Velocity Interactive Group partners, former AOL Chief Executive Jonathan F. Miller and former Fox Interactive Media President Ross Levinsohn, will lead the FatTail investment announced today. Ted Meisel, former Overture CEO and former president of Yahoo Search Marketing, also will participate.

Levinsohn--who joins FatTail's board of directors--said as ad sales tighten, automation become critical. "In a good or bad market you're always looking to do things more efficiently," he said, describing how people in the TV industry rummage through paper log books and carry tapes across the street. "Not only do the big sites benefit, but it will also be invaluable for the small sites that can't even afford to stick with manual systems."

Woodland Hills, Calif.-based FatTail, which develops Web-based advertising optimization applications, will use the funding to speed development and launch its new sales optimization products. Four companies are quietly testing one of the applications that will move into public beta by year's end, and released to the general public in 2009, according to FatTail CEO Stephen Pelletier, who declined to provide the names of either product, which he calls "sales optimization software."

Lack of automation has been a stumbling block, Pelletier said. He believes the company's platforms can skim hours, days or weeks from the process, freeing up publishers' sales teams from mundane operational tasks to spend more time with clients to understand their requirements.

Submitting requests manually creates inefficiencies and bottlenecks in processes that slow the flow of money. Sometimes it can take days or weeks to generate a request for proposal (RFP). He said that recommendations are often arbitrary--based on prior sales because ad reps are too busy carrying out operational tasks and don't have the time to determine the best value for the client. "If you must invest in manpower to build proposals, your cost of transition will be too high," Pelletier said. "Lower the cost of the sale and suddenly the smaller advertiser becomes more attractive to the publisher, which becomes more important to create competition."

When publishers need to quickly turn around quotes, or make adjustments mid-campaign, companies go through a mini-RFP process. Pelletier said publishers "work their butts off to get included," but unforeseen problems occur--causing delivery and performance issues and the additional money is allocated somewhere else.

FatTail advertising optimization software automates the process, so publishers can respond to RFPs in minutes, save themselves thousands of dollars a month in administrative costs, and provide advertisers with better customer service and better campaign results.

AdBook, FatTail's first product, a back-office system built mostly on Microsoft technology, supports online publishers at more than 500 Web sites, from Autobytel, to United Business Media, which publishes InformationWeek. The company also is developing several other products.

FatTail licenses its application through a software as a service (SaaS) model, which could generate renewal license fees for the company.

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