The digital advertising market is robust, with Statista to predict that global spending will be nearly $900 billion by 2026. But fake and fraudulent ad traffic remains a major problem in the space. Global ad fraud losses in total $35 billion in 2020 alone. And aside from wasted spend, invalid traffic can drive up metrics, causing brands to misidentify and misunderstand customer segments.
To fight ad fraud, Neil Andrew and Alex Winston co-founded Lunio, which attempts to exclude fake web traffic coming from different channels by analyzing behavioral patterns. The startup announced today that it has closed a $15 million Series A round led by London and Smedvig Capital, bringing Lunio’s total to approximately $17 million.
“In 2016, we ran a digital marketing agency in the UK and worked closely with one of their top clients, Segev Hochberg,” Andrew told londonbusinessblog.com in an email interview. “At that time, they kept noticing the same problem. Worthless clicks from fake users consumed a chunk of Segev’s marketing budget every month. And ad networks weren’t really rushing to tackle the problem because there was no real incentive for them to do so. So Neil, Segev and I founded Lunio to help other marketers catch and block clicks from bad sources, while the money saved is automatically reinvested in top-performing ad campaigns.”
Lunio claims to use a combination of data analysis and cybersecurity techniques to capture and block fake clicks, with algorithms run on the client side – in a user’s browser – to ensure that personally identifiable information is not sent over the internet. (Although the IP addresses of ad interactions are stored and provided to users, they are not combined with other information that could make them personally identifiable, Andrew claims.) The algorithms try to measure the likelihood of invalid click activity on a range of ad networks , including Google, YouTube, Facebook, Reddit, Instagram, and even TikTok.
“There is a huge opportunity cost of having derivative sales processes downstream due to false lead form submissions following false clicks. Salespeople can waste many hours chasing leads that don’t really exist,” Andrew said. “It’s not just about getting spam clicks back, if you can manage it. It’s about stopping all the knock-on effects of fake traffic on your website.”
Andrew says the pandemic has been a boon to Lunio as it led to an increase in fake user activity as brands and their customers went online. Meanwhile, the economic downturn has increased pressure on companies to stretch their advertising dollars, Andrew says, leading to another windfall for the startup.
Lunio has more than 1,000 customers for more than 10,000 individual ad accounts, Andrew claims. He chose not to share the sales figures, saying only that Lunio plans to increase its workforce from 43 employees to about 55 by the end of the first quarter of 2023 to support its go-to-market efforts in Europe and North. – “accelerate” America.
“We feel very isolated from the forward-looking challenges that many companies will face. We have implemented strong operational and investment discipline based on validated business cases to drive our future direction,” Andrew continues. “We operate on a best-in-class burn multiple and expect it to remain so in relative terms as we scale the business.”