. Patents are pending to protect how beacons are recognized and classified, and how they are leveraged to collect data about mobile users and organize them into archetypes.
Tough in the whole transition was the slimming down required to allow for development and restructuring to happen. Handly had to let go a recent financial executive hire along with many other staffers to leave a small and nimble staff that could service existing customers and handle the new company's data and infrastructure needs. He also needed a CTO, which he found in Dean, a SAS research and development manager, NC State statistics adjunct professor and author of a book on Big Data.
When SteapLeader spun out of Capitol Broadcasting in 2012, it employed 14. The number grew to 32, but by last fall, had dropped to 6.
"We've had some tough days, when it's really hard to come in and be the cheerleader," Handly recalled when we spoke last year.
But now, his team will grow.
At least three positions will be added this year in engineering, data science and business development. And they'll be ready to bring to market, widely, a product that salespeople can use to easily deploy custom, personalized ad campaigns, backed by data.
"The smartphone has been out seven or eight years now and the industry is so good at product analytics, page views, crash support, ad impressions and click through rates, but so few people are actually trying to understand who is using the device," says Handly. "That's why I'm so stoked about it. This really is an opportunity."