Ad management company MatchLogic is carving out a master plan that puts it at the center of a growing debate over targeted Internet advertising.
The startup company, which works on behalf of advertisers to automatically deliver ads to Web sites, is about to launch a massive data collection effort on the Internet, with the goal of getting at least 1 million consumers to fill out surveys by yearend.
MatchLogic will use the data to deliver ads it claims can be targeted right down to the individual.
The company also is pitching itself as an ad management service for publishing sites. Two fledgling ad networks, Targeted Marketing Concepts and NarrowCast Media, have signed on, as well as two publishing sites.
All of this sounds like the Nirvana of Net marketing. But the company's business plan places it at the center of two issues of concern on the Internet: how information collected from Internet users should be used, and whether it's feasible for marketers to use such finite targeting capabilities in the first place.
"We want to be the best at measuring and managing advertising, and we want to be the best at developing and applying a large-scale consumer database on the Web," said Ben Addoms, MatchLogic senior VP-marketing and sales.
WORK WITH ADVERTISERS
Until now, year-old MatchLogic has acted as an ad insertion network for advertisers and agencies, which pay between 75¢ and $4 per thousand impressions for the company to place ads, measure their effectiveness and deliver real-time reports. The company, based in Louisville, Col., doesn't negotiate buys or create ads.
MatchLogic handles all such "third-party" ad serving for General Motors Corp. and four other, undisclosed clients.
Several publishers, including Starwave Corp., have said they won't accept ads served by MatchLogic because they believe the system takes away their control of the advertising. Other publishers, including Sony Online Ventures, CBS SportsLine and NBC Interactive, support the company.
MatchLogic has more in mind than ad rotation, however. The company next month plans to launch the first of a slew of Internet surveys asking consumers about their travel, technology, leisure, business and automotive interests.
It will run a minimum of 1 million banners per month during the summer to convince consumers to fill out the surveys. The ads will appear on "large consumer sites" and will be partially paid for with barter, Mr. Addoms said.
MILLIONS OF SURVEYS
MatchLogic expects to get 3 million completed surveys by yearend, and 5 million per year thereafter, Mr. Addoms said.
By combining data provided by consumers with information from outside databases, MatchLogic claims it eventually will be able to know whether a consumer is in the market for a Toyota, for example, and deliver an ad offering a rebate at a nearby dealer.
Building such huge databases is hardly uncommon in traditional marketing. But an effort of this type is far more risky on the Internet, where privacy has become a lightning rod for controversy.
"Targeting is running up against a wall, with a lot of people whose gut reaction is to bristle at the idea of anyone finding out things about them online," said Taura Null, targeting technologies specialist at i-traffic, a New York Internet media planning company.
Still, companies are actively building databases via the Net. Visa International, for example, sponsors RankIt (www.rankit.com), a survey area on the Main Quad, a college-themed site. Each month, Visa surveys site visitors about sports, campus life and other topics; it offers prizes and other incentives for registering.
MatchLogic says it will make clear to consumers how their information will be used. The company has signed on as a premier sponsor of eTRUST, a new group promoting self-regulation of Internet privacy issues.
MatchLogic has also built a site dubbed preferences.com where consumers can go to learn more about the company and its surveys.
MatchLogic believes it can offer another control to consumers: the ability to go into their MatchLogic profile and change their preferences or delete their record. Whether consumers will use the site is questionable, however.
Technologically, MatchLogic may have the chops to build its database. The company was founded last year by Pete Estler, former president and founder of dbINTELLECT Technologies, a database marketing division of EDS. Other company executives hail from Polk Co., Nielsen Marketing Research and National Demographics & Lifestyles.
Even if MatchLogic succeeds in building its database, getting marketers to buy into it is a different story. Targeting has been the talk of the Net recently, but many major marketers aren't set up to deal with the data stream or the cost of delivering targeted ads.
A FINANCIAL STRAIN?
"If you're General Motors, you can afford it," said John Nardone, director of media and research at Modem Media, Westport, Conn. For other marketers, "it might be conceptually the right thing to do but maybe not financially."
According to a recent report from Forrester Research, while most marketers target their ads based on the content of a site, less than 10% do other types of targeting.
MatchLogic believes the time is right for marketers to exploit the power of the Internet.
"We'll use any good technology to improve the performance of an ad campaign," Mr. Addoms said. "If it works--and it's ethical--we will do it."
Copyright May 1997, Crain Communications Inc.