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Quantcast Shakes Up Ad-Targeting Model - WSJ.com
Quantcast Shakes Up Ad-Targeting Model By JESSICA E. VASCELLARO In a test of the viability of small online-ad companies, Quantcast has launched a new online ad-targeting service that is being closely watched by advertisers and investors. Quantcast, a high-profile San Francisco start-up, is one of dozens of young companies helping broker targeted display ads -- which typically cont......

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Quantcast Shakes Up Ad-Targeting Model

By JESSICA E. VASCELLARO

In a test of the viability of small online-ad companies, Quantcast has launched a new online ad-targeting service that is being closely watched by advertisers and investors.

Quantcast, a high-profile San Francisco start-up, is one of dozens of young companies helping broker targeted display ads -- which typically contain both text and images, and are aimed at audiences selected for such characteristics as age, income or even probable personality traits.

Some of these start-ups sell targeted ads directly on behalf of media companies and other Web publishers. Others -- like Quantcast -- provide data to help companies, such as General Electric's NBC Universal and Time-Warner´s Time Inc., sell targeted ads on their own.

Investors have poured millions of dollars into the fledgling businesses, hoping to discover the next Google or Yahoo that could change the way ads are sold online.

So far, few of the ad-targeting and data-brokering companies -- which also include AudienceScience and BlueKai -- have become big, or even profitable. And lawmakers and regulators have stepped up inquiries into whether the ways they collect and crunch data on Web users´ online behavior ought to be more tightly regulated to protect consumer privacy.

Quantcast, which has 65 employees, is attracting attention because it entered the ad-targeting business by the backdoor. In 2006, it started out by offering a free service that allowed Web publishers to track the types of people visiting their sites through software code it placed on the sites.

The service put Quantcast in competition with Nielsen and comScore, which track audiences based on the Web-surfing behaviors of panels of Internet users, among other methods.

Now Quantcast plans to translate the technology it has installed on more than 10 million Web sites into revenue. Its new media-buying service, known as Quantcast Media Program, begins by allowing advertisers to create a detailed profile of the types of people they want to reach. Then Quantcast finds Web sites using its measurement technology that are attracting those types of people. It takes a cut of the revenue from the resulting ads sold by the Web sites.

Independent online-media analyst Barry Parr says Quantcast´s model of giving away audience data, and charging only when an advertiser buys ads, is likely to appeal to advertisers more than other services that charge publishers upfront for their data.

Some Web sites question whether Quantcast sees enough online activity for its data to be valuable, noting that it still doesn´t measure some of the largest sites on the Web. But Quantcast Chief Executive Konrad Feldman says roughly all U.S. Internet users hit a site it tracks every month, and that the real strength of the service is that it allows advertisers to build a custom target audience on the fly.

So far, few advertisers have purchased ads through the new service, which was announced last week. Home Depot has bought some on weather-tracking service Weather Underground, according to Richard Lowden, vice president of sales at the weather Web site. However, companies including Kia Motors and Virgin America are using Quantcast data to define the types of consumers they want to target online.

Quantcast faces keen competition in the display-ad market, ranging from smaller companies such as Specific Media Inc. to larger players like Yahoo and Time Warner´s AOL.

David Zinman, Yahoo´s vice president and general manager for display advertising, says his company recently launched a new ad-targeting service that allows advertisers to show display ads to visitors who searched for certain search terms. "We have data that is only available to Yahoo, and are using it in a very specific and customized way" for advertisers, he says.

Still, some ad professionals are enthusiastic about Quantcast´s new service. "Yahoo can do many of the things that Quantcast can do, but they only see behavior on their own networks," says Jacki Kelley, president of North America for Universal McCann, a media agency owned by Interpublic Group. She says one of her clients is testing the Quantcast media-buying program.

Peter Naylor, senior vice president of digital media sales for NBC Universal, says he is more confident of Quantcast´s data than that of other ad-targeting companies because it has helped NBC run a "fine-tooth comb" through its own audience. NBC used Quantcast to track its Olympics Web sites last year, for instance, and found significant differences between visitors to the site´s gymnastics areas, compared with the equestrian ones.

As a result, NBC plans to roll out Quantcast´s media-buying program across its online properties. "It helps us find more of an advertiser´s target audience," Mr. Naylor says.


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