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Johannesburg - Invenfin, the innovation subsidiary of technology venture capital firm Venfin, has announced an investment which may put it on a collision course with Google.
The fund has invested an undisclosed sum in a 35% stake in Cape-based firm Ad Dynamo, which is offering an online pay per click advertising platform. Ad Dynamo is managed by local IT entrepreneur Sean Riley.
According to Riley, Invenfin made its investments in a series of performance-related tranches rather than a single upfront cash injection.
Riley came to prominence in 2008 when his online marketing firm Entelligence took Google South Africa to task over its treatment of local partners servicing Google clients.
Pay per click (PPC) marketing involves the serving of adverts to websites and charging the advertiser a fee when somebody clicks on the advert. The revenue is split between the publisher's website and the platform, and the model has proven to be a popular way for many smaller websites to help fund their offerings.
Asked what differentiates Ad Dynamo from Google, Riley said: "We believe our biggest competitive advantage is the transparency we offer on the commission split paid to publishers and Ad Dynamo."
Google has never disclosed how the split between itself and the publisher works, while Ad Dynamo is offering a flat 50% split between itself and the advertiser.
Commission is also payable for local agencies.
Big impressions
On whether this will put Ad Dynamo in a situation where it is going head-to-head with Google, Riley said: "We are pushing a Google and Ad Dynamo solution to work together, rather than an either-or situation."
Ad Dynamo claims to serve about 40 million adverts per month over 150 000 websites in South Africa.
As a guideline, Fin24.com, the largest financial news site in South Africa, generates about 3.4 million impressions per month.
Asked why the Ad Dynamo branding had not been picked up in the local market, Riley said: "We are not branding it as Ad Dynamo at the moment because the brand is not well-known - we are simply saying 'advertise here'".
Riley said adverts are being served across Hotmail - a market inaccessible to Google - as well as a number of major media houses.
However, local industry players are skeptical about the introduction of another PPC platform in South Africa considering Google's dominance.
Ferdie Bester from online marketing firm ClickMaven said that while he had not yet looked at the Ad Dynamo offering, it would be difficult for another player to come into the market. "Google has amazing contextual targeting technology and locally it has strong publisher relationships, making it hard to beat."
"We would advise clients to make sure that Ad Dynamo's targeting technology is robust and the reporting functionality provides transparency in terms of impressions and clicks."
-Fin24.com