LocalResponse Uses $5 Million Funding For Staff, Enterprise Product

LocalResponse, a recently launched ad network that targets offers to mobile users off of their explicit and implicit “check-ins,” has raised an additional $5 million in funding. The new round adds to the $4 million the company had raised in 2008 when it started life as a social network around nightlife called Buzzd.

LocalResponse monitors the publicly available check-ins at mobile services like Foursquaresocial and the implicit check-ins it detects from social networks. It then uses Twitter to send a user contextually relevant offers related to their current location.

Just out of beta in the last few months, LocalResponse has been honing its model with early clients like General Motors, Coca-Cola, McDonald’s,  Walgreens and Verizon.

“We’re a lot more targeted in our campaigns that we run,” says President and cofounder Kathy Leake. “The platform is one-to-one communications, so we make sure the campaign is incredibly contextual.” A user who checks in at their local gym publicly on their social network might get tweeted by that venue with a discount for an energy drink. If someone posts a photo on their social net that happens to be geo-tagged from a major sports arena, they might get an offer from a nearby vendor.

The system analyzes hundreds of millions of public postings that include geographic data or inferences of location. For now, LocalRepsonse relies on Tweets to send offers, but claims high response rates. For a charity drive involving Walgreens, a recent campaign targeted implicit and explicit check-ins at the drug store chain. It garnered click throughs on the messages of 65%, says Leake. On average, early campaigns for other major brands see 40% CTRs.

The funding came from Cava Capital, Vodafone Ventures, Advancit Capital and Progress Ventures. CEO and co-founder Nihal Mehta admits that the VC terrain is still challenging for startups. “It was tough. It is never easy,” he says. “But it helps that we are hitting a lot of hot trends: mobile, social, local.”

Leake, who came to LocalResponse after co-founding targeting company Media6Degrees, says that the big difference in raising money for start-ups now is firm proof of the model. “They need to see booked revenue from large multinational clients.”

The company will use the fund to expand the sales team and to help move the technology into subsequent iterations. Mehta says the company is working on a retargeting model that will be able to serve banner ads against check-in data. The company is also preparing an enterprise product that will let brands and agencies analyze check-in data to see traffic to their own venues or craft campaigns on location-based business intelligence.   

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