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Next month, Wunderloop is set to launch an online exchange for behavioural targeting-based advertising in several European countries, including the UK.

Backed by big name investors including Niklas Zennström, Klaus Hommels and Howard Hartenbaum, and in beta since March, the exchange aims to provide brands with more information on web users’ interests and improve the effectiveness and relevance of digital ads. Sounds good to us.

We spoke to the firm's Turlough Martin about some of the bluster surrounding behavioural targeting, what the exchange can offer to advertisers and publishers, and how it is preparing to extend its technology onto new platforms like IPTV.

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In a nutshell, how does Wunderloop Connect work, and how does it differ from other online advertising exchanges?

It analyses user behaviour online and uses the profile information thus generated to enable targeting of online advertising.

Our system is founded entirely on anonymous behavioural profiles. Whereas other exchanges are literally providing a trading platform for inventory, we allow advertisers to target people based on behavioural profiles. You’re not buying pages; you are buying audiences. This should mean higher CPMs, less unsold and greater reach.  

With the system, we can change the ads displayed on a page in real-time, so you would see different advertising to what I would see.

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What is behavioural targeting? What isn’t behavioural targeting?

It’s something that is bandied about quite a lot and a lot of people are jumping on the bandwagon. Behavioural targeting is a big thing in the marketplace at the moment, in the same way as search was five or six years ago. That’s not to say it will displace search, but it’s the new big thing.

A lot of people will say they are doing behavioural targeting when they aren’t – they might be doing 're-targeting', which ends up being mislabelled as behavioural targeting quite a lot. That’s not we do – we really do behavioural targeting and we have been doing it for seven or eight years.

When it comes to the exchange, any publisher that wants to join Connect has to tag their pages. We have a taxonomy or classification tree whereby all types of content are classified into about 400 categories. The publisher doesn’t need to tag every page; they just plonk in the code at the end of the pages. It doesn’t affect the performance at all. When a user looks at that page, we add the fact that they have shown an interest in that type of content into their profiles.

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What stage are you at with the exchange, and when will we see a full launch in the UK?

We’re in late beta, so it’s fully operational but we are being quite selective about who we are asking to get involved. People are using it, but our main focus is getting publishers signed up before we do a major agency roadshow in the next four to six weeks. We have had interest from agencies but we want to make sure there are sufficient profiles in the system to be used by them.

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What's your revenue model?

The exchange is free for any publisher or advertiser to join. The way we make our money is we take a transaction fee from the publisher for any bookings they choose to accept through the system. That is typically 30% - although if we are dealing with people with large volumes that we want to get on board, or early adopters, we may be willing to lower that.

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Have you any figures on uplift for advertisers?

With Connect, we are yet to be able to give you precise figures as it hasn’t been fully launched yet. But with iCRM, which is our in-house behavioural targeting system, Tiscali was routinely getting 300% to 400% improvements in click-through rates with its pilot of the system. It has renewed its contract with us.

iCRM uses the same technology as Connect but there are many advantages Connect has that iCRM doesn’t have – greater reach, for example.

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Can you name any networks, portals or publishers that are participating?

I have to be careful – suffice to say that three of the largest digital ad networks in the UK have agreed, and there are ad networks signed up already in continental Europe.

We obviously have some public relationships with major portals and we are keen to get some major portals on for volume and for the variety of profiles.

We also have signed up two of the major magazine groups with two more looking at the technical aspects of participation, and one major newspaper group with three in the pipeline.

It’s also important that we have some long tail sites, so we have some mapping, local information, financial services and dating sites.

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Who owns the user profiles?

Publishers own the user profiles. It’s up to publishers to decide whether they wish to share profile information or not. A lot of people are nervous about sharing at first, but when they are a bit more comfortable with the system, the benefits of sharing become clear. There’s a lot to be gained by sharing; you get much richer profiles.

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Your funding earlier this year by Niklas Zennström, among others, has got tongues wagging that you’ll be doing something IPTV-related. What work are you doing on behavioural targeting for other digital platforms?

We are platform agnostic so anything digital, we’ll work on. We are working with a major consultancy with a view to doing some pretty big IPTV stuff, allowing publishers to target content and advertising. It’s no secret who our investors include; more than that I can’t say.

Our main objective is to get ‘traditional’ online advertising done – that’s where we are putting our main efforts at the moment.

There is stuff going on in other areas though – we are talking to some mobile people as well. Correlating people’s behaviour on different platforms – that’s a pretty interesting area. If you build up an in-depth profile of someone’s web habits, that can affect what sort of advertising or content you give them on their mobile or on IPTV. That’s what we are looking at.

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What interest have you had from the big online ad players?

I’m not going to mention anyone by name but we have had approaches from people you will have heard of. That's a matter for our board!

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Published 17 July, 2007 by Richard Maven

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