For Andrew Monfried, it?s about people, not Web pages.
Monfried?s Elkridge-based company, Lotame Solutions, is at the forefront of the next generation of Web advertising. Rather than old-fashioned banner ads or search-engine-based placements, Lotame links advertisers with bloggers, commentators and others generating content on social media sites.
The model has paid off, as the company closed a multimillion-dollar round of venture financing last week, led by Massachusetts-based Battery Ventures.
Monfried, who started at Baltimore-based Advertising.com, said the strong experience gained there led him to start his own company to fill a gap he saw in the industry.
“When I left in November 2005, social media publishers were really challenged to figure out a way to leverage this amazing amount of information they had about their users,” Monfried said. “There was this big hole in the market, and no one was stepping up to fill it. It is the next big step, leveraging this huge amount of data.”
Lotame guarantees the publisher of a social Web site a regular payment in exchange for collecting data about its users including age, sex and location, as well as actions those individuals took on the site. Monfried emphasized that no private information is recorded.
The company then provides that data to advertisers looking to reach specific types of people generating content about specific topics. According to Omnicom?s OMD research group, 20 percent to 30 percent of all page views are generated on social media sites, but those sites account for only about 2 percent of online advertising.
“We know a lot about our customers, we know what they like, we want to make sure we?re reaching them,” said Taylor Valentine, account group supervisor with Lotame client Horizon Interactive.
Lotame?s success led Battery Ventures and others to buy into the model. Satya Patel, principal of Battery Ventures and now a Lotame board member, said the company was riding the increasing variety of social media Web sites from Facebook.com and MySpace.com to smaller operations.
“There?s no doubt that social media online is an increasingly important part of the online ecosystem,” Patel said. “There needs to be a way to [make it profitable] for the businesses in that ecosystem. We look at it as the next generation of targeting.”
