VentureBeat

Millennial Media, a Baltimore, Md., company that serves ads to mobile phones, has raised a $15 million a second round of funding.

A bunch of companies have launched to grab a portion of the lucrative mobile ad market. The cut-throat competition has pushed companies like Millennial into aggressive marketing tactics that cross the line. Earlier this year, we caught the company running a fake ad counter on its home page, which gave the impression of many more ads being served on its network than were actually being served.

With those sorts of tricks, you’ve got to wonder how investors can trust it, but apparently they do. Charles River Ventures led the round, which included existing backers Bessemer Venture Partners and Columbia Capital.

The mobile ad market is expanding quickly, with some estimates saying it will expand ten-fold within four years, to more than $16 billion — so minor marketing antics may be easy for investors to forgive.

Millennial Media raised a $6.3 million in a first round earlier this year, from Bessemer, Columbia and Acta Wireless. Competitors include AdMob (backed by Sequoia and Accel), Enpocket (acquired by Nokia), Third Screen Media (acquired by AOL), and ScreenTonic (acquired by Microsoft Corp).

In September, Millennial Media said it would serve ads on MySpace’s mobile site and other News Corp. properties, including IGN, FOXSports.com, AskMen.com and RottenTomatoes.com.

Serving ads on mobile phones is a lucrative business, forcing companies with a stake in the game to engage in aggressive marketing — perhaps too aggressive.

Millennial Media, one of a handful of Young Turks targeting this market, is a case in point. The company, which recently raised $6.3 million, has just launched a marketplace for advertisers and publishers that has a fake ad counter on its home page.

In its fervor to stay up with aggressive players like Admob and Third Screen Media, the company’s marketplace, called Decktrade, sports a counter (go to page here; see screenshot below) that gives the impression it is scrolling all the new ads being bid on within the marketplace. The counter (go to the page here; screenshot below) shows the bids, the click-through rate (CTR) and estimated cost per thousand impressions (CPM). The counter is moving rapidly.

You know it is fake because if you disconnect your computer from the Internet, the counter keeps ticking. A tipster pointed this out to us, after he’d done some analysis. The counter’s data is all hard-coded (download code as text); there’s only one phone for Turkey, the Nokia 6680, for example. What is odd, is how elaborate the scheme is. CPM values are set to be $8.5 + a randomly generated number, keeping ads at a nice high rate — all the better to get publishers eager to join. This is sketchy. If these sorts of randomized counters are being condoned by the industry and its insiders, we suggest people start calling companies on this; it’s misleading. We’ve requested comment from the company’s public relations firm, but have yet to hear back.

This sort of thing was bound to happen. The temptation to create the impression you are the market leader is great. EBay and Google showed the biggest marketplace wins. Mobile ad spending was only $871 million last year, but is expected to reach multi-billions in coming years. And the counter idea is a blatant copy of competitor Admob’s impressive counter. Three weeks ago, Admob raised $15 million from high-profile Silicon Valley investors Sequoia Capital and Accel Partners. Even then, we noted that companies appear to be getting carried away with their stats, and wondered aloud whether anyone is holding them accountable. Third Screen Media, for example, said on its Web site it served 175 million ads a month, after earlier telling the WSJ that it showed 350 million a month.

Here’s a copy of Millennial Media’s announcement about Decktrade. Millennial’s backing comes from Bessemer Venture Partners, Columbia Capital and Acta Wireless. The company is headed by Paul Palmieri, formerly with Verizon Wireless and Advertising.com.

(Update: Apologies for the earlier version. A switch in servers and move to a new version of Wordpress recently caused a glitch, causing a draft to be published instead of the final version.)

(Update: This morning, the company has changed its homepage, freezing the counter and saying it is only for “marketplace simulation.”)