BlueKai: Not Just a Data Warehouse Anymore
Ad tech firm expands its offerings
Ad tech firm BlueKai derived its name from a book, Blue Ocean
Strategy, about identifying untapped markets. Originally that market was
operating the Nasdaq for companies to buy and sell consumer data. Over the last
year and a half, though, the five-year-old firm has looked to pivot from just
buying and selling data to helping companies get the most out of it.
"If data is like electricity, we want to be the utility
grid for the nation," BlueKai co-founder and CEO Omar Tawakol said.
BlueKai already had the data through its exchange
business. It began putting down wire when it put together a data management
platform in January 2011. With the DMP, brands could house their own data (like
site visitor characteristics) and cross-reference it with third-party data from
companies like MasterCard and Nielsen to build audience segments for ad
targeting. BlueKai got the idea to build the DMP when it saw marketers were
overwhelmed with data and needed ways to keep up with it, Tawakol said.
"It was basically like the Gold Rush and Levi Strauss
realizes, ‘I don’t actually have to discover gold but can instead sell tools to
whoever’s gold digging,’" he said of developing the DMP business.
BlueKai didn’t strike it rich overnight, but the company’s
revenue run rate has doubled over last year to $50 million, with the DMP
business on track to increase its revenue by 200 percent year over year.
Contrast that with the traditional data exchange business, which is expected to
grow 100 percent year over year.
"By the end of 2012, net revenue of that [DMP] business
will exceed the [exchange] business started in 2008," Tawakol said.
BlueKai’s success isn’t entirely surprising. "Once you get
over the yearlong sales process, [a DMP] seems to be a much stickier and more
strategic business [than a data exchange] when it comes to deeper relationships
with brands," Forrester senior analyst Joanna O’Connell said. But “to be
effective as a DMP, you have to have tags everywhere,” she said. Fortunately for
BlueKai, it has flooded the Internet with pieces of code that can collect data
on and track users for first- and third-party purposes. Online security firm
Truste recently examined 100 of the Web’s top sites and found that BlueKai had
dropped even more cookies than site traffic giant comScore.
BlueKai isn’t the only ad tech outfit looking to get cozy
with marketers, and it may face a disadvantage with companies such as
demand-side platforms—which are already used by media buyers to run ads
online—to add DMPs to their businesses. "There’s a debate on whether a DMP has
to be part-and-parcel with a [demand-side platform]," said O’Connell. Turn, one
of the best-known DSPs out there, is among the most vocal proponents of the
paired approach, having launched a DMP to pair with its DSP last year. Its
integrated approach gives marketers a one-stop ad targeting shop. That’s an
alternative to advertisers having to daisy-chain different ad tech partners
whose platforms are able to plug into one another.
But Tawakol isn’t too worried about DSP/DMP hybrids eating
his lunch, describing that approach as "fundamentally the opposite" of
BlueKai’s. The fundamental difference? Business models. “We don’t make money off
running your ads,” Tawakol said. That means BlueKai can plug into not only DSPs
but also platforms that have nothing to do with advertising but are crucial to
brand marketing, such as site optimization. “We have no execution [platform],
but we plug into every execution platform.” Like electricity in every home.
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