Quantcast reaching their targets in online advertising

"Building a start-up is an endless set of challenges, but part of the attraction is that it's not straightforward," Quantcast co-founder and chief executive Konrad Feldman says.

He should know, for the entrepreneur is currently on his second start-up. His first one, Searchspace, a provider of terrorist financing detection and anti-money-laundering software, was sold for about $140 million (€125m).

“We built software systems to help banks and financial institutions detect terrorist financing. People aren’t good at looking at large numbers of transactions. We sold that business in 2005 for about $140 million,” Feldman says.

Now 43, the entrepreneur is working on expanding his second business Quantcast worldwide. He came up with the idea for that business while still at Searchspace.

“I got to do some work for AltaVista on internet data while at Searchspace. I started looking at analysing patterns in internet data and one of the areas I became interested in was advertising. I knew nothing about advertising though, so started interviewing people in the area to understand it better.”

Up until then, and to a certain extent still, online display advertising has been a tricky business. There are lots of ads online, but does anyone actually pay close attention to them? That’s the problem Quantcast has been trying to solve since its foundation in 2006.

“The idea for Quantcast was to manufacture data to make advertising more relevant for consumers,” Feldman says.

"We're focused on the trend of moving to real-time advertising. Our systems evaluate 2.5 million transactions every second. We are one of the largest processors of data in the world. We process 30 petabytes of data per day. To put that in perspective, the Cern hadron collider does in a year what we do in a day," he adds.

Targeted advertising

The company sells ads inventory directly to advertisers, and also works with publishers to help them target their own ads. It operates on the premise of targeted advertising. Thus, rather than showing the same ads to everyone, it uses big data technology to target ads to internet users in real time based on their interests and browsing habits.

The slogan for the technology company is “why would you broadcast, when you could Quantcast”. Feldman says that when firms or people broadcast, they transmit content broadly. The quantum of delivery is everyone, and everyone receives the same content.

However, he says the internet is not a broadcast medium. For example, with regard to search results, everyone has content transmitted to them individually. Yet, outside of search, digital advertising still used a mostly broadcast-like model.

Feldman and his co-founder saw an opportunity to change the status quo and take display advertising from a broadcast model to a search-like model targeting ads at users based on their interests and likes. And so Quantcast was born.

“We couldn’t buy our technology off the shelf. We had to build it from scratch.”

“Our first clients were website owners that were desperate to have a more accurate measure of their audiences. They wanted to demonstrate to advertisers that they had a real audience.”

The company now has more than 650 employees and has taken in a total of $65 million in investment funding.

‘Raised money to hire people’

“VC [vernture captial] firms found out about us through their portfolio companies that were using Quantcast. We got our first round of VC funding six months after we launched. Our largest cost is people. We raised money to hire people.”

However, the company wasn’t always flush with cash, and Feldman is quick to point out it was a hard slog for the first few years.

“We didn’t make any money for the first three years. We resisted paths unless they had us pursue what we felt was a big market opportunity. We wanted to direct relevant content to each device.

“When I built Searchspace the path we ended up pursuing was based on what companies asked us for. The second time round we had the luxury of choosing the market we were interested in and not being swayed by a cheque. We could self-fund the business.”

The company opened its Dublin office at the end of 2012, and will have 75 staff in the capital by the end of June. The Dublin office acts as the firm’s European operations centre, with teams looking after finance, marketing, recruitment and customers across the EMEA region.

“We looked at what other companies in Silicon Valley were doing. They were all coming to Dublin and doing really well in the city.

"Scaling a business is hard so it is good to have people with experience in doing so, which is the case in Dublin. That's invaluable. We have people here who came from Google, Facebook etc and learned the lessons in how to scale."

“We want to continue growing the operations centre in Dublin. There are great skill-sets here especially language skills”.

As for the future, he says consumers can and should expect advertising that is far more relevant.

“Display ads and ads on videos are beginning to be targeted. It used to be that just search advertising was targeted”.

“The more relevant advertising is, the more useful it is. In the US there are 20 minutes of ads on TV every hour but a lot of them aren’t relevant to the individual consumer watching.”

The company is also working on re-targeting people.

“They might have expressed an interest in a product so the ads then help them complete the purchase.”