BlueKai Enters With New Advertising Exchange

BlueKai Behavioral Ad ExchangeAccording to CNET's Stephanie Olsen, Bellevue, Washington-based, BlueKai will unveil its new ad exchange on Monday.

After raising a $3.1 million investment from Redpoint Ventures in Q1 of this year, the company founded by Medio Systems and Revenue Science advertising executive Omar Tawakol is ready to tell what all the secrecy has been about these past few months.

In Olsen's interview with Tawakol that was published this past Friday, Tawakol revealed BlueKai is creating a data ad exchange centered around behavioral ad targeting.

Olsen describes how it will work in the simplest terms:

"One targeting trick is to collect data about what someone does at one site, (e.g., reading a Las Vegas travel article at CNN.com), and then target an ad (e.g., cheap flights to Vegas) while they're visiting another site.

BlueKai wants to play middleman in that equation."

In other words, Blue Kai is creating an open exchange for the cookie data that, for example, the formerly-independent, behavioral ad network Tacoda (started by Dave Morgan and bought by AOL in 2007) used to buy on the cheap from its publishers. An exciting idea to be sure.

In the old (current AOL?) model, Tacoda offered publishers two ways to increase inventory yield:

  1. Deliver Tacoda advertiser campaigns on the publisher websites through standard, IAB ad sizes.
  2. Provide cookie data to Tacoda by putting Tacoda javascript on all publisher web pages which, in turn, sent Tacoda behavioral data and allowed them to create user profiles for targeting purposes.

Publishers made significantly more by delivering ads as opposed to setting cookies.

Considering the value of the cookies to Tacoda as the backbone of their behavioral business, one might think that Tacoda was getting a great deal.

Yes and no.

Cookie data is very valuable, but Tacoda was able to pay higher CPMs than other ad networks since the cookie data provided improved and compelling targeting capabilities for advertisers.

Blue Kai's model puts the power to monetize and control the anonymous cookie data into the hands of the publisher. BlueKai gets a percentage of each transaction. Its exchange will probably drive privacy advocates nuts, but, according to the article, since its anonymous data, it should override privacy concerns.

The BlueKai home page already illustrates their goals for the new marketplace: "A harmonious equation where effective and profitable marketing becomes a polite answer to a consumer need." Yes, Senator.. our cookie-ing is polite.

We jest. The behavioral data trove available online appears to be an excellent fit for the efficiencies of the exchange model.

In the article, it is noted that Tawakol believes BlueKai "is the first ad exchange focused on so-called intent data, meaning that people have demonstrated an explicit interest in buying a product or service." It is suggested that BlueKai gives the same opportunity to advertisers as search - we think this is a bold stretch.

If the search comparison were true, one could say that about another way advertisers can leverage intent/behavioral data through an exchange: by using contextual data with retargeting (poor man's behavioral without a robust profile).

For example, user reads new car article on the WSJ.com; exchange registers page as being in the "autos" category and the user is cookied accordingly; thereafter, whenever the user visits any page on the ad exchange, the user can be targeted again by advertisers interested in users who read auto content and presumably are interested in new cars.

But, contextual display advertising does not equal search for intent, either. Search is the bottom of the funnel. Everything else creates the interest.

As we've argued before, a robust analytics package is needed for ad exchanges which tracks from display campaigns straight through to search. The analytics would show how display advertising positively influences the purest moment of intent which is exhibited in search and thereby justify display campaigns as an important tactic along with search.

Regardless, BlueKai is opening up an exciting new revenue stream for publishers, better targeting for advertisers and more useful ads for the consumer.

The exchange model wins again. Read the entire CNET article here.

 

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