• by Steve Smith , Staff Writer @popeyesm, March 30, 2007

While BT networks in the U.S. continue to grow in order to bring greater scale to the technology, European online advertising is more fragmented. Targeting services provider WunderLoop licenses BT technology to some of the largest ISPs on the continent, including AOL Germany and FreeNet. Its new plan for bringing the necessary scale to behavioral campaigns is not a network but a brokerage. WunderLoop Connect is a self-service exchange for publishers and advertisers crafting BT campaigns. Chairman Michael Kleindl explains how a BT stock exchange works.

Behavioral Insider: You already help ISPs and large publishers do BT. What makes an exchange necessary?

Michael Kleindl: Looking at the advertising market we felt that there might be a shortfall for behavioral targeting; the more you target, the smaller your reach becomes. Our thinking is that we would need to get critical mass and critical reach. Even with large properties, the moment they started to target they could only buy small pieces. They said BT looks very good and they see very good results, but they can't buy enough. And they said we have been trying with AOL in Germany and FreeNet and all your technology clients -- why don't you connect each other, and then we would be in a position to find more of the specific target groups. That was a very cool idea but it was probably not going to solve the problem. We would need a system where we could connect the total Internet universe. This is a stock market where every publisher, not only large portals or media companies, have access to the technology free of charge. They can pull down the technology, start profiling their audiences, and then can trade their audiences and their inventory at the stock exchange.

BI: Walk me through the process for a publisher.

Kleindl: He basically decides which areas of his Web site to tag and which creative he wants to use in these categories, and which price by creative. The system then automatically produces a small piece of code that he adds to his ad server tag, He decides how much inventory he wants to place.

BI: How doe the advertiser experience this?

Kleindl: The advertiser basically starts a query where he says, well I am looking for finance audiences and people who have been searching for costs of stocks or real estate in the last four weeks. He immediately gets a read-out of potential reach. and he can place his budget and ask for his campaign to be run on rectangles or banners and then frequency. He gets a list of sites where he can see how much audience is available. In one line he [also] sees a blind buy where the publishers would be aggregated that don't want to be seen by brand name inside the stock market. Then he gets a rate by site and decides whether to accept the rate or start a negotiation process. The publishers get notified that there has been a deal proposed and they accept or don't accept. Then the advertiser cherry-picks the sites he wants to place the campaign with.

BI: But this is not a network.

Kleindle: It has nothing to do with the network business. This is fundamentally different from some of the guys in the U.S. We have no sales teams. It's a neutral stock market.

BI: But it does allow smaller publishers to enter the BT market.

Kleindle: Yes. It solves the fundamental problem of critical reach with BT.

BI: Does the advertiser still have to put together a series of separate deals to do the campaign?

Kleindle: No. The stock exchange works as a clearinghouse. The deal is made between the advertiser and a number of publishers, so for the advertiser it is one operational deal, although you might have relationships with ten thousand. This is where it may be similar to the network. So it is very easy for the advertiser.

BI: Your BT technology folds into the profile more than just recent content visits.

Kleindle: We integrate search as well as content, which is pretty unique. It is really integrated BT, so it does incorporate any available data very easily. Large portals add all their CRM information, the CMS systems, all of the analytics data, and then we add any research data like Nielsen or comScore. And then there's a lot of intelligence in the algorithms and in the data modeling. This can go down to what we call the relevancy rating so we can even adjust a profile during flight, if someone comes to the site and we recognize the cookie as someone who has been looking into finance sites. But maybe an hour ago he has been looking for flight tickets to London. So search is always relevant. We can allow the publisher to say, if such a business case comes up then we forget the finance profile for this second and we show a travel ad, because the freshest information we have is from an hour ago and it had been about a flight ticket. So we call it a relevancy rating. Even during a single session we can overwrite the assumption we have and see that right now he is looking at something different, so let's react.

BI: Once your current clients are up and running on the system, what kind of reach are you expecting to deliver for BT campaigns?

Kleindle: Just in Germany, if the four or five who are currently tagging are all tagged up, then we are up to 70% to 80% of German Internet penetration.

BI: Why is this stock market preferable to a BT networked solution of the sort we have in the U.S.?

Kleindle: Because the reach is much bigger. There are no networks in Europe. People would not sign up for a BT network. It is almost a no-go for publishers. The network is selling the technology and competing with their clients for the advertising sales. It is a very tricky game. In Europe it is a challenge to create a critical mass, so a stock market is in our opinion the only way to go.