Tapad is having a growth spurt. From a modest corner office, the digital advertising startup has encroached on the entire 20th ﬂoor of a building in Manhattan’s Chelsea neighbourhood—with the exception of a walled-off chunk in the centre, taken up by a lighting company. Co-founder and CEO Are (“Ah-ree”) Traasdahl needs the space: He has hired 44 people in the last year, 10 in just the last month. The squatter demands $65,000 to move. “New York real estate,” sighs Traasdahl, 40.
Growing pains are Traasdahl’s badge of honour. Thumbplay, his mobile-app store that predated the iPhone, expanded from sales of zero to $100 million in less than three years. With Tapad he’s piloting another rocket ship.
Tapad professes to solve a problem that has long plagued online advertisers: How to track and target the same consumer across multiple devices—desktop computers, smartphones and tablets. Such ‘retargeting’ is easy to pull off on a desktop. Just add cookies—bits of code that tag visitors—to a website and advertisers can follow prospects with pitches as they circumnavigate the web. Visit a website that sells cutlery and you might be stalked by ads for knives and forks. Because such ads show only to those who’ve visited a brand’s website, they boast a click-through rate of up to three times that of banner ads, says AdRoll, a San Francisco retargeting company.
But cookies can track on only one device. The trail goes cold when you leave a desktop and use a phone. Digitally agnostic users can switch screens 27 times in an hour, says a recent study, leaving marketers in the dark. Using algorithms, Traasdahl says he can show them the light.
Today Tapad has 160 clients, including Audi, American Airlines and TurboTax, serving 2 billion ads each month across 18,000 online publishers. With $1.2 million in sales in 2011 and $8.2 million last year, Tapad should notch a small proﬁt on $25 million in 2013. An imposing roster of digital advertising vets—including AppNexus CEO Brian O’Kelley and former DoubleClick CEO David Rosenblatt—have invested $8.3 million, along with venture funds like FirstMark Capital and Avalon Ventures.
They have had a slightly scary ride. Tapad muscled through a year of failed sales meetings. Its burgeoning success risks irking Congress, regulators and privacy advocates.
Traasdahl grew up in a small town near Trondheim, Norway, 250 miles north of Oslo. An only child—his father taught high school English and his mother physical education—he showed an early affinity for moneymaking. At age 8 he used Legos to attach a motorised lock to the door of his room, requiring entrants to insert a krone (14 cents) if they wanted in. “It was a 100 percent margin business,” Traasdahl smiles. He gave up when his mother stopped collecting his laundry.
In high school he covered soccer games for a national newspaper. He sold his own help desk software to local businesses while attending the Norwegian University for Science & Technology in Trondheim. After a brief stint consulting, he joined an Oslo startup that ran text-based voting campaigns for TV shows. When it sold to Telenor, the Norwegian telecom giant, he moved to New York City in 2003 to start a US unit.
The entrepreneurial virus ﬂared again. Leaving Telenor in 2004, he launched Thumbplay, an early app store that sold music, ringtones, games and videos on mobile phones. Working in a windowless office in Midtown, he and a co-founder put in 100-hour weeks for a year, striking licensing deals with record labels and carriers.
Customers were slow to catch on. As his cash ran dry, Traasdahl dumped his last $90,000 into online banner ads on popular sites like MySpace and Metro Lyrics. Customers jumped—and spent big money on Thumbplay’s library of content. For every $5 spent acquiring a user, Thumbplay gained $30 in revenue. That helped land $7.5 million from SoftBank Capital.
The company surged, raising another $42 million in venture funds. Exhausted, Traasdahl gave up as CEO in 2008 to spend time in Florida with his wife and newborn son. Hit hard by the rise of iOS and Android, Thumbplay saw its meteoric streak fade. The company sold to Clear Channel for less than what investors had put in.