Kevel raises $11M from investors as more large brands sign on

DURHAM

Kevel, a Durham advertising technology startup until recently known as AdZerk, has raised $11 million from investors in the past few months, the company’s CEO James Avery told The News & Observer on Monday.

The money comes as the startup, which helps companies build their own advertising platforms, gains momentum with larger customers, like car-shopping website Edmunds, United Airlines, fitness tracker Strava and Ticketmaster.

That has allowed the startup, founded in 2009, to reach profitability and boost its headcount this year from 30 to 50 employees.

“We have been profitable for a long time,” Avery said. “But now there is this bigger opportunity.”

That opportunity is the chance to aggressively court larger brands, which requires more employees and resources.

Until a few years ago, Kevel focused mainly on running advertising servers that publishers use to manage online advertising campaigns.

But it shifted to creating the software that underpins an individual company’s digital advertising.

Instead of relying on Google and banner advertisements to reach customers, Avery said, companies have begun focusing on building their own in-house advertisements.

Google and Facebook dominate digital advertising, with Google gobbling up 37.2{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} of digital ad revenue in 2019, according to eMarketer. But in recent years, more companies are trying to chip away at Google’s dominance.

This has most notably been done by companies, like Amazon, Snapchat and Pinterest, which have huge amounts of capital to throw at advertising software. But for many companies creating their own advertising platforms can be time consuming and expensive.

Kevel makes it easier for others to get into the game. The startup provides tools that help companies create their own sponsored listings, native advertisements and promotions.

It’s a potentially huge market for Kevel to be in. According to a recent report from eMarketer, e-commerce advertising has exploded during the pandemic. Companies are expected to spend $17.3 billion on e-commerce sites and apps this year, up 38.8{a25bda0f8ab6dac90e68079d6f038584ef6ac53f1f4621de3ad526e35cd6c0d6} from last year, eMarketer said.

By taking advertising in house, Avery said, “You can get better click through rates and you can charge more because the user experience is better … than 17 different banner ads.”

Edmunds, for example, used Kevel to create sponsored listings within its own marketplace, allowing dealerships and manufacturers to promote their cars on the site.

Strava, on the other hand, doesn’t sell advertisements, but instead uses Kevel to promote itself within its fitness app. While Strava’s app is free, it has a premium tier. Kevel’s tech helps the company promote paid upgrades to users at times when a user is most likely to do so.

Kevel also helps companies navigate privacy laws, like Europe’s General Data Protection Regulation, which limits how businesses can handle and track user data.

The funding round was led by Atlanta’s Fulcrum Equity Partners and San Francisco-based Commerce Ventures.

Avery said he doesn’t expect to raise more capital in the near future, but that could change depending on how well the company does next year.

“My goal is to raise enough (money) that we don’t have to raise again,” he said. “But if we can grow significantly, of course we would raise money again.”

While Avery did not want to commit to an exact number, he expects Kevel to continue hiring aggressively in 2021.

The company has signed a lease for a larger office space at the BB&T building on South Duke Street in Durham, which was renovated recently.

Despite that lease, though, the majority of the company’s recent hires have been remote workers based in places like Texas, California and London.

“We had been hiring remote before,” Avery said. “But the pandemic really leveled the playing field for recruiting talent.”

This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate