SPARK Neuro, a startup in the emerging field of neuroscience-based analytics, has closed $13.5 million in Series A funding led by Thiel Capital’s Peter Thiel with participation other investors including Will Smith and Michael Eisner.
The New York-based company uses electroencephalogram (EEG) devices to measure brain activity along with other biometric inputs to gauge people’s emotional responses and attention to different stimuli — like ads and movie trailers. Founded in January 2017, SPARK Neuro’s initial focus has been in the entertainment and advertising industries, and it counts Netflix, Hulu, NBC, Universal and Paramount among its customers.
SPARK Neuro founder and CEO Spencer Gerrol (pictured above) said its proprietary system can get a truly objective read on how human beings respond to content. Traditional methods like focus groups, surveys and polls fall short because they’re inherently subject to biases and incomplete data, he said.
“Your emotions really drive all your decisions, and there’s been no way to measure that,” Gerrol said. “Research in this area has been really rooted in self-reporting.”
Gerrol went on a roadshow to raise capital and ended up teaming with Peter Thiel, Eisner’s Tornante Co. investment firm, and Will Smith. The round included a total of eight big investors who put in at least $1 million, including “another A-list Hollywood celebrity” who wants to remain anonymous, according to Gerrol.
With the funding, SPARK Neuro has a post-money valuation of $53.5 million, according to Gerrol. He remains the company’s biggest shareholder; together, Gerrol and CFO Jeremey Sziklay own majority control of SPARK Neuro.
So, how does the company’s neuroanalytics system work? SPARK Neuro’s approach measures four main factors to determine whether content resonates with consumers: brain activity (via an EEG test with 14 electrodes attached to subjects’ heads), electrodermal activity (the process used in lie-detector tests), facial expressions and eye tracking.
The hard part, according to Gerrol, is making sense of the data: “Raw EEG data is incredibly noisy.” SPARK Neuro’s team has developed proprietary algorithms to analyze the data collected, which amounts to more than 6,000 data points per second, to measure emotional response and attention.
Companies in the entertainment-biz have enlisted SPARK Neuro for various purposes.
Universal, for example, has used the neuroanalytics research to optimize movie trailers — to determine exactly where people got bored or otherwise responded negatively. Hulu has used SPARK Neuro as an ad-sales tool, to show marketers the different levels of emotional engagement between a regular commercial and a premium ad sponsorship.
Among its work for NBCUniversal, SPARK Neuro has measured reactions to different promos and advertising among bilingual Spanish/English speakers for Telemundo. NBC’s “Sunday Night Football” tapped the firm to measure the difference between contextual ads — in this case, spots that were football-themed — versus non-contextual ads aired during NFL games. (SPARK Neuro found that “SNF” ads with football references performed better, even among viewers who didn’t identify as football fans.)
For Paramount, SPARK Neuro conducted its first test with a full-length movie: Darren Aronofsky’s surrealist horror/thriller drama “Mother!” starring Jennifer Lawrence, Javier Bardem and Michelle Pfeiffer. The studio wanted to get some insight into how to market the unconventional movie, and ended up featuring footage of some of SPARK Neuro’s actual testing in its promo campaigns. Basically, Gerrol said, the data showed conclusively that “the last 20 minutes of the movie are phenomenally intense.”
SPARK Neuro plans to use the Series A funding to grow its headcount. It began with a staff of three and is now at 15 employees; Gerrol is targeting 50 employees by the end of 2018. In September, SPARK Neuro is scheduled to open its first international office, in Tokyo, Japan. SPARK Neuro was profitable after its first year in business, Gerrol claimed.
As for the “SPARK” name, Gerrol said it’s an acronym he devised years ago: Scientific Persuasive Artistic Research-Driven Knowledge. He’s long been interested in applied cognitive psychology, having obtained undergraduate and master’s degrees in human factors from Tufts University.
While SPARK Neuro is less than two years ago, some of its technology was incubated in Gerrol’s previous company, SPARK Experience, which used applied psychology to measure responses to user experience and design. At the end of 2016, he sold SPARK Experience to Motivate Design, a UX research, design and staffing agency in NYC.
To date, SPARK Neuro has collected data on 15,000 individuals. It recruits panelists by providing cash incentives, which average $100 per person per session, for their participation. Unlike with focus groups, SPARK Neuro’s payments to test subjects don’t have the potential to distort the results, Gerrol said. “You can’t control your brain. People have referred to us as a ‘lie detector on steroids.'”
Emotion-measurement work done by SPARK Experience got attention during the 2016 U.S. presidential election. In the weeks leading up to the election, the firm conducted research on undecided voters in two swing states, Pennsylvania and Florida. The team concluded that Donald Trump would win, based on an analysis of the emotional reactions to various videos the subjects were shown (e.g., a clip about Mexican immigrants). “We uncovered the ‘hidden Trump voter,'” Gerrol said. “In some cases they weren’t even aware of their emotional responses.”
In addition to its Hollywood clientele, SPARK Neuro also has worked with companies including Anheuser-Busch, Barclays, Clorox, FedEx, Fidelity, General Motors, JetBlue, Mars, State Farm and Walmart.