• by Laurie Sullivan  @lauriesullivan, November 3, 2009

Rocket Fuel has partnered with Morpheus Media to drive sales, loyalty and brand engagement for Lord & Taylor. The fledgling hybrid ad network that launched earlier this year helped to triple the retailer's campaign goals from the first to the second for online sales of women's fashion, apparel and accessories by analyzing behavior, social, contextual and search data.

Although Rocket Fuel declined to disclose the initial financial budget for the campaign, the results generated a return on investment of about 3.6 times greater than Lord & Taylor's goal and reduced effective cost per acquisition (CPA) by 73%.

Morpheus Media built a custom audience segment tailored to Lord & Taylor's specific campaign objectives. The digital display ad campaign goals included an aggressive ROI to drive traffic to the retailer's online store, as well as metrics for building brand engagement and loyalty among the target audience of women living in the Northeast, ages 30 and older.

The idea is to predict the response prior to serving the ad. George John, CEO at Rocket Fuel, calls the technology "progressive optimization," which rebuilds itself every 15 minutes" to learn. This guarantees that the targeting improves each time it serves up an ad. The platform automatically collects target data and information on impressions served.

Three models run together in parallel to increase the chance of successful targeting. Rocket Fuel built a "click model" to predict whether a click is likely to happen. Advertisers often will overdo creative optimization, so they will come up with an ad that looks great. The company also built a conversion model, which predicts whether it does get a click, the chance of the click converting into a sale, and a conversion that might occur after someone sees an ad even without clicking.

Rocket Fuel used this platform to build a custom campaign profile for Lord & Taylor's marketing campaign. The company identified the best audience using its Progressive Optimization technology, which focused on key metrics based on relevant characteristics, such as sites, creative, ad unit size, time of day, geography, behavior and demographics.

Lord & Taylor had expected heavier sales in cities with brick-and-mortar stores, but that wasn't necessarily true, says Rocket Fuel President Richard Frankel. Think crowdsourcing. The data indicated a higher demand in areas where no physical location existed. The data gave the retailer insight into locations where they lacked support and might consider opening brick-and-mortar stores, he says.

Rocket Fuel co-founders John and Frankel -- veterans of Yahoo, DoubleClick, Epiphany, and salesforce.com, and space agency NASA -- say the product roadmap for the company includes integration with more real-time data exchanges. John and Frankel recognize a need for more efficient ad networks driven by technology, algorithms and machine learning.