• by Mark Walsh  @markfwal, March 16, 2009

Mobile ad network Quattro Wireless has closed $10 million in third-round funding led by Highland Capital Partners and Globespan Capital Partners.

The financing brings its total raised to date to $28 million. The Waltham, Mass.-based company plans to use the latest funding to continue its international expansion and the improvement of its mobile ad technology.

Quattro counts brands including Microsoft, Sony and Kmart among its advertising clients, and boasts running 1,000 brand and direct-response campaigns across its network of more than 700 publishers in 2008.

Quattro CEO Andrew Miller doesn't expect things to slow down this year, despite the general pullback in ad spending. "We're expecting significant revenue growth from last year, and I think this is really a function of mobile growing up ad networks and publishers getting more sophisticated and integrated on the buy-side structure," he said.

He pointed out that typical ad buys with Quattro typically range from $75,000 to $125,000. But where a year ago that $75,000 would have been spent over nine months, it now might only cover a three-week campaign, according to Miller. He added that the company is also seeing more upfront buys, such as movie studios carving out space on mobile phones for the upcoming summer movie season.

In addition to entertainment companies, consumer electronics, packaged goods, travel and fast food marketers have also been active in mobile advertising. M-commerce players such as banks and ticketing services are also making a bigger push for customers on handheld devices, noted Miller.

Key mobile publishers for Quattro have been the NFL, MySpace, Univision, Hachette and CBS. Mobile advertisers and publishers alike have benefited from growing subscriber adoption of smartphones that make mobile Web browsing and media consumption a less frustrating experience for users. About 13% of U.S mobile subscribers own smartphones.

"Our network is very smartphone-driven," acknowledged Miller. More advanced devices with built-in GPS technology and other features also help Quattro to target advertising to users more precisely. "There's a different behavior on mobile, in applications and SMS text messaging. ... We're mapping that, and going to show how harnessing behavior on mobile ... from location to specific devices, will lead to better results when it comes to ad delivery," said Miller.

At the same time, the attributes of mobile devices that allow companies like Quattro to develop extensive--if anonymous--profiles of cell subscribers have also raised growing privacy concerns. In a recent interview with The New York Times, even Eswar Priyadarshan, Quattro's chief technology officer, conceded that the company so far has held back from targeting ads down to the street-corner level to avoid "creeping out" mobile users.

Miller asserted that the key to privacy is "not using any personally identifiable information." In January, a pair of advocacy groups filed a complaint asking the Federal Trade Commission to investigate whether mobile marketers' targeting practices violate cell users' privacy.