Commercial success is where it's app

LeadBolt dominates Australia's mobile-phone advertising industry. Now, Microsoft has come knocking, writes Christopher Niesche.

Google might rule the massive online advertising market at the moment, but Australian company LeadBolt is hot on its heels and starting to dominate the fast-growing app advertising market.

The business runs a platform that allows advertisers to put ads into free phone apps. The advertising revenue goes to the app developer, with LeadBolt taking a commission.

This year, smartphone users around the world will download 80 billion (yes, billion) apps, and that number is forecast to double to 160 billion by 2017.

"There are so many customers we're not really competing with our competitors in a way, we're just trying to fulfil that increasing demand," says co-founder and chief technology officer Andrew Scarborough. "At some point, it will settle down, then that whole thing about competitive edge will kick in and we'll have to be even more super-smart with what we do."

Most ads pay only a small fraction of a cent, but this adds up. The company serves up 5 billion ads a month in 100 different countries and advertises on 40,000 apps.

The inspiration for the business, which was founded in 2010 and now employs more than 50 staff in Australia and the US, came from one of the founders, Dale Carr, who noticed the rise of the smartphone and saw that what little mobile advertising there was wasn't really working.

"Then you put the two together and if you can make it work, you've got a big global market, and that's where we started our journey," Scarborough says.

But there were technical problems to overcome before the business could get up and running. With no platform (or program) available to do the job, Scarborough had to build one from scratch.

It also had to find more innovative ways of using the smaller mobile screen, including audio ads that allow people to keep using the app and shake their phone if they're interested. Another approach is to run ads in the same way that TV commercials appear, such as at the end of a game level on an app so it doesn't interrupt the game.

Next, they had to attract customers. The advertisers were easy enough to find, but a lot of app developers work independently, sometimes from home in different countries, and were much harder to contact. LeadBolt's solution was to get in touch with them via online technical forums and trade shows until word of mouth spread about what they were offering. They also gave developers incentives to refer their friends and colleagues.

Nine out of 10 apps downloaded are free, meaning their developers are hungry for revenue. Some app developers can make thousands of dollars in advertising revenue a week, but most make a lot less.

LeadBolt (the first syllable is pronounced as in "lead the way", not the heavy metal) effectively has two sets of customers - advertisers and app developers - and this has helped fuel the company's growth (revenue grew 300 per cent in 2012).

"We end up with this bootstrapping," Scarborough says. "Suddenly we've got a lot of developers and we need to fill all their advertisements, so we'll work on the advertisers' side, and then we've got too many advertisers."

As LeadBolt has grown and gained credibility, it's been able to attract major advertisers, including Disney, Webjet and Domino's.

As a company in a fast-moving technological space, LeadBolt has a mantra of constantly innovating.

"We have to wake up every day and say, 'What are we doing new today?', and if we're not asking that question, after two or three days, that's a problem," Scarborough says. "When we've slowed down and we've been talking about something, a competitor will suddenly release that feature."

LeadBolt was recently approached by Microsoft, which is making a push into the mobile space and asked the company to launch on its new operating system, Windows 8.

"That's been very exciting getting that going," Scarborough says.

LeadBolt was also a recent finalist in the 2013 Telstra Australian Business Awards.

LeadBolt is the only Australian company offering mobile-phone ads, but it has about 50 competitors globally. It is the third most used advertising platform by app developers on the Android system (the easiest to measure usage), with Google at No.1.

"For me, knowing that I've come on board and we've built the technology from the ground up, that's quite satisfying," Scarborough says. "Of course, I'd like to beat Google. That would be fantastic."