Irvine-based SpecificMedia Inc. knows a lot about what you’re doing online,and advertisers stand to benefit.
The Internet advertising company landed a $10 million first round of funding last week, which it plans to spend on sales and marketing, among other uses.
SpecificMedia is looking to help businesses wring results out of online advertising. During the past year or so, the company has rolled out a slew of services that help advertisers figure out who is buying, what they’re buying and when they’re buying.
The company taps demographics, behavior patterns, geography and contextual measures to come up with its results.
“Based on the content you consume, we can predict who you are,” said Tim Vanderhook, cofounder and chief executive.
SpecificMedia had estimated sales of $15 million last year. It has 45 employees, including 30 in OC. It’s looking to more than triple revenue in 2006 and add about 30 workers by the end of the year, Vanderhook said.
La Jolla-based Enterprise Partners Venture Capital led the funding round, which also included San Diego-based Shepherd Ventures.
SpecificMedia has a network of about 450 Web sites, including some for ABC, Fox, Major League Baseball and the Weather Channel, which it steers advertising clients to based on who they want to reach.
Vanderhook has bold plans for the company. He’s looking to do an initial public offering within three years. And he said he wants the company to be recording annual sales of $100 million by the middle of 2007.
He said the company is producing positive cash flow and has hundreds of customers.
But SpecificMedia has some big competition on the horizon. Vanderhook said Google Inc. presents a challenge, as does Advertising.com Inc., a unit of Time Warner Inc.’s AOL.
He sees the biggest threat from Microsoft Corp., which can use the data it collects to help advertisers target potential customers.
“Ultimately, I worry about Microsoft,” Vanderhook said.
In SpecificMedia’s favor: The company uses Web data that is more broad-based than the information Microsoft collects through its software sales.
The kind of detail that SpecificMedia provides helps advertising deliver on largely unfulfilled promises made a decade ago, when the potential for the Internet seemed limitless, Vanderhook said.
One of the company’s key analysis tools,which it hopes to patent,helps advertisers figure out who users are based on their Internet behavior.
SpecificMedia can tell whether a Web user is male or female based on a look at the “cookies”,or tags assigned to surfers by Web sites,in a computer. The company doesn’t need to know the Web surfer’s name.
How? The company uses statistical analysis. If a surfer visits FoxNews.com at 8 a.m., MarketWatch.com at 9 a.m. and CheapTickets.com at noon, chances are the person is a man. Vanderhook said men tend to look at news when they first arrive at work.
The company said its system is 95% accurate based on this type of analysis.
In the past, advertisers might have just put an ad up at iVillage.com, a site that has information on health, diet, pregnancy and beauty, or sports news site Espn.com, depending on whether they wanted to reach a woman or a man.
But Vanderhook said that type of thinking isn’t good enough. Both men and women visit those Web site sites. At iVillage, 40% of the visitors are male.
So, many advertisers end up wasting money on viewers they aren’t looking for, just as they have in television advertising and other media.
“What we’re doing is trying to cut this fat out,” he said.
The company also has developed a contextual tool that keeps track of where a Web user has gone so it can “re-target” the consumer with ads.
So a Web surfer might go to a Subaru Web site one day and then read a news article about a Subaru Outback the next day. Subaru could use SpecificMedia to get its ad posted next to the story to catch the person’s interest.
Contextual advertising helps place the right ad on a page based on what the user is looking at, similar to Google’s AdWords program. Google’s service doesn’t use graphics.
Culling geographic information is relatively easy, Vanderhook said. SpecificMedia taps data from Internet service providers to gather it.
SpecificMedia has been around since 1999. It was among the first companies to sell pop-up ads, including those from Orbitz.com and those camera ads from X10 Wireless Technology Inc., which seemed to show up everywhere.
The company did well through the technology downturn, when companies were using a lot of ads to build up sales. By 2002, SpecificMedia had sales of $16 million and a $4 million profit.
But that was the company’s high mark. Pop-up blockers were introduced by Internet service providers and software developers to help frustrated Web surfers cut back on the annoying ads.
SpecificMedia’s sales fell by half between 2002 and 2004, when the company started working on its ad information services.
Vanderhook said the company may seek another funding round if it sees a good acquisition target.
“SpecificMedia increases advertisers’ accuracy by a huge margin,” said Moya Gollaher, a principal at Enterprise Partners Venture Capital. “These guys are the real deal.”
