Tuesday, 1 February 2011

KC company in forefront of Internet advertising business

The biggest advertising spots on the Internet are household names: Google, Facebook, Bing.

But by pulling together all sorts of digital advertising — from e-mail and search-engine ads to mobile ads and online-game offers — a Kansas City company, Adknowledge, has become the No. 4 digital advertising network.

And it plans to keep growing after announcing in January that it attracted $200 million in new outside financing.

Scott Lynn, Adknowledge’s chief executive officer, said most of the roughly million online advertisers today turned to Google. And heavily trafficked websites such as The New York Times, ESPN and Expedia attract big-brand advertisers.

But “the remainder of the Internet is very, very difficult to advertise with,” he said. “We’re trying to create a single advertiser marketplace for those other segments so that advertisers can go to a single website, enter a credit card number and buy traffic with all of these different companies through a one-stop shop.”

In just six years Lynn’s company has put together those pieces, roughly doubling its annual revenue last year to $300 million.

Its work force has grown to 330, about half of them in Kansas City. Adknowledge also has offices in New York; Los Angeles; San Francisco; Chicago; Fort Myers, Fla.; Britain; and Australia.

The Silicon Alley Insider, a website that focuses on tech business news, last year ranked Adknowledge No. 18, after Hulu and before TheLadders.com, on its list “The Digital 100: World’s Most Valuable Start-Ups.” The report estimated Adknowledge’s value at $900 million.

Some of the building blocks of Adknowledge’s success:

•A huge database of consumer profiles and their interaction with ads, used to predict where businesses should put their ads to get the best response. Adknowledge emphasizes that it does not use “cookies” to follow people online, as some companies do, and that its profiles are anonymous — consumer interactions are not linked to any person’s identity. Adknowledge has more than 60 terabytes — a terabyte is 1,000 gigabytes — of that behavior data and says it runs more than 20 billion calculations a day “to determine what ad to show to each consumer.”

•A sophisticated matching site, bidsystem.com, that makes it easier for advertisers and digital advertising channels to find one another. Adknowledge says more than 10,000 advertisers bid for traffic — to put their ads where they’re most likely to be seen. And the company says it generates “more than 280 million clicks per month” for its advertisers across “multiple channels, including e-mail, display and social advertising.”

•A series of acquisitions in the past two years to expand those channels.

Lynn said the company’s 2009 acquisitions of social media businesses such as Super Rewards (an Internet advertising company that offers points or other rewards to online users who sign up for services) and the media division of Miva Inc., one of the largest independent online advertising networks, supported Adknowledge’s vision of creating a single marketplace for online advertising.

And last summer Adknowledge acquired the Hydra Group, which has thousands of online advertising affiliates — sites that get commissions when the ads they display are clicked, especially if they generate sales or other desired actions, such as requesting information on products or services.

“We currently maintain market leadership positions with our social media and e-mail advertising businesses,” Lynn said at the time of the acquisition, “and believe that Hydra will allow us to achieve the leading position in the affiliate industry.”

Lynn said another factor in Adknowledge’s success was that “a majority of the company is technology-focused,” enabling it to come up with powerful, innovative products such as bidsystem.com and its programming to predict which advertising approach would be most effective for a particular client.

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