Mobile ad company Kargo is trying to prepare for privacy laws with its first chief revenue officer and a new ad format

• Mobile ad firm Kargo made a sizable shift to programmatic advertising a couple years ago. Now it's shifting back to more direct sales tactics with a new ad format that publishers like The Hollywood Reporter, Food Network, and Complex are running.
• The ad format uses contextual and sentiment targeting, which addresses data privacy laws like Europe's GDPR and the upcoming California Consumer Privacy Act, CEO Harry Kargman said.
• Kargo has also hired its first chief revenue officer and staffed up its West coast and Midwest sales teams.
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A couple years ago, mobile advertising firm Kargo flipped its $100 million business from selling custom banners to building programmatic software for publishers.

Now, it's shifting back to direct sales with a new ad format that the company says addresses privacy laws like Europe's General Data Protection Regulation and the upcoming California Consumer Privacy Act.

Kargo is also bulking up its sales ranks, hiring as its first CRO Johnny Horgan, who was SVP of sales and partnerships at Amobee and also worked in advertising roles at Facebook and Microsoft. Kargo has also hired new head of sales on the West Coast and Midwest, Troy Trouter and Vlad Strelsov.

Kargo's president and COO Ryan McConville recently left for an EVP role at NBCUniversal, and Kargo said that it does not plan to immediately fill his role.

"Kargo has invested in technology for the better half of two years to better enhance new creative formats but to do so in a way that establishes us as a programmatic leader," said CEO Harry Kargman. "We finally feel like we're set up for the next trajectory of growth."

The adtech firm is pitching cookie-less targeting

A challenge with programmatic advertising is that it's hard to build brand awareness when a single page might have 10 ads from different advertisers, Kargman said.

Privacy laws like GDPR and the upcoming CCPA limit the amount of data that advertisers can collect, which has led publishers like Meredith and The Washington Post to experiment with cookie-less targeting.

Kargo's new ad format, which it calls Branded Takeover, lets advertisers buy all of the ad space on a given page. The new format runs on publishers like The Hollywood Reporter, Complex, Food Network and HGTV.

Publishers are also struggling with Apple's Intelligent Tracking Protection (or ITP) feature that prevents them from using third-party cookies for ad targeting, Kargman said. Instead of using third-party data, Kargo's ad format uses contextual targeting.

"Apple has devalued all of the pages of publisher content," Kargman said.

Kargo found that people spent 40 seconds with the new ad format

Kargo is still selling most of its ads programmatically, but the new format represents a shift back to direct, negotiated deals with publishers that in theory that are more lucrative.

Advertisers including Hershey's, Subway and AT&T have run the new contextual ads. Kargman said that advertisers have committed to seven-figure budgets with the ad format.

Hershey's recently ran a Halloween campaign for Kit Kat as part of a year-long commitment that included media spend, measurement and creative work with Kargo, said Vinny Rinaldi, head of addressable media and technology at Hershey's.

"Where [Kargo] takes the lead in the mobile space is with their creative capabilities," Rinaldi said.

Kargo said in initial tests, people spent 40 seconds engaging with the branded takeover ads, up from Moat's benchmark of 16.6 seconds and that the ads generated a 2% click-through rate, up from Google's mobile benchmark of 0.6%.