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BlueKai Gets $10.5M to Improve Ads

BlueKai, an advertising startup that hopes to convince users to actively manage their online privacy settings and sell better intent-based advertising information based on such actively managed accounts, has raised $10.5 million in second-round funding from Battery Ventures and return investor Redpoint Ventures. The Bellevue, Wash.-based startup had previously raised $3.2 million. Because I’m trying to wrap my brain around the realities of online privacy, I chatted with Omar Tawakol, CEO of BlueKai, about what he’s trying to do.

We agreed on two things, namely that, currently, consumers don’t care about their online privacy and behavioral advertising isn’t really working. As a former executive of behavioral ad shop Revenue Sciences, Tawakol speaks from experience. Rather than measuring only where a consumer has been on the web, BlueKai limits its data to sites that clearly indicate intent to buy something, typically retail goods, cars and travel.

I’m not an advertising expert, but it makes sense to me that there’s a higher correlation between me going to a travel site to book a trip to Tahiti and being receptive to travel advertising than me reading about Tahiti in an online magazine and being receptive to similar travel ads. And I also recognize that the web isn’t free. Advertising and a cheap distribution medium are what enables compelling free content to thrive on the web. So what BlueKai is trying to do is to make those ads more effective, while not crossing the boundaries of individual privacy.

The intent-based advertising BlueKai is pitching is supposed to be more effective than behavioral ads, and the ability to manage preferences is supposed to make data collection less intrusive than schemes such as NebuAd’s. However, I don’t see BlueKai’s efforts to get consumers to manage their ad preferences (which would generate better results for marketers) winning converts. And because it’s based on cookies, it will still irk some privacy advocates.

First off, the site offers donations to a charity as the primary incentive for consumers to tweak their preferences, which is nice but unlikely to drive a lot of traffic. Second, its registry seems tiny. I spend most of my day online, it’s there that I book travel, buy or research most of my purchases that don’t involve food or paper goods, and I didn’t have a cookie on my computer from one of BlueKai’s partners. So even if I cared, I wouldn’t have found anything to care about at BlueKai.

Ironically, some of the new funding will go toward better marketing of this service to consumers, says Tawakol. BlueKai is promoting a less intrusive way of managing online data, but it will likely face the problem in that the mass market won’t care, while privacy experts who do will find the use of cookies and any sales of personal information repugnant.

7 Responses to “BlueKai Gets $10.5M to Improve Ads”

  1. Stacey Higginbotham

    Mark, I have no doubt that VCs and businesses see data as the new media, to be bought and sold. But unlike traditional media where a person actively seeks to create content, personal data exists and is created as a byproduct of surfing the web. That’s why privacy issues and consumer control of their own data is so essential. And that’s what companies and consumers have ignored for the most part. I also question whether individuals have the ability to negotiate well on their own behalf–or even opt out of the process– when up against businesses.

  2. Blue Kai is actually the second player to the BT exchange game. eXelate has been working on optimizing the user advertising experience for over a year now and has partnered with 10 of the top 25 ad networks, to help deliver a more relevant online marketing message. eXelate’s reach is quite large — 80M UV, so the chances of the author being “tagged” is probably greater via eXelate than Blue Kai. eXelate also offers centralized consumer opt-in and preference management, albeit without the “charity” concept.

    We believe data is the new media . . . it will be bought, sold and managed in the same way. Obviously the VCs think so too.

  3. Why should I do it? What is in it for me? Maybe I could get access to special deals? Or maybe I get access to special deals for recommending it to friends?

    Strikes me that they may be missing half of the equation here. Yes, this totally makes sense for the advertisers and the sites on which these ads are displayed. But unless there is a real reason as to why consumers should opt in, then my suspicion is that they won’t.

  4. Well, just goes to show you that ideas spring up all over the place at the same time.

    I’ve been working on this myself, daily searching the sphere’o’blogs to make sure nobody is beating me to it….

    I need to run faster, huh?