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Online display ad network AdReady Inc. landed $10 million and a pair of potentially valuable partners in a Series B round of venture funding to help it establish leadership in automated marketing campaign development and management.

Bain Capital LLC of Boston led the deal, and the company expects to lean heavily on Bain's global private equity and management consulting arms.

The round included Khosla Ventures, which is expanding its large focus on energy investments increasingly to include media deals. The new capital brings total investment in the 18-month-old company to $12 million and will allow it to expand its technology suite as well as boost sales and marketing.

AdReady was formed in June 2006 by Aaron Finn, the former online marketing head of Renton, Wash.-based Classmates Online Inc., to automate practices developed in making Classmates.com one of the Internet's largest online display advertisers. The company's ubiquitous banner ads enticing Web surfers to connect with former classmates made the company one of the most successful direct response advertisers, and led to a $100 million sale to Woodland Hills, Calif.-based United Online Inc. in October 2004.

After spending a few years consulting on how best to use Internet display advertising, Finn teamed with early Classmates investor Madrona Venture Group LLC to create a technology platform to offer sophisticated advertising design and campaign management services to even the smallest advertisers.

"Over six years I spent more than $100 million on ads at Classmates, 95% of which were display, and only 5% on search," Finn said. "That is what made it a profitable company and led to a good exit, and I figured if I could take the best practices from there and automate them it would be a very empowering and democratizing thing for display advertising buying."

The company launched a beta site in early 2007 and launched publicly on Oct. 16, allowing customers free access to a suite of tools for designing advertisements and creating advertising campaigns. The company aims its products at end users, which include companies with internal marketing functions, but also the many local advertising firms that create copy and campaigns for the smallest of advertisers.

In addition to design and management tools, AdReady provides customers access to thousands of publishers and takes a 20% cut on all advertising purchases. AdReady also has a white-label program in which it hosts services for third parties, and the company already has relationships with brands including Readers Digest Association Inc. of Pleasantville, N.Y.

Greg Gottesman, a managing director with Madrona, said the firm stayed in contact with Finn after the sale of Classmates, and worked with him on behalf of portfolio companies designing online ad campaigns, recognizing the huge difference small adjustments could make. Both Gottesman and Finn cited the simple replacement of the pronoun "you" with "I" as an example of a tested principle that can be applied to improve results, and Gottesman said the company successfully automated such principles in a system that not only applies them, but measures results in real time, allowing for continuous adjustment of advertising design and placement.

"With AdReady, even a small flower shop has the ability within minutes to create an advertising campaign that is already battle-tested, and immediately run it across multiple sites and get back a bunch of information on performance," Gottesman said.

Finn said the company began fundraising in August expecting to close the round in the first quarter of 2008 but had a lot of interest from the 10 firms it initially engaged with and eventually drew term sheets from about half of those. He said the company was not specifically looking for strategic investors, but liked landing an East Coast as well as a Silicon Valley firm, and particularly liked Bain's strategic capabilities.

"Geography wasn't a top criteria. Mostly we were interested in how involved they could be, because we are a small company and need to have every oar pulling 100%," Finn said. "Bain has a whole other side of the business with worldwide private equity and consulting partners and a great deal of experience with consumer brands."

Finn would not disclose a valuation for the round but said it was up significantly from AdReady's A round.

The company used no outside financial adviser for the round, and had legal work from Daren Nitz of Vandeberg Johnson & Gandara LLP in Seattle. Joel Friedman of Ropes & Gray LLP in Boston represented investors.

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