In 2016, Adverty, a Swedish start-up, entered the market with an unusual product — 'seamless' 3D advertising for mobile applications and virtual reality. Today, Adverty's invention is being used by big product companies and brands such as Nestlé, Coca-Cola, Asus, and McDonald's. Adsider had the chance to talk about technologies and the future of 3D advertising with Handren Rasch, Head of Sales of the company.

In just a couple of years you managed to create a new service market. What is it like to sell innovations?

We have been developing Adverty for over three years, so it didn't happen as quickly as it may seem.

There are many challenges in what we do. I like to compare the start of our project with the times when people just started selling TV advertising. The problem with innovations is that people are already used to doing things in a certain way because it is comfortable for them. This goes on until you change the way they do it.

And this is not easy. Advertisers who are used to spending budgets on television and out-of-home come to us with their cool product. They have to step outside their comfortable budgets and invest into my new, risky product.

This is one of many challenges that we faced. Before we entered the market with a ready proposal, we had to work a lot on getting feedback from the clients. That is why we were very transparent in communication with media agencies and all possible categories of buyers.

It took a lot of time to integrate PubMatic and BidSwitch. It is not easy to set up 3D advertising on a platform that is built for 2D buying, but we made it. At that point we also realized that brand safety was super-important, that is why we need a possibility to verify everything that we do. That was how we started integration with iOS.

Then we needed a brand lift study. To do that we teamed up with Dentsu Aegis in Sweden.

We have always tried not to simply sell the client our product and forget about it, but to receive feedback from buyers to later shape our offer in accordance with their needs.

Is the entire industry in apps now?

Definitely. The introduction of GDPR and the fact that cookies and traditional purchase algorithms are becoming obsolete is a bit lucky for us. In the nearest future everyone will rely on ideas, devices, and advertising of these ideas in apps. That is partially what we are doing now. The demand for free games and apps is rapidly growing in general.

Adverty is not a game or an adtech solution. If we get involved with five new games [with VR advertising — Ed.] our reach might increase by hundreds of millions of unique monthly users. Cookies are dying, that is a fact. In-app is a way to increase your reach.

When you play in-app, you spend a lot of time doing it. This way, thanks to our product, the advertiser is where consumers spend their time.

What categories of apps do you serve? I know that the US accounts for about 10% of your global inventory.

It is in fact about 20%. Our possibilities were very limited, and Adverty offered only several solutions. To put it short, we were selling game by game. However, now we have a larger library of inventory, and yet again we had to go through the stage of feedback from agencies. Everybody needed different packages, so we started offering advertising for casual games and e-sports.

Adverty has headquarters in Stockholm and London, you are now developing business in the USA, and recently you announced a plan to bring seamless in-game advertising to the Polish market.

Our commercial department is in Stockholm, but there are also offices in the UK and Ukraine. We have a team of developers in Lviv. Our brain is in Ukraine, because Ukrainian professionals are very clever.

Do you have plans to develop in other regions — СЕЕ, MENA?

We do most of our sales through programmatic, that's why we don't need a physical presence everywhere. However, it is very important to allocate time for specific markets and to have representation there. For instance, in Poland we collaborated with the best representatives in the business, so they can now add Adverty to their portfolio. Each of our games involved top 10 markets. That's why, we surely have a plan to expand in Ukraine.

What does 'seamless advertising' mean exactly?

We place advertising in the gaming space in an unobtrusive which doesn't disturb the gaming process. So, advertising isn't built into the menu, but into the gaming environment. It is called 'seamless' just because the term 'native advertising' is already taken.

Please tell us about Adverty's business model.

We work as a classic CPM model. We also own shares in the companies of our publishers and developers.

What benefits for advertisers and brands can Adverty offer?

I think, first of all, it's who you can reach.

You mean the audience?

A very specific audience. People who don't spend that much time on social networks, but play games all the time. Sometimes our users have gaming sessions that are over half an hour long. This is a great opportunity for brands to show advertising to people who do not consume traditional media.

Another clear benefit for the advertisers is simplicity. Let's say, you designed an out-of-home campaign in the streets of Kyiv. A person walks down the street and sees a DOOH banner. With the help of programmatic, and with just a few clicks, the advertiser will make you see the same banner when you are playing a mobile game and walking down the street in the same game.

When people are tired, and they come home from work, they wear a headset and sit down to play games. The advertising usually pops up when your character dies, you pause the game or open a menu. I don't know what people are thinking, but if I was playing a game for 25 straight minutes, then suddenly died and saw a Coca-Cola ad, I wouldn't be very happy.

Gamers have an entirely different mood: they are focused and engaged — you typically aren't playing a mobile game with one hand. That's why, for the brands it is a great opportunity to show advertising at a great price at the end of the day.

Please tell us about the company's patents, such as 'BrainImpression.' You have five by now if I am not mistaken.

All of them are currently pending, so I can't specifically talk about them. I can give you an example of how people create advertising in 3D though.

Imagine this plastic bottle is advertising.

'Brain impression' depends on several factors. The first is the lighting. If it becomes dark, you will only see the silhouette of an object. If it becomes really dark, you definitely won't see anything.

Our patents are mostly about these 'brain impressions.' In fact, they determine what impressions of objects in a 3D environment are.

When buying something, you have 'impressions' from one hundred percent visibility of this object. While this is happening, there is a timer on screen. Playing the game, you see an ad, and then it disappears. We can even trace how many seconds you spend looking at it, and this information is very valuable for the client. I hope I explained it well enough.

Please tell us what happened to the company last year.

I think that the most important thing we did last year was make all of our inventory available for programmatic. Meaning, we created inventory with a clear product that can be bought — all of this is 3D.

On the development side, our team signed a contract with one of the most anticipated games of the year. In terms of commerce, it was cool to partner with Unilever. This allowed us to launch a full-scale campaign in Scandinavian countries.

In December 2019, you announced a partnership with SMAATO, a US-based in-app platform. Please tell us about this integration.

Briefly speaking, now our inventory is available on one of the largest mobile exchanges. Our partnership just started, and it's strictly mobile.

How do you plan to increase sales?

We are still in the process of getting advertisers and agencies to feel comfortable with this new media. This is not the web, not YouTube, not Facebook or Instagram. This is even not television or out-of-home.

We need to launch as many campaigns as possible and invite even more brands to cooperate. We still need to prove that our product consistently works. For instance, we plan to do another brand lift study, several case studies, and several focus groups.

We need to prove to both ourselves and the industry that, first, it works, and second, it gives advertisers something that they can't get anywhere else.

Don't you think that 'seamless' advertising will become as annoying for gamers as regular ads?

Mobile games are now on the rise in the gaming industry, and developers are creating free products. By creating free apps, they gain as many active users as possible.

I don't think that our advertising will become as annoying as in-game videos. However, there is also a certain responsibility for advertisers and developers: you need to remain relevant.

My dream scenario is when I see an ad on the train, and then I sit down to play mobile games at home and see it continued there. Then, I go to the cinema where I see 'my' ad on the screen, and then on YouTube. I want advertising to be mutually connected, and now this is possible with the help of programmatic.

In-game advertising in general makes playing the game even cooler. Just imagine: you see the same movie advertising banner in a game that you already saw outside your office.

You are now developing an SDK. Are you planning on building up a demand side, too?

Everything that we tested already works with all the main DSPs. We have about 700 different programmatic campaigns all over the world. They even work on Trade Desk and DV360. That's why any DSP that's built into BidSwitch or PubMatic is just one click away from buying.

Yet, you are not the first to do 3D advertising. What do you think the future of it will be?

It's good that we have competitors. This means that we are not the only ones who are enlightening the industry. I know about five other similar companies with whom we are friends and sometimes meet at events. In fact, we are helping each other.

The future of advertising depends on its representation in cinema and television. If now you see an ad of a Cola bottle in a game, soon it will be possible to advertise any 3D object.

The rise will be noticeable for the industry in the manufacturing of equipment. There will be more 3D objects when augmented reality and VR will become widely popular. For instance, at a time when people will be able to wear AR glasses in the street and not look like an alien. For consumers and advertisers everything will become possible with the arrival of 5G.