An ad tech startup that turns ride-sharing vehicles into digital billboards just raised $21.5 million

Firefly

• Outdoor advertising is booming and is poised to reach $38 billion in spending this year.
• Ad tech startup Firefly is hoping to cash in on the opportunity with its technology that delivers location-based and contextually relevant ads through smart screens mounted on rideshare vehicles.
• Firefly has beta-tested more than 50 advertising campaigns for brands including Hotel Tonight, Turkish Airlines, and Walmart's Sam's Club.

As outdoor advertising continues to gain momentum, one ad tech startup is hoping to cash in on the opportunity.

San Francisco-based Firefly essentially converts ride-sharing vehicles into moving digital billboards, using its technology to deliver ads to consumers through smart screens mounted on the vehicles. It touts the ads as location-based and contextually relevant, as the smart screens are connected and GPS and 4G LTE-powered.

Founded by Stanford Graduate School of Business grads Kaan Gunay and Onur Kardesler, Firefly has raised $21.5 million in seed funding led by NFX, which was also an early investor in Lyft. Other investors include Pelion Venture Partners, Decent Capital (Tencent founders), and Jeffrey Housenbold of SOFTBANK Vision Fund.

Firefly works directly with drivers and has been beta-testing with what it says are "hundreds" of rideshare cars across Los Angeles and San Francisco who are paid a flat fee of $300 per month for mounting the screens atop their cars. It plans to expand to New York City in early 2019.

Outdoor advertising is seeing a resurgence

With brands finding it hard to make their ads stand out in a cluttered digital environment, outdoor advertising is seeing a resurgence. The format is poised to reach $38 billion in spending this year, according to Zenith.

Firefly's pitch is that its technology delivers the right message at the right time, cutting through the clutter and leading to better engagement. The company manufactures its own smart screens and has built its own software stack.

"Ours is a significant value add for advertisers looking for more relevant and contextual targeting," co-founder Gunay told Business Insider. "It's one of the first ad platforms since YouTube to provide significant incremental reach for advertisers."

The company has been scaling in beta over the past year. It has executed more than 50 advertising campaigns for brands including Hotel Tonight, Turkish Airlines and Walmart's Sam's Club. Most of these brands have run more than one ad or campaign, Gunay said.

Firefly promises brands more transparent and viewable impressions

Firefly promises advertisers guaranteed impressions to a target audience of their choice, based on location as well as demographics. Ad campaigns are measured by matching telemetric data (latitude/longitude/time stamp) of the vehicle with third-party audience data (ZIP/census) and marrying that to the number of impressions delivered based on a specific period of time the car was driven in a specific geofenced area.

Sam's Club is using Firefly in Los Angeles to promote its "Scan & Go" app, which lets members scan the products they want and leave the store with them that day without having to go to a register.

The ads reach consumers better than regular out-of-home channels because the location-targeting aspect lets the brand verify where the ads were viewed, said James Lerner, senior manager of product marketing at Walmart.

"Measurement of out-of-home advertising is usually very rudimentary," he told Business Insider. "This is more transparent and viewable. It's almost an audited impression."

Hotel Tonight is using Firefly to pinpoint ads to locations the brand wants to target, said Julian Weintraub, Hotel Tonight's media manager.

"Firefly also provides us the opportunity to daypart our ads, which heightens the relevance of our messaging," he said. "With its business model, Firefly is able to offer us tremendous reach and frequency at a very affordable cost."