An Ad Network - And Site Rep Firm - Grows In Boulder; Lijit Talks Momentum

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lijitAdExchanger.com spoke recently with CEO Todd Vernon and COO Walter Knapp of Lijit, a Boulder, Colorado-based company focused  providing a search engine and other tools to long-and mid-tail publishers. In addition, publishers may choose to join Lijit's ad network.

Earlier this month, Lijit issued a release on company momentum. Read it here.

AdExchanger.com:  What momentum have you seen in the last year for Lijit?

WALTER KNAPP: Things are going really well. We're only 35 people in the company and our growth has recently been exploding.  Last month we were pushing about 500 ads a second across our platform. And now we're almost doubling that. The first half of last year we grew roughly 28 percent month over month, which is healthy growth. But in the second half of the year, all of that accelerated exponentially. The Lijit platform is now well in excess of 15,000 sites and that's because publishers have various Lijit components installed on their sites. We have an on-site search tool, an analytics widget, a recent readers widget, and a related content widget. And of course we offer advertising services so users install our ad “widgets,” if you will.

What do you think Lijit’s opportunity is for publisher growth? Does it continue in the mid- and long-tail?

WALTER KNAPP: I think we're squarely positioned in the mid-tail and probably the head of the long-tail. I actually think that if you were to talk to our publishers they would think of Lijit as if we were a business partner to them. What I mean by that is that we give them a variety of technologies and services that help make their site better and help them make money, whether it's the search tool, a related content widget or ads.

If you're a publisher in our network one of the benefits is that your data gets aggregated with a ton of other data points from sites in our network. Then we reflect the data back to you so that, as a publisher, we help make your site better. We show you where people are coming from and what they're searching for. What are they finding or not finding? We also use that data and that relationship to say, "If you're interested in making money, we can help you do that too."

Because we provide value, our publishers continue to give us more inventory. Lijit averaged 34 million ad avails a day across the network in December. In January, we’re averaging 47 million a day, with spikes now hitting 55 and 56 million a day.

TODD VERNON: If you actually look back over the last six months, we have seen that kind of growth every month. So, while it has increased a lot in January, it hasn't jumped any more than it did October to November, or November to December. Continued adoption provides momentum. Mid- and long-tail publishers don’t have ad operations people or sales people. They create and curate content every single day. That's what they do best. Lijit provides components that make their site better so they look at us as a partner.

How much scale do you have for search terms associated with your network’s users?

TODD VERNON: When someone, a cookie, comes into our network, about 55 percent of those cookies contain at least one search term associated with that cookie.

Everything we offer except ad widgets or ad units contributes to data for 50-55 percent of uniques in the network. That’s how we look at data. The reason we look at it that way is there are a variety of different Lijit components on different sites in the network. There's overlap as well so there's a huge segment of our network that has all the components installed. Then there are other segments in various degrees of adoption.

For example, a publisher may have started with an ad widget and now we're talking to them about an analytics component. Maybe they've been in our network for three years using our search tool, and now we're talking to them about adopting the ad service. The continuum is what allows us to build deeper relationships with our publishers.

Let’s talk about how an ad network or demand‑side platform would buy from you and leverage this data.

WALTER KNAPP: This is where we're spending about 80 percent of our effort as a company right now.

Here's how it works. We go out to our publisher base and we say, "Look. We have all this data we reflect to you – your data as well as data from tons of other sites in our network.  We don’t sell your data outside the network but by being part of the network, you benefit from everyone else's data." I then use my data to create audience segments that marketers want to reach. For example, "These sites are about parenting, or these sites are about technology, or these sites are about sports."

I package those segments up for DSPs, ad exchanges and optimizers like Audience Science, Turn, adBrite, interclick, AdMeld, PubMatic, etc. We currently have over 35 ad partners and can set up specific ad chains to reach pre-determined audience segments.

Our partners then use their own data to make further refinements.

From a publisher’s point of view, it’s a great solution. I can fill 100 percent of their inventory with very high quality creative. We’re completely transparent so I show the publisher fill rates and the eCPMs, and everyone seems to be happy.

Will you let a DSP actually buy specific keywords that are being put into a search engine and the cookies associated with those keywords? And then map those against, of course, the impressions on your network?

WALTER KNAPP: Only if it's directly tied to the media. We don't sell the data outside of it being tied directly to the media because from my perspective, Lijit is clearly mapped to the publisher. We think of ourselves as a publisher‑side business. We represent the publishers as if they were our own sites. It's very hard for me to get my mind around selling the data without being able to give proper attribution back to the publishers in our network.

The biggest concern that I have is that data aggregators and exchanges are not able to properly give attribution back to the publishers. The thing that makes this whole wheel go around is the publisher, because that's where the consumer views the message.

We try to deliver as much value in as many different vectors as we can back to our publisher base.

Is your inventory real‑time biddable?

WALTER KNAPP: Yes. Some of the things I connect directly to but we also leverage AdMeld and PubMatic for their real‑time bidding infrastructure. We don't use them in the classic sense as an optimizer. We simply use their RTB infrastructure and it makes sense for us to continue to do that. They're great partners. They provide really necessary business processes for me in terms of consolidated billing and consolidated reporting.

How are you doing on hiring? You're optimizing yield across all these sites; this is a technology focused play. Is it difficult hiring? I would think scaling your business runs up against a wall where you need experts in various areas.

WALTER KNAPP: You would think, being based in Boulder, Colorado, that's relatively hard to find. But Boulder is also a high-tech hotbed, so we attract... I mean, we get inbound people all the time, coming in to work here.

And quite frankly, it's impressive talent so we're actively talking to people and developing that part of the business.

TODD VERNON: We're an engineering-centric business too so we automate everything we can. If we do it twice, we automate it. If we don't, then it's not ready to be automated yet.

Is real‑time bidding affecting your business?

WALTER KNAPP: There are marketers today that want a branded experience with a site, where they want an expandable, maybe a synched banner, a roadblock, some sort of guaranteed inventory. They want day parting. They want time‑of‑day parting. They want things like that in a guaranteed way. We can do that, but it’s not a typical ad network kind of buy. That's more of a direct kind of buy. In that way we are similar to a site rep firm like Federated Media or Glam Media. We look at real‑time bidding, DSPs, and trading desks as a supplement to the site rep business.

Among the RTB buyers, we started working with Cadreon two years ago. The rise in those groups has been bumpy, but it's been consistent. Last year roughly 10 percent of the industry’s ad spend was flowing through RTB sources and trading desks, DSPs and ad networks. That will probably be between 25 and 35 percent by the end of this year.

A year from now, what are some key milestones you'd like to accomplish?

TODD VERNON: What’s interesting about our company is it's a complete business platform for mid‑ and long‑tail publishers, a segment that has been historically rejected in this space. The thing is they have the most compelling content and the stuff marketers want to align with because it’s highly focused, conversational and interactive. We've always been really good at attracting and maintaining this segment because we provide real value to them.

What's exciting to me about the company is we've completely rounded out the offering. It's not just about analytics. It's not just about providing functionality for readers. It’s about really creating 360 degrees of business value around our publishers’ main focus, which is content creation.

So what do I want to do in the next year? I want to scale this to the point where we are second to only perhaps Google, in terms of reach, and size, and the ability to attract and maintain publishers.

Google is huge, right? That's where I'm heading, but if this year we start to outpace everyone else in the space it will be an awesome exit to the year. What's most exciting to me is that there isn't a missing leg to the stool anymore; we now have the whole story.

By John Ebbert

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