Behavioral micro-targeted online ads
NebuAd’s goal is to provide a turnkey hardware and software advertising solution that delivers the most relevant ad to the right consumer at the right time, benefiting ISPs, advertisers, and publishers. NebuAd promises to do this without collecting any personal information. Its public beta went live November 2007.
With NebuAd, advertisers can get more conversions and higher return on investment on their campaigns, according to CEO Robert Dykes. They also receive analytical information about which ads work best. For publishers, NebuAd increases the value and sell-through of ads, allowing them to command premium advertising rates for their entire site inventories. The hardware component is the NebuAd Ultra Transparent Appliance, which is provided at no cost to ISPs and communicates with NebuAd servers.
To protect consumer privacy, NebuAd uses one-way hashes to anonymize user identities. NebuAd takes the approximately 70 percent of ads that are currently untargeted and targets them by observing Web searches, Web pages accessed, and the ads consumers click on. It then creates and updates anonymous consumer profiles to better focus ads. The company charges advertisers and shares a percentage of those revenues with content publishers and ISPs.
Many smaller ISPs are struggling financially, and an additional source of revenue should be welcomed. While competitor Tacoda does not include ISPs in its business model, Phorm does share revenue with ISPs. However, Phorm’s primary market is the UK, so NebuAd has little direct competition in the U.S. and Canada. Currently, NebuAd has about 17 small ISPs as partners, but as it ramps up, we expect some of the bigger players to sign on. NebuAd is wise to focus on underperforming advertising that it buys cheaply from ad networks. Many blogs contain under-utilized advertising, and NebuAd can increase the value of this inventory by making it more relevant.
Consumers are understandably suspicious of behaviorally targeted ads, and NebuAd has received a good deal of criticism. To counter that criticism, NebuAd has established an independent privacy board chaired by Larry Ponemon of the Ponemon Institute of Traverse City, Mich. If NebuAd can convince the larger ISPs to sign on, and its targeting technology is truly non-intrusive, NebuAd can deliver a new level of advertising effectiveness for clients.
