Spongecell, Backed by Eric Schmidt, Squeezes Social Media and Video Into Banner Ads

8/30/11Follow @jpruth

Ben Kartzman wants banner ads to do more than sit and wait to be clicked. As common as that mode of marketing has become, he believes his company, Spongecell, can more efficiently engage the public by weaving rich content—video, social media, or interactive features—into typically idle ads.

“We don’t think static ads should exist anymore,” says Kartzman, CEO and co-founder of Spongecell in New York.

A heavyweight in the online world seems to agree with him. In June, Spongecell raised an undisclosed amount in a Series A2 round led by Eric Schmidt, executive chairman of Google. The recent funding is helping to expand the technology and sales staff at Spongecell, according to Kartzman. Other investors in the round included Jim Pallotta, chairman of the Raptor Group; Brian Rooney, who serves on the board of directors for the Pittsburgh Steelers; and SilverHaze Partners.

Five-year-old Spongecell adds functions such as Twitter feeds and rotating deals to banner ads for more than 200 brands such as fashion label Emporio Armani, ice cream maker Ben & Jerry’s, and automaker Volvo. Features embedded into the ads include video, streaming audio, and connections to social networks. For example, Kartzman says consumers watching video within these ads might pause the content and … Next Page »

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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