Russian advertising platform CityAds raises $5M to go global

Klever Internet Investments, the technology branch of a major Russian private investor, Klever Asset Management, has received a minority stake in CityAds Media, a Moscow-based international affiliate marketing and performance advertising platform, in exchange for $5 million in growth equity funding.

CityAds, which is attracting private equity investment for the first time, intends to use the funds to scale its international sales, explore new verticals, and fuel its proprietary technology development.

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“It is good to see new capital flow into this still fairly fragmented CPA (cost-per-action) niche in order to accelerate performance marketing as a whole and big data optimized conversion tactics in particular,” said Bas Godska, the Russia representative of myThings, a global RTB-player active in the country since early 2011. “Only this way can we release some pressure in regards to the relatively high customer acquisition costs from paid traffic channels in Russia.”

“Yet I noticed a strange correlation locally — the smarter the technology, the less in ad budgets are being spent on it,” Godska added in an exchange with East-West Digital News.

High-tech features for global expansion

Operating via the CPA model, CityAds Media uses next-generation big data tools — such as retargeting, upsell services, and dynamic creative optimization and pricing — to improve traffic-conversion efficiency.

“Our main competitive advantage lies in these technologies; there is no similar offer on the CPA marketing market,” CityAds deputy chief executive Oleg Mamedov told East-West Digital News.

However, Mamedov named Zanox as their main international competitor, as well as Admitad and Actionpay on the Russian market.

Founded by Alexander Savchenkov in late 2010, CityAds Media became profitable six months after launching, according to Mamedov. Turnover reached $50 million in 2013; currently the platform counts more than 700 customers and 40,000 active affiliates in four market segments (financial services, online games, e-commerce, and travel).

While CityAds’ software developers are located in Russia, the company operates in Russia, Ukraine, Kazakhstan, the European Union countries, and Brazil. “So far Russia has been our main market, but we’re actively developing international activities now,” said Mamedov. “Two new offices will be set up in the first half of 2014 in Asia, and we’re planning to have eight representations outside Russia in total by the end of the year.”

Since its inception in 2012, Klever Internet Investments Limited has invested in three Russian startups: remote working platform Workle, accounting software publisher Moe Delo, and online real estate listing Choister.ru. The fund has just announced another investment in SurfingBird.ru, a Russian content discovery service similar to StumbleUpon.

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