• by Ross Fadner , September 6, 2004

This morning, Poindexter Systems, Inc. is expected to announce that it has secured an $8 million round of funding from several venture capital (VC) firms, which the company says it will use to expand its core targeted ad serving and optimization products for advertisers, as well as to increase its U.S. sales force and explore opportunities in new market segments. Blue Chip Venture Company, WallerSutton 2000, L.P., and previous investors Hudson Ventures and Echelon Ventures each contributed to the round.

According to Poindexter CEO Rich Person, the company is "aggressively" going after the majority market share held by ad serving giants DoubleClick and aQuantive unit AtlasDMT. Person noted that while DoubleClick has enormous volume at 70 billion impressions per month, its analytics and targeting capabilities leave room for improvement. Analytics, he said, will be a key driver of Poindexter's growth, particularly because larger national brand advertisers want their agencies to provide more and more analytical data to back up their spending.

Mark Wright, director of Blue Chip Venture Company, noted that the company chose to invest in Poindexter specifically because of its "ability to respond to the needs of advertisers and agencies for more sophisticated analysis and targeting of online audiences." Both Blue Chip Venture's Wright and WallerSutton's founding partner Bill Ingram will join Poindexter's board of directors.

Poindexter's Person said that he expects to aggressively compete in the maturing behavioral targeting (BT) market as well. He noted that advertisers will increasingly move from buying impressions to buying actual audiences as the technology becomes more refined and widespread.

Denise Garcia, GartnerG2 market research director, noted that behavioral targeting is online advertising's flavor of the month, but she said the support of a major portal would help it become a more attractive option for advertisers.

"Portals have a higher volume of traffic than content sites," Garcia said. "One of the issues with behavioral targeting is getting a high volume of the target the advertiser has identified," but "this is not likely to be as much of an issue with high volume sites, like portals," she added.

Person also said that Poindexter, aiming to present marketers with a one-stop shop, will use the funding to develop search and e-mail marketing solutions. It will also look into bringing its targeting capabilities to ITV initiatives, Person said, citing an interest from large agencies in particular.

"VCs are in agreement that the Internet advertising market is hot," Gartner's Garcia said of Poindexter's funding. "It's growing faster than advertising on most other media, so it's attracted the VC's attention."

But Garcia warned that agency/publisher dynamics are more complex than they appear to those outside the market. "VCs, in their haste to get involved in a fast-moving hot market, oftentimes fail to understand complex market dynamics," she said. "New technologies and new media only increase the complexity between agencies and publishers."