The Spanish startup, seedtag, is revolutionizing the way in which online shopping happens. Rather than browsing online shopping guides or having to seek out a product, seedtag allows you to shop from any website page (blog or publisher), be it large or small retailers. Moreover, seedtag is bringing the concept beyond fashion and technology merchandise, and applying it to insurance, education, auto, and consumer packaged goods. The three founders of seedtag come from backgrounds at Google and Tuenti prior to launching their first venture together.
KITE Invest: Could you comment on the origin of the collaboration between the three Co-Founders, and how did the idea of seedtag emerge?
Albert Nieto Riera: Jorge and I were business analysts at Google, and we have always been passionate about discussing business ideas. One day Jorge was reading a sports newspaper and he saw that Roger Federer had changed his tennis racquet and he loved it. He read the article but it didn’t mention anything about Roger’s new racquet. He then realized that he wanted to buy the product or at least get some basic information about it (price, available retailers…) and the process to get that was extremely inefficient: leave the article, search for the information on Google, find a link providing all this information… The solution looked obvious to us: add a simple tag with all basic information and transform pictures into store windows for users.
Neither Jorge nor me were computer scientist so we asked computer scientist at Google and other friends to give us a short-list of top CS in Spain. Pablo showed up and he was a perfect fit: previous experience in StartUps (CTO at Fever and CEO at Origo) and a solid track record as a CS at Tuenti. He was thrilled about the project and got on board as a Co-Founder.
Today, we are turning this basic idea into an ad business for publishers and advertisers that transforms publicity into a service for users. A win-win-win relationship.
KITE: Although seedtag provides its users a service to ease shopping, what measures has seedtag taken to ensure security, safety and even return policies, especially for those shoppers who are more skeptical of online shopping?
Jorge Poyatos: This is one of the important issues of eCommerce. However, security and consumer trust is improving fast every year. We believe eCommerce is just commerce, we only make it more available connecting it to content. A general security measure is to work only with well-known advertisers and publishers. We don’t accept everyone in our network.
We run our ad business on CPC (cost per click) or CPM (cost per thousand impressions) basis. We have implemented a fraud detection mechanism that informs us when an unexpected performance happens (for instance, a huge increase in CTR% or an uncommon amount of clicks coming from a single IP). We have a zero tolerance policy with fraudulent publishers.
KITE: During seedtag’s beta phase, the startup was able to make agreements with Spanish retailers: Asos, Decathlon, Fnac and Zalando. How has seedtag grown since this stage?
Albert: In terms of business, we’ve reached partnership agreements with about 50 more publishers and advertisers.
On the publisher side, we’ve been able to grow in three months our “image impressions” from 0.5 Mn/month to 5 Mn/month.
On the advertiser side we started to monetize our impressions a month ago.
KITE: What are the ambitions for seedtag during the next two to three years? Are there plans for the company to expand outside of Spain?
Pablo Lopez: Our mid-term strategy has been quite clear from the very beginning. We wanted to use Spain as a field to validate our business hypothesis and to find product market fit. Spain is an ideal place to start for us, as Jorge and Albert have lots of key business relationships in both publishers and advertisers thanks to their previous job at Google. We are on track to reach break-even during 2015. Once we have a sustainable business in Spain, we will carefully plan our next step to expand seedtag abroad.
KITE: Beyond the traditional computer screen, seedtag focuses on shoppers and hand held devices: Smartphones, tablets, and Ipads. seedtag is not the only company that provides this form of online shopping. How does seedtag differ from competitors?
Jorge: As you mention, online traffic is moving from desktop to handset devices at a very fast path and this is great news for seedtag. What share of small screens is occupied by audiovisual content compared to desktops? This traffic migration is a huge challenge to traditional display advertising that will have to adapt to this new reality. Advertising and content will be much closer and we are a great way to combine both.
In terms of competition, we don’t see much tech native advertising solutions in Spain. On the contrary, there are some big (and excellent) competitors in more mature countries, like the UK and the US.
Concerning differentiation, I would point out two things: we are 100% consumer centric and we do care about design. We are consumer centric as we have developed our technology allowing publishers to use seedtag directly in their blog/web (no need to maintain any seedtag platform). Design is a key part of what we do; we want to create beautiful, useful ads. We don’t do anything we wouldn’t like to find navigating the web. In my opinion, design has been undervalued in online display advertising and we take that as an opportunity to differ from competition.
KITE: seedtag has already closed a round of seed funding. With the anticipated high growth projections over the next few years, where is seedtag currently in terms of funding and investment?
Albert: For our first stage we are a well-funded company. We want to run the company on a very basic principle: “if you don’t need more money, don’t ask for it”. Our next round of funding will most likely be for international expansion likely in in 12 to 18 months.