A Q&A with Liftoff co-founder and CEO Mark Ellis. The Menlo Park, California-based mobile marketing software startup recently completed a $5 million Series A funding round, which it announced earlier this month. The round was led by Steve Anderson of Baseline Ventures, with participation from Michael Dearing of Harrison Metal, Fred Warren of Sage Venture Partners, Shinya Akamine of Core Ventures Group, Tim Koogle , the former CEO of Yahoo!, and Ilya Sukhar, founder of Parse (acquired by Facebook). The company was founded in 2012 by Ellis, Chief Product Officer Phil Crosby, and CTO Harry Robertson, and previously raised $1.8 million in Seed funding.
SUB: Please describe Liftoff and your primary innovation.
Ellis: We started Liftoff a little over two years ago because we and a lot of the customers we worked with at our previous company were frustrated with their inability to effectively target users on mobile. While the online marketing space had matured to a point where there was a high degree of confidence that ad dollars were helping grow a profitable customer base, this was not the case with app marketing. So we set out to build a platform for marketers to more effectively target and acquire new mobile users that will both install an app and engage in high value actions inside the app, like register, share, make a purchase, make a reservation, or subscribe to a service.
SUB: Who are your target markets and users?
Ellis: We are currently focused on six key markets: Ecommerce, finance, lifestyle, social, travel, and utilities. The majority of the apps in these markets have specific ROI, producing postinstall events that our customers would like to increase engagement in. We will continue expanding into other verticals as we grow.
SUB: Who do you consider to be your competition, and what differentiates Liftoff from the competition?
Ellis: We consider our competition to include anyone that is competing for ad dollars to put into mobile advertising. In looking at our competition, what differentiates Liftoff is that we are able to run true CPA-optimized mobile app install campaigns and charge our customers on the postinstall action, and not the install. In other words, while all other app marketing services manage app install campaigns on a pure cost-per-install basis, and charge their customers on the install, Liftoff manages campaigns on a CPA basis. Our customers only pay when we acquire a new install who goes on to engage in a specific postinstall event.
Our business model essentially ‘derisks’ the advertising spend for the marketer, which our customers absolutely love.
SUB: You just announced that you’ve raised $5 million in Series A funding. Why was this a particularly good time to raise more funding?
Ellis: Mobile app marketing is exploding; and demand for our service has taken off along with the growth in the market. We are seeing tremendous market traction and wanted to move more quickly.
SUB: How do you plan to use the funds?
Ellis: Our plan is to continue investing in our technology and our team. With increasing demand for our services, we are doing everything we can to stay ahead of the curve and deliver for our customers.
SUB: What were the first steps you took in establishing the company?
Ellis: We wanted to understand our customers’ pains so we built a mobile app and went through the effort of marketing the app through the methods available at the time. To be honest, it was a very painful and fragmented experience. Based on this, we knew there was a need for a more informed buying experience that could deliver results that marketers care about most.
SUB: How did you come up with the name? What is the story or meaning behind it?
Ellis: We aspired to have a name that spoke to the key characteristics of what we offer, i.e. growing a large, engaged user base for our customers, and helping our customers ‘liftoff’ and grow a profitable user base.
SUB: What have the most significant challenges been so far to building the company?
Ellis: Moving as quickly as we can with demand for our services.
SUB: How do you generate revenue or plan to generate revenue?
Ellis: We have two elements to our business model and how we generate revenue. As we ramp up with our customers and learn about their users and defining characteristics, we work on a cost-per-install (CPI) payout, where customers pay for each new install we generate. As our system gets smarter at acquiring new users who engage in specific postinstall events that meets our client’s CPA goals, we move to a CPA payout. At this stage, a customer only pays for new app installs who engage in the agreed upon postinstall event, like registering, making a purchase, or subscribing to a monthly service.
SUB: What are your goals for Liftoff over the next year or so?
Ellis: We are really focused on working with our growing customer base, to build profiles of their most valuable users and help them grow a more active mobile user base.
In addition, given the uniqueness of the data and insights we are accumulating on app marketing and postinstall engagement, we want to share our knowledge with the marketing community. Whether a company chooses to work with us or not, we feel a sense of responsibility to educate marketers on how to effectively build a more engaged and profitable user base. Our Mobile App Engagement Index is just the start of this effort.