Walter Knapp is COO of Lijit Networks, a search tool proving analytics to publishers and audience targeting to advertisers.
AdExchanger.com: What problem is Lijit solving? It appears to be a couple of problems potentially.
WK: You’re right there are really two problems that Lijit solves. The first is for publishers. If you think about it, the most interactive component of any website is the place where readers of that site explicitly interact with the content by expressing intent to find or transact something. This is done through the search box on the site. Interestingly, publishers have really not had a good solution for exposing all of their content and then capturing all of the fantastically valuable data available through site search. The Lijit search widget that publishers install on their site, indexes and includes site as well as social content (Twitter, Blogs, Facebook, photos, videos, etc.). This means that when a reader performs a search he gets all of your content in one place thereby exposing more, reducing bounce rates, increasing time on site, and boosting pageviews. The associated data we capture through these search boxes is centered on the intent expressions of a publisher’s reader base. We feed all this data back to our publishers in a real time stats dashboard. All of this is free to the publisher.
The second problem Lijit solves is one of true audience understanding across the mid- and long-tail. We believe that brand advertising and marketing messages begin with the desire to reach a particular audience in a compelling and interesting way. Unfortunately the state of audience discovery and targeting online is woefully inadequate to find the best audience for a particular message. Moreover, our publisher base is comprised of largely niche and focused content sites where the authors and editors spend nearly all of their time creating and cultivating engaging content for their readership. Lijit captures audience data across our network of nearly 50M uniques and enables premium advertisers to reach the right audiences at scale.
Please discuss the current scale of the business from both a reach (and frequency? uniques, queries, geo-breakdown, etc.) and revenue perspective.
We have well in excess of 12,000 active publishers in our network, growing at 50+ new sites per day. Our network has grown from 350M monthly pageviews and 32M uniques when we entered Q1 of this year, to now nearly 50M uniques and 550M monthly pageviews. We see more than 3M daily uniques that collectively conduct about 1M queries each day. Because the Lijit search widget is free to online publishers of all sizes and delivers the value it does, we see unbelievably low churn in our publisher base. We are working on a number of high-profile publisher deals, but even at current course and speed we should hit 1B monthly pageviews before year end.
What does your competitive set look like? How do you differentiate?
We spend a lot of time surveying the competitive landscape for both site search as well as detailed audience understanding. On the search side it’s amazing to me that nearly 30% of websites have no search whatsoever, and about 60% have simply the default search that comes with their CMS platform. Universally, none of our competition in site search includes site + social content, allows the customization flexibility we offer, nor do they feed back to publishers the incredible intent data about their readership.
On the audience side, clearly there are data aggregators and others that are getting really good at leveraging data to find and deliver audiences. Folks like Audience Science, or DSPs like Turn and Invite Media come to mind. We look at these folks more like partners in that we have the data they need to drive their platforms and we have the publisher relationships needed to execute campaigns.
How is Lijit's offering different than Google custom search and why couldn't they offer what you're doing today?
We have a long standing and very positive relationship with Google and the Custom Search group in particular. The basic differentiation is that we’ve built a fundamentally different search architecture than the large horizontal search engines (Google, Bing, and Yahoo). You can think of our search architecture as a “faceted” search engine in that every publisher in our network becomes what amounts to the center of their own universe, including not only their site but also all their associated content sources and network of closely-held or trusted sites. Google is in the business of delivering the one right answer for any single query. Lijit is in the business of returning the correct answer for the publishers’ business goals.
Plenty of stress on the supply side these days as you know. What does the publisher get out of a relationship with Lijit? Why is a "relationship" important?
When I look at the landscape of online or digital advertising, it’s obvious to me that there is still a ton of cash flowing in from both media spend as well as venture capital investments and this enables companies to spin up that likely have limited staying power. The calculus we solved at Lijit was: build a huge and growing network of publishers by delivering to them incredible value through real functionality and reader intelligence. We cracked that code and the results are extremely low churn, tremendous amounts of audience data, and a trusted relationship to place premium advertisements across the sites. I think if you simply use money as your relationship currency as with traditional ad networks, your business is fundamentally an arbitrage model with limited long-term prospects.
Are you offering search query string data for search retargeting to advertisers or their intermediaries? What would you say are the differences of intent between your search data and that of pure search engines like Google's, Yahoo!'s and Microsoft's Bing?
That’s a really good question. One of the things we see in addition of course to on-site search data is the referring search data coming from Google, Bing, Yahoo, etc. The growth of the sheer amount of information online has trained people to enter ever-longer search queries to find what they want from a search engine. This lengthening of search strings benefits the mid and long-tail publishers that comprise the vast majority of our network. In fact, on average 30% of the pageviews across our network occur as the result of a reader coming from a major search engine. Here’s where it gets interesting: once a reader lands on a site in our network the search queries then entered on-site are typically very short (1 or 2 words on average) and are very contextually aligned. For instance one site in our network, VeloNews is the premier cycling-specific magazine and website in the world. When a reader lands on VeloNews a typical search query would be: “Lance’s Bike”. The answer of course to a cycling geek like me is the 2010 TREK Madone.
Please identify the types of partners you have and the parts of the business they address.
We have a unique position in the market due to both our strong publisher relationships as well as the audience data we collect. That enables us to pursue multiple partnerships and revenue channels simultaneously. For instance, we routinely work with premium brands and agencies to identify very specific audiences for campaigns. We also have great relationships with nearly all the major Agency Platforms and DSPs. Furthermore, we work with a select group of partners that want insights into the data we collect. All of this we leverage to benefit our publisher base by bringing them high quality creative campaigns that appeal to their readership at a higher CPM than they could attain on their own.
What pivots have you made with the Company to get where you are today?
When we originally launched the Lijit search offering it appealed primarily to bloggers. After all bloggers are by nature extremely social and we found they did a lot more content creation online than simply writing their blogs. In fact, the average Lijit publisher has six additional content sources (Twitter, Facebook, Flickr, YouTube, Delicious, etc.). Over time we matured the offering and the search widget has become an increasingly powerful tool for publishers that are more commercial in focus. The intent data about their readership and the premium advertising opportunities we bring to these publishers has been a major turning point in the growth of Lijit.
What's the status of Lijit's funding today?
We were fortunate to have the involvement from the beginning by Brad Feld, Seth Levine and the folks from Foundry Group. They have a very entrepreneurial attitude, super strong online and digital advertising experience and have been great partners in building the business. The Foundry guys have a long track record of interesting investments in the publisher and ad space, notably Feedburner which was acquired by Google in 2007. We’ve raised just over $11M in 3 rounds from High Country Ventures, Boulder Ventures, and Foundry Group.
What can or will Lijit do to help advertisers and publishers value data?
I think the quick rise of the DSPs and the establishment of Agency buying platforms has shown that there is real and tangible value in the ability to parse and understand audience data so that messages can be optimized and delivered to the right place at the right time. The missing side of the equation remains that Publishers lack the understanding of their audience particularly in a larger context and therefore have little ability to value the unique reader beyond their core publication. Lijit is in a unique position of being the supply / publisher side of this equation and we’re working diligently to continue developing this audience insight.