27 Mar Your Online Clicks Have Value, for Someone Who Has Something to Sell
New York Times, By STEPHANIE CLIFFORD, March 25, 2009
Imagine that a company set up a mall store where, instead of selling trinkets, it sold information about customer behavior. For a few cents, it could tell a saleswoman at Nordstrom that the person who was about to walk in had already stopped at Steve Madden and was looking for red shoes. That is the idea behind two new Internet companies, BlueKai and eXelate Media, which run so-called behavioral exchanges. They do not sell products or ad space, but information about Web site visitors. Data houses have existed in the offline world for years. When you receive a catalog in the mail, seemingly at random, it is usually because a marketer has bought data about you — income level, interests, age, gender — from a firm like Acxiom or Experian. (Why the data seems to indicate you’ll enjoy the Bowling Delights catalog is another question.) In the online world, where data is highly specific and immediately available, directing ads based on data can be even more detailed and lucrative. “People are realizing that it’s the data that drives the value,” said Omar Tawakol, the chief executive of BlueKai. BlueKai and eXelate work in similar ways. They both track who is interested in what through a cookie, an invisible bit of code on a Web page. When someone does a search, for example, on Kayak.com for first-class flights to Paris in September, that information can be captured by a cookie, and Kayak.com can sell that cookie using eXelate or BlueKai. A buyer would want that cookie so the company could cut down on wasted ads. Sure, Hilton could blanket sites with its ads, but it would rather show an ad to someone who has searched for flights to Paris recently. “When you see a cookie on that user, you can show them travel to Paris even though they may be on MySpace or The New York Times,” said Mark Zagorski, the chief revenue officer of eXelate. Buyers vary: the Hilton itself or its media agency may buy the information. A publisher may buy data so it can sell more expensive ads to Parisian hoteliers and restaurants. Or the buyer may be an ad network — a company that handles sales for big groups of sites at once. A general ad space buy costs around $1 to $2 for a thousand impressions. If BlueKai data is purchased, that may rise to $4 to $15 for a thousand impressions, Mr. Tawakol said. Once the buyers log in to the exchange, they select the criteria they want, and the exchange tells them how many cookies are for sale. BlueKai has about three million cookies for in-market sedan buyers, for instance, and nine million for cellphones and P.D.A.’s. The advertisers specify how recent they want the cookie to be — they may want only people who have looked for their product in the last day — and bid on a price. The challenge for eXelate and BlueKai is to get publishers and commerce sites interested in selling information about their visitors. Mr. Tawakol argued that a commerce site has a lot of information about what someone is interested in, but does not make money from it. Expedia and Kayak.com, for instance, know the travel dates of customers, preferred airlines, and city of departure and arrival. “A commerce player knows more about travel than Google does, but Google’s capturing all this advertising,” Mr. Tawakol said. EXelate has a slightly different model. It asks not only commerce sites to sell their user data, but also publishers and sites with registration data. That may be challenging: many publishers have been reluctant to share any user information with other sites. Mr. Zagorski argues that publishers can make extra money by selling data. “You still have extremely valuable data on your users that can be monetized,” he said. “Publishers need to have a data strategy. It’s as important as an e-commerce strategy or a social network strategy.” In the Internet world, whenever talk of consumer data arises, so do questions about privacy. Privacy advocates have been pushing companies and Congress for stricter rules about aiming at consumers, and the Federal Trade Commission has been threatening to regulate online advertisers unless the industry adheres to more stringent standards.