• by Steve Smith , Staff Writer @popeyesm, January 18, 2008

Performance ad network AdKnowledge reported recently that in 2007 the number of clicks on its text ads had increased 300%. As president Brett Brewer tells us here, the company profiles users based on their previous history of interacting with ads, and then distributes that knowledge to publishers for their Web sites as well as their email, search and display channels. Recent acquisitions and partnerships in the social networking space have resulted in a product that applies these targeting methods to the emerging widget marketplace.

Behavioral Insider: Differentiate AdKnowledge from the rest of the BT field.

Brett Brewer: It was launched around the concept of taking search engine advertisers and making an easy automated way for them to get their text listings out across the Internet. The disconnect is that consumers spend only about 15% of their time actually searching, and the other 85% of the time surfing or in email. There was a disconnect between where advertisers were spending their dollars and where consumers actually spend their time.

BI: How and what are you profiling in the user?

Brewer: We have a big challenge, in that if a person goes to Yahoo and searches for eye surgery, it is fairly simple to show them an eye surgery ad. It is a lot harder when you were looking at millions of different consumers across hundreds of thousands of Web sites and trying to predict which person is likely going to respond to an eye surgery ad and which person isn't. So, AdKnowledg doesn't look at BT as the traditional bucket-izing of people's interest. [On a portal] you show them a finance ad because you  know they were on a finance site the day before. That is relevant and interesting. But we think it is more relevant to know that that person clicked on a fly fishing ad three days ago and clicked on a Volvo ad two days ago.

And what we have seen from these individuals is that the next ad that they most likely respond to click is an ad for a trip to Alaska. We call that the DNA of the consumer. We don't put a person in a bucket. We keep track of the ads a person clicked on, and the ads a person doesn't click on.  Over a long period of time -- in some cases, when the person has not clicked on 150 ads and clicked on 47 ads -- we get pretty darn good at predicting what they are likely to respond to.

BI: Walk me through the technology. Where does the tracking start?

Brewer: The publisher and us are basically cookie-ing that user or recording the IP address, and if it is email they will pass us a one-way hash. So, for example, my email address would be something like user1257657 in encrypted form, and it would then see in our database that this user number has clicked on these 47 ads and not clicked on these 613 ads -- and therefore pass back to the publisher the best ad that we have to show to that consumer. [The publisher] can send it out or not.

A user to us is either an IP address, a cookie, or a one-way, hash-encrypted, email address. We are never tracking personally identifiable information. We stay one step back from the actual publishers. AKnowledge is just giving the publisher the ability to interact with our API and leverage our advertiser bases combined with the behavioral targeting information that we may have on the users that are coming to their site. The publisher is choosing to show the ad.

BI: Then on the buy side, this is all done on a bidding system?

Brewer: Correct. All of our advertisers are bidding for clicks on a cost-per-click basis, exactly as they would at Yahoo or Google.
 
BI: Where specifically are you seeing the most growth?

Brewer: We have seen it on our tagline product, which is basically a single-line text ad at the bottom of user-to-user email. We developed a product for dating, reunion and jobs sites. These sites have been supporting lots of user notifications and user updates and all that kind of email with no way to make any money from it. The tagline product works the same way as the text ads. It is targeted to the person receiving the email.

BI: What have been the main drivers for the 300% click growth you claim for last year? 

Brewer: On the revenue side, the one thing we have seen over the last six months is that we've now got enough distribution and enough revenue where it makes sense for big travel and mortgage guys to come into the AdKnowledge system and spend their time and money. In the active bid system, having one to two bidders in a category is one thing. They are relatively conservative. But once you have four, five or six competitors in there, the bids have gone from a dollar to two dollars in categories. So it has been big growth. Most publishers are paid on a CPM basis, so as that bid system landscape increases, it's very financially beneficial for the business.

BI: You have been active in the new social media space. How can BT be applied here?

Brewer: We have a product that monetizes widgets within Facebook and soon other social network sites. The publishers tend to be individuals, one or two guys in their dorm room who have come up with a way for Facebook people to pass each other a virtual beer or something like that. Within that widget Facebook has given them ad space, but if you are two guys in the dorm room, you don't really know what to do with it. The bigger guys haven't really built it out to the point where they have realized what advertisers work there. So we were relatively quick to that space; it only existed for the last six-and-a-half months.

But we have seen huge growth there, because the inventory is literally growing 100% month over month. There are incredible numbers. We are one of the few players in there that monetizes that traffic by pulling down the AdKnowledge ad tags. We've grown along with the overall market growth.


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