Raising Cash, Vertical Ad Net Makes a Play for Brand Dollars

NetShelter has raised $11.1 million in venture capital funding. The Toronto-based vertical ad network will use the cash to accelerate its engagement offerings for brand marketers and open offices in San Francisco, among other goals.

Launched in May 2006 with 12 sites and just 1.2 million U.S. unique visitors, NetShelter’s addressable audience here has grown to an estimated 17.7 million spanning 150 sites, according to ComScore. That audience figure puts it ahead of previous tech category leader CNET.

According to CEO Peyman Nilforoush, the company’s increase in reach has been accompanied by a corresponding rise in the size of its clients’ media buys and the number of advertisers on the network.

“We were getting RFPs in the tens of thousands of dollars,” in 2006, he said. “Budgets now are in the hundreds of thousands of dollars.” He said that estimate represents the average budget size, not the high end.

Nilforoush added over 100 advertisers placed buys with the company in November, and he claims the company serves in excess of 1 billion ad impressions per month.

It’s not uncommon to hear publishers promote their integrated ad offerings, but ad networks — geared as they are toward brokering raw tonnage of display advertising — rarely do. Yet as the display market suffers from price deflation and commoditization, some networks have begun speaking the language of engagement.

Federated Media Publishing and Glam Media are two such firms. Both have merged the network model with an agency-like approach to creating complete advertiser packages that can be sold at a premium to media buyers. One cornerstone of this approach, especially for FM Publishing, has been to create destination sites that aggregate content from publisher partners.

NetShelter has done this as well, setting up a holiday destination site at TopTechGifts.com and another at LastGadgetStanding.com. Owning the real estate allows network players to offer greater integration of a sponsor’s message.

“You have to have programs that go way beyond IAB banners,” said Nilforoush. “Banners are a component, but in order to deliver engagement you have to be able to bring the brands, bring the publisher, bring the consumer.”

NetShelter divides its audience into two basic types — B-to-B and B-to-C — which it further subdivides into five segments. Those include consumer electronics, mobile, IT, developers, and games.

The investment was made by three Canadian VC firms — GrowthWorks, Rho Canada and JLA Ventures — each of which will have representatives on NetShelter’s board.

Note: An earlier version of this story said NetShelter will relocate its headquarters to San Francisco. While this information was based on direct comments made by NetShelter, the company has since indicated the new Bay Area office will not be its headquarters.