Ad technology firm WideOrbit raises $14.5 mln

By Michele Gershberg

NEW YORK, Feb 28 (Reuters) - Advertising technology company WideOrbit Inc will announce on Thursday a $14.5 million round of financing from venture firms Khosla Ventures, Greycroft Partners and the investment arm of Hearst Corp.

The new fund-raising bolsters WideOrbit's aim to create an efficient system for taking stock of advertising inventory available across all media systems, from television to radio and even movie theaters.

The company's software manages more than $10 billion in advertising transactions for more than 900 television stations, radio stations and cable networks. Clients include NBC Universal, Hearst, Gannett Co Inc (GCI.N: Quote, Profile, Research, Stock Buzz) and Qualcomm Inc's (QCOM.O: Quote, Profile, Research, Stock Buzz) MediaFlo.

Founder and Chief Executive Eric Mathewson built his expertise in the equities derivatives market, where he gained a healthy respect for the potential for automated pricing and inventory to improve profits.

"The underlying inventory systems that run media were very archaic," Mathewson told Reuters in an interview. "I said to myself, how do you create an exchange like the New York Stock Exchange that has run time, or real-time pricing."

Changing that proved a challenge as most media inventory is priced on an overnight basis, while some outlets do it on a weekly or even semi-annual basis, he said.

While transaction-related costs for media buying and selling can easily top 14 percent, Wall Street was already working on a model of a fraction of a percent.

Building the technology backbone for the digital media era has provided opportunities for both start-ups and the Internet's largest players, including Web search leader Google Inc (GOOG.O: Quote, Profile, Research, Stock Buzz), which has partnerships with satellite and radio companies to help automate ad sales.