A stealth start-up on Monday plans to take the wraps off a new advertising data exchange designed to connect publishers and advertisers so they can target ads to Web surfers. The privacy pitch: consumers can tweak the advertising data held about them.
The start-up, Bellevue, Wash.-based BlueKai, is taking a novel approach in an otherwise crowded new market for Internet advertising technologies. Many start-ups, ad networks, and Net media giants are honing technologies to leverage vast troves of data about people online so that they can tailor ads to their behaviors, preferences, or demographics--so-called behavioral ad targeting. One targeting trick is to collect data about what someone does at one site, (e.g., reading a Las Vegas travel article at CNN.com), and then target an ad (e.g., cheap flights to Vegas) while they're visiting another site.
BlueKai CEO Omar Tawakol
(Credit: BlueKai)BlueKai wants to play middleman in that equation. With BlueKai's exchange, sites like AutoBytel can sell anonymous data about the people, for example, who have configured a BMW Mini Cooper on its site in the last month. (AutoBytel would use a tag called a cookie to identify that person's computer, without a name or address.) Then sites like CNN.com could buy that data (in the form of identifying cookies) so that when those people show up at its site, BMW could show a Mini Cooper ad.
BlueKai CEO Omar Tawakol said data exchanged on its service is anonymous. To participate, publishers, sites, and advertisers must agree not to combine personally identifiable information about people with non-identifying cookies. Consumers will also be able to see what information is linked to them (cookies on their PC) in BlueKai's registry database, which will launch Monday. Data might include the person's ZIP code and interests like luxury cars, BMWs, Las Vegas travel, and so on, depending on how often they visit BlueKai's partners.
"We're creating a data economy, where you can get data from a seller to a buyer as long as they meet privacy rules and make the payment. Our job is to set the rules, ensure payment, and guarantee some notion of quality," said Tawakol.
The consumer registry, he said, is meant to get people accustomed to the idea that their data is worth something. For now, BlueKai will let people give to charities like the March of Dimes by maintaining data on the site, but five years down the road they might invest their data like they invest money.
BlueKai's online ad model, keeping consumer privacy in mind.
(Credit: BlueKai)"We need to stop trading data in the shadows," he said.
Tawakol, who previously worked at behavioral ad targeting company Revenue Science, said this is the first ad exchange focused on so-called intent data, meaning that people have demonstrated an explicit interest in buying a product or service. Ad experts say such intent data is why search engines like Google have had so much success--people simply type what they want into the search bar and a related ad appears. BlueKai aims to do the same thing to improve the targeting of banner or display ads by trading intent data from sites related to auto buying, travel, and shopping.
A publisher like video site Tremor can go to the exchange to buy data for 3 million people who are in the market for an SUV, for example, demonstrated by whether they've configured a car. Tremor can then upsell to those people from Ford, General Motors, or another SUV maker. Like Google, the exchange is based on bid pricing, meaning that advertisers bid against each other for the data. Advertisers or publishers may pay half a cent for a unique cookie, or in the case of the 3 million SUV shoppers, $15,000 for the campaign. But just like with search, the cost varies by the type of consumer.
BlueKai's Tawakol compares the idea to the direct mail marketing business. Offline, marketers call up a data company like Axciom to buy the names and addresses of household decision makers in a certain ZIP code, for example. Then they would take that data and create a campaign.
He said that there's a huge opportunity to take data from sites like Orbitz or Amazon.com to establish shopper intent.
"The behavioral targeting problem is when you rely on context, like someone reading about travel so you assume they're going to book a ticket somewhere, whereas if they go to a travel site, they book something. You know more than Google does about that potential travel," he said. "Buyer data specifies exactly what the user wants."
Consumers buy-in
Still, consumers will need to buy in, too.
"It's already a large opportunity but the Holy Grail is if it becomes something consumers buy into. If they think of it as something they care about and view it as something improving their Internet experience, then you're entrenched," said Ali Partovi, founder of music site iLike who's an angel investor in the company. Partovi founded LinkExchange in the dot-com heyday.
Founded in December 2007, BlueKai has raised a total of $4.7 million from Redpoint Ventures and other angel investors. The company makes money by collecting a percentage of the money exchanged between sellers and buyers of data, but Tawakol would not disclose the split.
So far, only two companies participating in the exchange, Autobytel and video site Tremor, have gone public about their relationship with BlueKai. But Omar said it has relationships with many of the top 10 advertisers, publishers, and travel, auto, and retail sites. All of its partners, however, have had to agree to privacy standards and potentially change their privacy policies to notify people that they are sharing cookie data with a third party. They also must allow consumers to remove specific details, such as travel or shopping interests, or to opt out altogether through a link to the NAI, or the Network Advertising Initiative.
BlueKai's exchange also does not require sites or advertisers to disclose their name to a buyer or seller, but the company will guarantee a site's status and allow a company to say which sites it won't work with.
Marc Rotenberg, executive director of the Electronic Privacy Information Center, has been a critic of the NAI and industry self-regulation. The NAI, he said, has an opt-out system in which people must maintain a cookie on their computer to prevent other Web sites from profiling them, which is counterintuitive to privacy-conscious people who would typically delete all of their cookies.
"In the original , when they were targeting people based on preference without knowing who they are, we thought that was great. But of course the model changed very quickly, and Internet ads started to link names with cookies," Rotenberg said.
"Where we stand now is that the government should regulate any company that's collecting any personal identifiable information. The company should be liable for any misuse of the data, including security breaches," he said.
"And if there's commercial value I think it should be shared with the individual," he said.
A slide illustrating BlueKai's privacy approach.
(Credit: BlueKai)Electronic Arts is delaying the release of its Harry Potter and the Half-Blood Prince video game until next summer so that it will coincide with the release of the film, which has also been postponed.
Shares of the game maker dropped by about 1 percent to $45.94 in after-hours trading on Monday.
Last month, Warner Bros. said that the release date for the sixth film in the series would be put off from November to summer 2009 because of after-effects of the writer's strike. (It said that production of the next two films in the series would not be delayed, however.)
The Rock Band game publisher put a positive spin on the new date in a press release Monday, saying that it will be more immersive than ever, with new Wii gestures. But the delay may change EA's immediate financial picture. The company had said it expected to generate $120 million in revenue and 13 cents a share in profit from the video game in the quarter it was to be released, according to Reuters.
Fans of Harry Potter author J.K. Rowling still have something to look forward to this year: the release of children's book The Tales of Beedle the Bard in December.
Social networks are designed to be all about friends, right? Yet when it comes to the competition behind the scenes at social networks, I'm reminded of the '70s song by War, "Why can't we be friends?"
That song especially comes to mind with Google's OpenSocial Foundation, a nonprofit that was officially established this week to promote the open developer platform OpenSocial. OpenSocial is a common set of application protocol interfaces (APIs) for social networks. It's designed to make it easy for companies to create a social network or related applications and have them work seamlessly with other social networks using the platform. (Some argue it's also designed to compete with Facebook's developer platform.)
And if companies aren't comfortable with the OpenSocial premise--for fear that it's just an anticompetitive ploy--they now have a nonprofit foundation that will help ease their mind.
"This organization seeks to ensure that OpenSocial will remain implementable by all, at no cost, in perpetuity," wrote Dan Peterson on the OpenSocial Foundation blog.
Specifically, the foundation will provide operational guidelines about the technology and details on intellectual property as the platform changes and grows.
(The whole thing reminds me of when Microsoft submitted its streaming media compression technology, or codecs, to an industry standards body so that they would be adopted by Hollywood. Critics were wary of the software giant's past monopolistic behavior.)
For its part, the OpenSocial Foundation has a new board of directors that spans the industry. It includes Anil Dharni, director of products at the social network hi5; Google Director of Engineering David Glazer; Joe Greenstein, founder of the movie site Flixster; Allen Hurff, a vice president of engineering at MySpace; and Sam Pullara, a vice president of platforms at Yahoo.
The foundation will choose two other members from the community at large by vote. Perhaps someone from Facebook?
You could easily forget a business birthday, but Google wields more star power than most. It was officially incorporated 10 years ago this Sunday while co-founders Larry Page and Sergey Brin were still working from a garage.
To celebrate, the journal Nature has asked researchers and business pundits to postulate on which young technologies might have as much impact on the world as Google 10 years down the road. After all, in the last 10, Google has grown from running a few loaner servers to a vast network of data centers that can not only deliver a map to a local store but also could have major effects on scientists' understanding of nature.
According to Nature, the common theme of their projections is the integration of "the worlds of matter and information." Here is a selection of responses.
Sam Schillace, engineering director at Google: better browsers. (Oddly enough, Google just introduced its own browser, Chrome.)
"The next generation of browsers...will make communication and collaboration even more transparent and let me focus on what I really want to do--connect with the person at the other end and get work done together. It will turn the web into a superconductor for interactions with other people and change the way we work pretty radically."
Bill Buxton, principal researcher at Microsoft: electronic paper.
"The history of communication technologies over the past century tells me that anything that's going to impact on the next ten years is going to be ten years old already. (The components that made Google possible 10 years ago were already there 10 years earlier, with the creation of the Web.)
"One prime candidate is electronic paper, displays that are as easy to view in ambient light conditions as paper and that consume hardly any power. It started with E Ink a decade ago; now we are seeing it in devices such as Amazon's Kindle."
Investor Esther Dyson, board member of DNA start-up 23andMe (which was co-founded by the wife of Google co-founder Brin): the mining of genetic information.
"Everyone dies of something; your genome gives you hints of which causes are most likely for you. But it doesn't predict precisely or with certainty, or tell you when. People's level of understanding of statistics in relation to soccer or gambling always amazes me, so there is hope that people can likewise understand the difference between correlation and causation in genetics."
Ian Pearson, a futurist with the U.K.-based Futurizon group: video visors.
"We're crying out for technology that will allow us to combine what we can do on the Internet with what we do in the physical world. One technology that springs to mind is the video visor, which gives you a computer image superimposed over the world around you."
And in the really out-there category...
Vincent Hayward, professor of engineering, Pierre and Marie Curie University: haptic, or tactile, computer interfaces, e.g., for mobile phones.
"A dry, flat screen will be able to simulate the feel of fur or wetness."
AOL has sharpened its ad-targeting tools for the iPhone in a nod to the popularity of the Apple smartphones.
The Internet media company said on Wednesday that it has updated its advertising system, known as Platform-A, so marketers can send promotions to people while they're surfing the Web on the iPhone.
When an iPhone user visits any of AOL's sites or those of its partners, for example, the company will show that person a specially formatted banner ad or a marketer's Web site on the iPhone.
The ad technology will be sold through the brand Third Screen Media, the mobile-advertising arm of Platform-A.
AOL's Platform-A already has broad reach, but the company is surely trying to become the de facto ad system on the smartphone. According to June statistics from ComScore, Platform-A is the top-ranked ad network, reaching 90 percent of the nearly 190 million Americans who are online. (The Yahoo Network was second, at 83 percent, followed by the Google Ad Network, at 81 percent, and Specific Media, at 78 percent.)
With these new Platform-A changes, AOL said it can deliver as many as 75 million ads to iPhones every month.
eBay on Wednesday plans to unveil a new e-commerce site for shoppers of environmentally friendly and fair-trade goods, .
In a bid to win over eco- and socially conscious shoppers, the online auctioneer will add a new retail component to its fairly new community site WorldofGood.com, which targets people who care about healthy living and the ethical treatment of workers. The site, which eBay built in partnership with fair-trade company World of Good, will sell products ranging from fair-trade coffee from Costa Rica to toxin-free skin cream from London.
The move is an attempt to capture a piece of the estimated $206 billion annual business in the U.S. surrounding fair-trade and environmentally made products. One of the pioneers in the business has been the natural food store Whole Foods, which over the years has broadened its scope to sell everything from organic-cotton baby clothing to fair-trade wine to eco-friendly bed slippers. Online, however, the business is still fragmented. eBay hopes to provide a one-stop shop for people interested in finding these goods.
"We have an opportunity to drive large-scale consumer demand by helping consumers make more informed choices about the products they buy, and doing so in a market that's historically been inefficient," said Robert Chatwani, eBay's general manager of the project.
What's different about WorldofGood compared with eBay, he said, is that shoppers will have more information about products--where they come from, how they're made, and how they affect the environment.
Chatwani helped conceive of the idea for the WorldofGood marketplace three years ago while traveling to India with fellow eBay employees. There, they found some sustainably made artisan products they believed would sell online, and could give some money back to the creator. They tested the idea and it worked. eBay teamed up with World of Good, a group designed to alleviate poverty in third worlds by helping sell local artists' goods globally.
Unlike eBay's traditional auction model, WorldofGood.com will sell products at fixed prices. The listings, of which there will be about 20,000 to start, will appear on WorldofGood as well as within eBay. The auction company will initially launch the store in the United States, but it plans to expand internationally, initially in Europe.
For now, the listings will span more than 70 countries and carry environmental or fair-trade certifications from about 25 eBay partners, including the Rainforest Alliance and Co-opt America. Product makers must have some sort of certification before they can apply to sell products on the site.
"Consumers are sleeping giants--they have a tremendous amount of purchasing power," Chatwani said. "We simply are introducing a new way for them to shop...and create a really positive social impact."
Updated at 3 p.m. PDT with details from the FAA.
Hundreds of flights were delayed in cities across the country Tuesday because of a computer failure in the Federal Aviation Administration's system for processing flight plans.
A representative from the FAA said a software problem in the administration's central system for processing flight plans, based in an Atlanta office, caused the system to go down at about 1 p.m. EDT on Tuesday. That failure prompted a backup system in Salt Lake City to take over flight-plan processing, but a backlog in the handover caused flight delays instead, according to FAA officials.
"There were about 5,000 flight plans in the system, but a lot of them were airborne and unaffected," said Hank Krakowski, chief operating officer of the FAA's Air Traffic Organization. "The only flights that were affected were those that had already pushed off from the gates and couldn't get off the ground. It created a backlog."
The FAA said it expects the problem to be fixed by about 6:30 p.m. EDT.
The problem largely hit cities in the Midwest and on the East Coast, but the FAA was unable to be specific about how many airports or flights were affected. Those airports hit hardest by delays were in Boston, Atlanta, and the Washington, D.C. area. Washington National was still experiencing delays as of 6 p.m. EDT. Chicago O'Hare had experienced 60- to 80-minute delays throughout the afternoon. And Atlanta had as many as 40 aircraft backed up during the afternoon, according to FAA officials.
To put the software trouble in perspective, a bad day of thunderstorms might cause more flight delays than those experienced on Tuesday. But the FAA's computer issues likely had a larger geographical affect, officials said. Part of the work in diagnosing the computer failure will be in understanding why some airports were more affected than others, officials said.
"There were so many aircraft and flight plans...it overwhelmed the system. It rejected plans and increased delays, and added to the volume, so we're managing our way out of it," Krakowski said.
At the heart of the problem was the FAA's computer system known as NADIN, or National Data Interchange Network, which processes the flight plans that airlines file every day. The FAA always runs a parallel system in the event of a software glitch, but officials said that they had never encountered the challenge they had Tuesday.
"This was a failure mode we've not seen before.," Krakowski said, without describing the problem exactly. He added that the agency did not suspect any hacking or safety issues.
"It looks like an internal software processing error. We think we know what it is, but we have to do forensics on it to figure it out," he said.
By the end of this year, the FAA plans to upgrade the NADIN software. Representatives did not say how the software will improve on the current system, however.
For the last six years, the multi-billion-dollar breadwinner of the online advertising business have been those well-placed text links that appear on Google and other search engines.
Now, executives and investors want the money to starting pouring in from sales of graphical or video ads on the page.
Two former executives from Yahoo, one of the Web's prime-time locations for display ads, are banking on new demand from advertisers for online brand ads, promotions akin to the outdoor billboard or TV commercial. Last year, Elizabeth Blair and Andy Atherton--two former longtime executives in Yahoo's ad operations--started Brand.net to be an advertising network that would cater solely to wishes of brand advertisers, as opposed to direct marketers that buy text links, email lists, and other action-oriented media.
On Tuesday, their company Brand.net will announce that it has raised $10 million from Norwest Venture Partners and its previous investor InterWest Partners so that it can build up operations. The company brought in $3 million last November, too.
Brand.net is one of in a long lineup of new advertising plays that are attracting investors' attention. Turn, for example, raised $15 million from Norwest Venture Partners and others last week to further develop its display advertising marketplace.
The idea behind these companies is that online brand advertising has much further to grow. Off of the Internet, brand advertising is worth an estimated $130 billion annually. Online, it's still worth about $4 billion annually, compared to the $16 billion for direct marketing ads online.
For its part, Brand.net has not announced any of its publishing or advertising partners, and a company representative said it has no affiliation with Yahoo. But Blair said that Brand.net works with the top advertising agencies to buy and place brand ads across a host of top publishing sites.
The San Mateo, Calif.-based company uses its own ad server and analytics technology to help advertisers run a targeted, well-timed campaign on the Web, such as the launch of a new car or movie promotion, according to Blair. The company's pitch to advertisers and agencies is that it can help them save time by doing the legwork for them across many sites.
It's hard to say whether it will work, given that there are so many advertising networks that have already aggregated much of the prime real estate on the Web. But the company's founders believe that their track record of working with advertisers and agencies will be key to their success.
"A lot of the investment in (online advertising) has been from technology-focused folks trying to solve problems and impose solutions on a market," said Atherton, a former vice president in Yahoo's advertising group.
"There has been a little Silicon Valley-Madison Avenue dialog in which Silicon Valley has said, 'you should do more direct response advertising because that's the tool we've built,' rather than listening to advertisers and agencies requirements and building around those," he said.
Microsoft has invested in Internet TV company Move Networks for an undisclosed sum, in a move to broaden the reach of its video streaming technology.
The investment comes roughly five months after the two companies struck a strategic partnership. In March, Microsoft said it would begin supporting Move Network's video streaming technology within its own cross-browser video platform, Silverlight, which lets publishers customize navigation and ads. As part of Monday's deal, Move Networks said it will support Windows Server-based encoding, Microsoft video-compression technology (codecs), and Silverlight's digital rights management (DRM).
The deal also signals continued momentum for Move Networks, a supplier of high-definition video-delivery technology to publishers including ABC, Discovery, ESPN, and Fox. In April, the American Fork, a Utah-based company, raised $46 million from a stellar lineup of investors, including Benchmark Capital, Cisco Systems, Comcast Interactive Media, Steamboat Ventures, and Hummer Winblad Venture Partners. Microsoft said it has joined that Series C round of financing several months later. In all, the company has raised more than $67 million since it was founded in 2006.
The two companies are showing off their teamwork during the Democratic National Convention this week, under a deal with the DNC. The DNC is broadcasting live coverage of the event via its Web site with Microsoft and Move technology.
Combined, the two technologies let publishers deliver "skip-free" TV programming online with customizable navigation, according to the companies.
Specifically, Move Networks CEO John Edwards said that Microsoft helps it boost the advertising appeal of its technology with Silverlight. "Our close relationship with Microsoft demonstrates their confidence in our ability to unlock the tremendous potential of Internet television for audiences, media owners, advertisers, and service providers," Edwards said in a statement.
Online publishers are increasingly selling ad space on their sites with the help of third-party advertising networks--a trend that's contributing to the rise of newfangled ad technologies.
One advertising network in that boat is Redwood City-based Turn, which on Thursday, raised $15 million in a Series C round of funding to buoy its growth. Palo Alto, Calif.-based Focus Ventures was the lead investor in the deal, and was joined by Turn's previous investors Norwest Venture Partners, Trident Capital, and Shasta Ventures. The company has raised more than $37 million since it was founded in 2005 by Jim Barnett, the former president of Overture Search, a commercial search company bought in 2002 by Yahoo.
Turn is essentially trying to improve online display advertising with the same principles that have driven the multibillion-dollar Web search ad business, dominated by Google. Those fundamentals are: auction-based pricing and ad targeting to reach the right consumer at the right time. According to Turn, advertisers including CapitalOne, T-Mobile, and Teleflora use the company's Turn Smart Market to buy space on sites like MSN, Fox Interactive Media and CBS, parent company of CNET News.
Ad technologies are a hot commodity for investors, given that most of the Internet's early ad companies (e.g., DoubleClick) are now owned by one of the Web's search giants. Venture capitalists are looking for new ad targeting technologies that can make display ads more measurable and effective, pushing growth in the $21 billion annual online ad market.
