Persado has built a new class of technology that uses math and science to automate the generation of the most persuasive language used in messages intended to drive action. They call it Persuasion Automation and considering that they just closed their Series B from some pretty heavy hitters, and thanks to some very happy clients, we’d say that it works.
For the record, Persado’s machine-generated messages outperform human-generated messages by up to 400%. This effectiveness has helped the company grow its customer base 300% in the past year and expand its geographic presence to six countries. Persado founder and CEO Alex Vratskides sees this natural language generation AI technology as the future of marketing and advertising, but with applicability to all sorts of communications, including healthcare (persuading patients to take their meds), quantified self, fundraising, civic programs (persuading people not to litter), elections, financial literacy – and that’s just for starters.
Vratskides dishes up the details.
Who were your investors?
Persado is announcing its B series funding, led by StarVest Partners, along with the participation of Citi Ventures and American Express ventures. StarVest, Citi and AmEx are all new on this round. Bain Capital Ventures, our existing investor from the A round, also participated. Our total funding for this round is $21 million. We are certainly excited that our customers are so impressed about our tech, that these funds invested in us!
Tell us about your product.
First of all – what do we solve? As you consider the marketing technology stack, companies have used software, math, and data science to get the right product to the right person at the right time. Yet, when it comes to the language of the sales pitch, creativity and gut instinct still rules. Persado changes that: we eliminate the randomness of creativity with a concrete scientific approach.
Persado’s platform uses software to generate the most persuasive language for communications designed to drive an action. For instance, buying products, making charitable contributions, sticking to your diet, etc. Persado’s software writes that message for you automatically – in lieu of having a human do it. Our clients use Persado to generate the most returns their email messages, landing pages, social media posts, mobile messages and Facebook ads. Their copywriters write their best guess, even their best A, B, C, D guesses, then our technology does its magic. Every time, without fail, we outperform the human copywriter by a significant margin.
How is it different?
Persado’s persuasion automation technology is the first of its kind. We are the only company that has broken down the art of persuasion (typically encapsulated in words) to numbers and math. Where others see words and phrases, we see vectors and ontological structures.
What other areas do you see natural language marketing being used, in the foreseeable future?
Our technology has a series of uses beyond the marketing field. For example, persuasion automation could help cities with citizen compliance (anti-littering, getting vaccinated, etc.), or significant potential in the digital health arena (encouraging patients to take preventative measures that will help them stay healthy).Whenever action is needed in a digital medium, Persado is relevant.
What market you are targeting and how big is it?
The opportunity lies with the additional dollars generated, if one was to magically optimize the efficacy of the copywriting of the digital marketing/communications. As more and more of the budget gets allocated to digital communications, the opportunity and applicability for Persado’s technology grows. Our target market is limitless, as Persuasion Automation transcends just marketing.
The total addressable market is hard to calculate quantitatively because of how fundamentally disruptive persuasion automation is. The category we’re defining – persuasion automation – is called that because, fundamentally, Persado’s technology impacts any situation where digital communications are being used systematically to persuade a customer to take an action, such as making a purchase. Additionally, this technology can persuade a patient to abide by a doctor’s recommendations, to stick to his savings plan, to give to a charitable organization, to vote for a candidate, etc. We address digital marketing, digital health, personal savings and financial plans, fundraising, electoral politics and civil applications.
What’s your business model?
We work on a recurring SaaS model, where the client receives access to the Persado platform and a set number of campaigns allowances (for an entry fee). The fee scales more campaigns through Persado, and also utilizes more digital channels. Currently we focus on email and mobile messages, but we do quite a bit of work on language found on landing pages and calls to action there.
What was the funding process like?
It was fairly straightforward. By now, we have over 50 clients (Fortune 2000 quality), so we were able to provide many proof points, as a significant number of these clients have already crossed the seven digit annual subscription. We also had Bain Capital Ventures participating from Series A, which gave us a lot of credibility. As a result, there were a variety of options that came very fast.
What are the biggest challenges that you faced while raising capital?
We had a lot of interest from VCs, as they began to grasp the potential behind Persuasion Automation. They were interested in the brands that we work with, the size of the contracts, how quickly we got to the executive marketing suite, and how quickly contracts were concluded. There definitely was a sense of “let’s not waste time!”
What factors about your business led your investors to write the check?
Persado has massive potential to disrupt multiple, multi-billion-dollar industries. We have zealous, excited, happy customers.
What are the milestones you plan to achieve in the next six months?
In the next six months we will launch persuasion automation as a category in the market and establish a new paradigm for producing copy for marketing messages. Instead of testing two “guesses” that a copywriter produces for an A/B test, Persado systematically generates millions of possible variations and uses math and science to create the optimal result. We want that behavior to become the industry standard – a true data-driven marketing department. .
Everything else is either derivative of that or another way of expressing that. We have important goals like the launch of our coming self-service product in Q2, announcements in sectors other than marketing in Q3, and expansion of sales and customer support worldwide. Ultimately, we are establishing awareness in the marketplace about how machine-generated messages can outperform traditionally copy written messages sometimes 2, 3 or 4 to 1.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
If you do not need the money and you are profitable, grow that way as much as possible in order to prove that your business model is reliable. By doing so, you can achieve greater valuation later on and you get to keep more of the company. If your business is one that needs capital injection right here, right now, you will need to get in front of the right people within VC firms. Do not take no from people who are not qualified to say yes!
Where do you see the company going now over the near term?
Continued product growth, continued customer acquisition, and broadening usage with existing customers. We also want to increase market awareness.
What’s your favorite winter escape, in the New York area?