The company is getting into the ad business and today will announce Advertising Decisions Solutions, a new division in the company that will work with its clients to apply behavioral-targeting layers to ad campaigns; it has also acquired Acerno, a company that has built itself on the notion of "predictive modeling," for $95 million.
Boston-based Akamai is a "content delivery network," a technology firm that publishers, ad networks and advertisers pay to ensure that their online content is delivered quickly and in high quality. It has a fairly behind-the-scenes role -- but because it streams content all across the internet, it has a wide view of the web and how consumers use it. That visibility is what is fueling its ad-targeting ambitions.
Targeting web surfers
How does the ad targeting work? One hypothetical example: The technology notes when a person reads a review of a particular hybrid car on one site and then targets that person with an ad for a Prius a few hours later on a news site. The system also recognizes when a person puts a product in an online shopping cart but abandons it before making the purchase; Akamai can help that retailer target ads or discounts to that person, promoting the products left unpurchased.
Acerno, meanwhile, tracks what consumers buy on a variety of e-commerce sites and crunches that data through an algorithm that predicts who the customers are (someone buying maternity clothes is likely a soon-to-be mom) and predicts what they'll buy next and serve them appropriate ads. The plan is for Akamai's and Acerno's technologies to work together.
"We have the ability to work with some largest advertisers and networks and publishers today to do much larger and more flexible re-marketing buys," said Mike Afergan, chief technology officer-senior VP, Akamai's Advertising Decision Solutions. Akamai will offer the targeting technologies to publishers, ad networks and advertisers and charge a share of the increased revenue or return that the service helps deliver.
Internet conglomerate IAC is an early customer, testing Akamai's targeting to help bundle IAC's audience into targeted groups, which it then sells to advertisers. IAC execs say it's a useful technology because of its vast internet footprint, which includes Ask.com and Match.com, and because it doesn't require publishers and advertisers to add pixels or tags to their sites, as most behavioral-targeting firms do.
"It's faster than any other behavioral targeting solution," said Ali Mirian, director of product management at IAC. "It's easy for us to use it to unify disparate data and ... it's almost implementation free on advertiser side. When we tell that story along with our targeting capabilities it becomes really compelling. They see speed to market with robust targeting."
Diversify revenue streams
It's no surprise Akamai is looking to diversify its revenue stream right now -- the content-delivery space is fast becoming crowded and, some say, commoditized. Deep-pocketed players such as AT&T are entering the market and streaming media growth, which for the past couple years has been driven by media and entertainment companies aggressively putting video content online, has started to slow.
But Akamai said it is responding to the needs of its customers, not any sort of internal business problem.
It may also have to contend with privacy issues as some consumers and privacy advocates are uncomfortable with these new breeds of ad targeting. When asked about the concern, Akamai said it is a member of the NAI, a group of ad networks that have agreed to follow certain self-regulated privacy-protection guidelines. When asked how it was different from companies such as NebuAd, which used the footprint that internet service providers had to target ads, it said its contracts are not with the consumer but with publishers, ad networks and advertisers. Additionally, retailers opt-in to share the data with Acerno.
"Our relationships are with those publishers who choose to work with us," said Mr. Afergan. "We're aware of the issue and spend a lot of time trying to make sure we're doing what's appropriate here. Re-marketing is an industry that exists today and it's a rather unobjectionable technique."