Weather is getting more news attention these days. In financial market terms, you could say weather has had a “high beta” lately – extremely volatile.
According to Jason Chen, co-founder of four-person WeatherAlpha, marketers and media companies alike have taken note and are starting to use information about weather, building it into their operations and campaign strategies. Chen and his co-founder Dan Alexander, who is the company’s Chief Meteorologist, hope that they can bring new insights to advertising via their self-funded company, which began in 2009.
AdExchanger spoke to Chen and Alexander recently.
AdExchanger: First, a typical venture capital question for you – what problem is WeatherAlpha solving?
JASON CHEN: Three years ago when we started WeatherAlpha, we believed that the market lacked what we considered to be actionable insights as they related to weather. For example, we perform a weather impact assessment for clients, where we inform them which weather conditions impact their strategies as well as the threshold and variances from one location to another.
But it wasn’t enough giving them that information.
We wanted to provide a specific mechanism to apply these insights in their strategies and operations. So we developed WeatherEdge, our data platform, which provides real-time weather data tailored to specific advertisers. For example, it automatically accounts for the views per location, the time of year, the time of day – and the actual weather conditions including the threshold and magnitude. And in that sense, we basically are more about the application of the science. It’s not just about tying a product to the weather. It’s about understanding the weather’s impact on the consumer psyche, and then correlating different products to that weather condition to help consumers make their experiences easier, better, more comfortable, more fun or – in a case of apparel – even more fashionable in some way.
What other verticals are you targeting beyond advertising and media?
JASON CHEN: We’re focused heavily on the advertising and marketing space. We have discussed internally the possibility of branching out into investment houses and financial advisers, because there is a correlation between certain types of stocks and commodities and the weather. But a lot of these types of companies provide that expertise in-house.
Also, we’ve thought about reaching out to universities and professional sports teams to do studies about their facilities, whether or not you could draw any type of correlation to their past records, whatever their facilities were and whatever injuries may or may not have been as a result of weather conditions.
What’s the bigger opportunity in advertising – historical or real-time weather data?
DAN ALEXANDER: It’s a little bit of both. We are a real-time platform, but there’s certainly an historical element, which is important, as is how the weather impacts people in different locations, which is based on history.
For instance, a day of rain in Phoenix, where that’s quite a rarity, is going to impact consumers and shopping traffic much more so than it would in Seattle. And the same should be said for a given temperature – 80 degrees in Burlington, Vermont in April is a really big deal.
There are unique attributes about weather and its impacts that we find fascinating. That’s kind of another thing that we built our system on.
How does a typical engagement go with a client that wants WeatherAlpha? What can you tell me about pricing?
JASON CHEN: It depends on the extent of the services that a client is looking for.
In the ideal scenario, first we would want to do a study, take some of their historical data and baseline it. Then we would overlay weather data to see if there is any correlation to specific weather triggers that they hadn’t looked at.
The next phase would be executing a campaign where you target the ad based on specific weather conditions and thresholds in specific locations.
The third and final phase would be the optimal phase, where you build on top of what you’ve learned and further refine the campaign by creating the tailored call to action.
What we are finding with a lot of advertisers and agencies is that they have at least a certain understanding of what they think is the right weather trigger. And many of them just want to jump into the full-blown third phase since they already have the specific conditions and thresholds built in.
DAN ALEXANDER: There is an educational component to this, and we’re here just to optimize a client’s campaign around weather.
JASON CHEN: As far as the pricing, I would prefer not to go too far into detail there. But we are flexible, depending on who we are working with; if it’s a platform in which we’re integrating our data, it would probably be more along the lines of a revenue share agreement versus if we were doing much more on the processing of the actual ad and the display. In that case, we’re going to be talking more about a CPM.
Is any of this proprietary data? Or are you pulling from weather sources that are freely available to all?
DAN ALEXANDER: Our system relies on multiple sources of data. And the data sources themselves are not proprietary. But I think we add extra value in the analysis of the data and making it actionable, simplifying it for the marketer. You can’t just take a raw feed of weather data; it’s difficult to know exactly where to go with that.
We’re here to help the advertisers understand weather’s impact and guide them through the process of using our data. It’s a combination of the data, the analysis of the data and then the eventual application of the data to a real campaign. We also store all of that data so that we can cross-reference historical data for any specific vertical and update benchmarks and campaigns from different advertisers within the same vertical.
Obviously, that information is proprietary to our customers, but we’re able to look at our data and optimize our system or its data segments. We initially started out with 65 data segments that were based on weather impact assessments that we’ve done on weather and advertising as a whole. But then, based on the work that we’ve done with some of our customers, we’ve built out and added to our data segments. We’re at 122 data segments.
What are some milestones that you guys would like to accomplish in a year to 18 months?
JASON CHEN: That’s a question that we ask ourselves all the time. Towards the end of last year, we tackled it and decided that for now we want to focus on the advertising space primarily. What we want to do within the next 12 to 18 months is be known as the weather provider within the advertising space.
Do you guys consider the Weather Channel as competitive at all?
JASON CHEN: We’ve seen the press that they’ve been getting the past few months. There’s nothing we can really say about it, other than we wish them the best of luck. This is something that we’ve been working on for three years. We’ve had two patents pending since 2010. We’re all about trying to create new and unique solutions.
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