Israel's Bidalgo brings algo-trading wisdom to ad tech

Peli Beeri, Bidalgo. Photo: Kellan Rogers

By using algo-trading principles to make Facebook campaigns more efficient, Bidalgo expects $100 million revenue in 2015.

At first glance, the Bidalgo offices in the Ramat Gan diamond district look like the offices of any average high-tech company. Some open space, some offices, a kitchen, and a PlayStation room. But when you look up close, you may notice the small differences. Opposite the PlayStation console, is a proudly displayed row of nail polishes, for the girl-power on staff - an unusual display for a high-tech company, many of which have a distinctly boys club feel to them. The conference rooms are named after some of the biggest artists in music history. Though Justin Beiber does not have his own room, if you pop in on a meeting, you might find yourself in Jimi Hendrixs room, or The Beatles room, or Rihannas.

These small touches are what make Bidalgos solutions unique in the world of Ad Tech, and they are also what make the companys story - its evolution from an idea that sprouted in a university students apartment in Beersheva into a senior Facebook partner - so inspirational.

Bidalgo was founded in 2010, and is expected to end 2015 with $100 million in revenue, but the company has managed to fly well beneath the radar, until today. The idea came from Matomy Media Group (LSE:MTMY) alumnus Mor Beeri, who was looking for ways to improve the efficiency of Facebook campaigns. Beeri brought on two friends from the army and from university - Niv Yemini and Oded Freid - and in a students flat in Beersheva, the three formulated the Bidalgo concept. To complete the team, they sought a figure to lead the company, and decided to bring Mor Beeris brother, Peli, who had been a senior department manager at 888 Holding plc (LSE:888), on board as CEO.

As the company name suggests, the idea behind Bidalgo is to take algo-trading from the world of finance, and to bring it to the world of online advertising, through algorithms that know how to optimize for advertising and to promote apps on social networks.

"We created an algorithm that makes it possible to easily upload Facebook campaigns to promote apps, that can account for dozens of parameters and segments - countries, ages, the operating systems on users devices - and to look at the all these combinations together and to understand how and whether its worthwhile to target a specific demographic, explains Bidalgo Israel General Manager Peleg Israeli, who has headed the Israel operations since company CEO Peli Beeri left for San Francisco some six months ago to develop the companys Silicon Valley presence.

"The idea is to constantly monitor supply and demand. I know how much it costs me to pay for exposure, or a click, or for an app install, and we are constantly checking the changing prices. As on the stock market, I end a certain campaign when I see that the price is not economically worthwhile, just like someone sells a stock when he sees that it is crashing. Peli adds, The algorithm knows how to make the right decision quickly, and thus to save costs, and attain the best possible advertising ROI.

Bildalgos customers are app developers, including leading names from the world of gaming such as Zynga, Playtika, Plarium, and Israeli 888, alongside other app companies such as Israeli BillGuard. The cost of an advertising campaign on Bidalgos system can reach the hundreds of thousands of dollars, and Beeri recommends that developers in early stages first try advertising directly though Facebooks built-in system. It greatly depends on what stage the app is at. If its at a fairly mature stage and you want to attract a large number of customers, and mostly high-quality customers, then thats where we come into play, he says.

But its not just the price that plays a role in Bidalgos system. Its also possible to see what users do after they have downloaded the app on one dashboard - how many people have downloaded it, how many have made in-app purchases, what the frequency of app use is, etc. The whole world of data is our bread and butter, explains Israeli. We make the data accessible to our customers in a very simple manner.

Bidalgos success led Facebook to recognize it as a Facebook Marketing Partner (previously called PMD, or Preferred Marketing Developers). Whats unique about us is that almost all the Facebook partners chose to specialize on one side of the coin - either they offer a technology that can be integrated, or they offer a service. We offer to manage campaigns for customers, and if they are satisfied, then we can teach them how to use it, says Israeli. Beeri explains, If its a young company that has no marketing team, we will run the advertising campaigns. But if its a more established company, it can take our technology and use it independently. Bidalgos list of competitors includes successful Israeli companies such as Kenshoo (A competitor of sorts, says Israeli), and Taykey. Other mobile advertising competitors include InMobi, which has already raised $200 million, and MoPub, which was acquired by Twitter in 2013 for $350 million, but Bidalgo is in talks with them about potential partnerships as well.

The company believes in lean management. Not so much for ideological reasons, but in light of the fact that the algorithm the company developed can replace the work of hundreds of account managers. The company has 35 employees in Israel, and two more in the US, one of whom is Peli Beeri. The company has a cooperation agreement with a company in Singapore that knows how to operate the technology, and represents the company in the Asian market. By the end of the year, the company plans to double its manpower and to hire 30 more workers.

This year, the company is expected to reach $100 million in revenue, after recording more than 500% growth last year. Until 2014, we grew organically, alone, and without an active sales team. We expect significant growth, says Beeri.

Reaching the $100 million mark is indeed an accomplishment, but it is doubly so in light of the fact that the company has no investors, and has never raised any funds. Thats something we are proud of. We have been profitable since the end of our first year, and we have succeeded in creating something strong, good, and significant here. We are not actively looking, but if a strategic opportunity presents itself, we will consider it, said Israeli.

"The first year was very difficult. We brought in a little money - less than $100,000 - from family and friends. We worked from home, all the management, and we started discussing the possibility that we might need to close the company at some point, Beeri recalls. We started working with customers and making a little money to fund the technology. There was long period of time when we, the founders, didnt draw salaries at all. Now too, our goal is to end each year with a balanced budget, and we manage the budget very efficiently.

Asked about the lack of investors, Beeri says, There were tempting opportunities from the biggest funds in Israel, and from competing companies in the advertising world. We said no to all the offers. The last offer was before I left for the US. Should we need to raise money, we will do so, but right now, its not in our plans. We are earning enough to meet our budget and to deliver with the money we earn. We are very efficient because we invested in the technology very early on.

With full founder ownership, close relations with Facebook, and playing in the hot world of mobile-app promotion, there is no doubt that Bidalgo is on the right track. The big question is what the future holds. Right now, the focus is on taking the amazing component that we built and getting the message across. But, in the end, I can see Bidalgo becoming a part of a much bigger mobile advertising entity, says Beeri, hinting at a possible future exit.

Published by Globes [online], Israel business news - www.globes-online.com - on March 30, 2015

Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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Peli Beeri, Bidalgo. Photo: Kellan Rogers
Peli Beeri, Bidalgo. Photo: Kellan Rogers
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