Lexity CEO Kumar On Leveraging Intent And The Ecosystem OS For Ecommerce Retailers

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LexityAmit Kumar is CEO of Lexity (formerly known as "Vurve"). In a press release last week, in addition to its name change, the company launched its "'Ad Intent' system for e-commerce merchants of all sizes." Read the release.

AdExchanger.com: So, what was the original idea Vurve? And then what did you learn along the way that revealed Lexity, if you will?

AK: Our initial vision was to build a simple, affordable and effective advertising solution for e‑commerce small businesses - that has remained the same over time. But what we learned in the last couple of years was that small businesses are confounded by the complexity that exists in the ecosystem. For example, if you are a small e‑commerce business, you open up Google and find a lot of tools, and you have to understand the system quite a bit to actually do any effective marketing at all.

We learned over the last couple of years that for e‑commerce merchants, two things are important. First, the fundamentals were more around marketing terminology. Clients thought, "OK, I want to create awareness for my brand.”  And so, instead of hitting the merchants on their head with the technology, what we should have been doing is talking to them in the language that they understand.

Secondly, at my previous job where I was VP of products at Dapper (acquired by Yahoo), we were essentially building a DSP, but only focused on display media like every other DSP out there.

So another reason I started Vurve, now Lexity, is because I strongly feel that there is a demand for looking at demand-side algorithms going across all channels.

Another way to think about it is - it's almost an iOS approach, where we're saying that as an e‑commerce merchant, you can come in and say, "I want to increase conversions” and our OS will do the rest.

How is Lexity leveraging “intent” on behalf of the eCommerce merchant?

For us, the reason we use the term "intent" [in discussion of our product] is because it is something that one can relate to from a businessman's rather than an ad technologist's perspective.  The intention that one has with Ecommerce ads is to attract a set of customers that are foot traffic to the store’s door or website. We think talking to merchants with that terminology is the right way to go.

We have the historic data. We know all the sales transactions they've had in the last 10 years because they give us access to that through their platform. And, we can mine those trends and automatically optimize those for them.

In some sense, where the ecosystem is right now is that it should be thought of as an operating system. And what you really need is an application on top that hides all of the underlying complexity into terms that marketers actually can understand and use effectively - so user intent at a higher level than people are discussing right now.

Ad technologists are still talking from an intent buying perspective in a very micro‑level. It's a time for the ecosystem to grow up in that sense.

What's the sweet spot in terms of Lexity’s target market?

We are currently focusing on some of the long‑tail small businesses with $5,000 to $15,000 in media spend a month, which backs out to teh revenue that a business might be making. Our minimum requirement actually is $300 a month, which is roughly $10 a day. The algorithms that we have built do very well in the context of small businesses since we track each and every e‑commerce marketing dollar, all the way to the e‑commerce metrics corresponding to it.

We're not only talking about revenue, but we're talking about how much time does a user spend on the site, how many products do they view when they were on the site, etc.

All of these data points are important.  If you are missing this data, then you can't actually optimize very well. We make this available for free internally to our merchants.

Aren’t companies like Local.com or ReachLocal are certainly targeting the local merchant and long‑tail publisher? Where's the differentiation for Lexity?

The local market is obviously very hot, and everybody's focusing on the local businesses. This is true all the way from Local.com to Groupon. And what we've decided to do is focus on the e‑commerce segment where they already are selling stuff online. And so in that sense we are not direct competitors with ReachLocal and Local.com. Although the same technology's applicable to that area.

Our competition is  Google and Microsoft, of course, and in the long‑tail, there isn't much. On the high end there would be people like Channel Advisor who are providing a set of solutions from rich media marketing to search marketing for their large clients.

Our differentiation is that since we know long tail customers don't have the technical competence to know how to bid appropriately, etc., what we decided to focus on is building a completely automated solution rather than providing a sort of fancy Excel editor where people can tweak their spend.

What’s happening in the industry right now – in spite of the fact everybody claims to provide these tools – is that there needs to be a human being to track the performance on a daily basis and optimize. We've taken that completely out of the loop.

What would you say are some of your takeaways from your Dapper experience?

I think the biggest takeaway was that in order for you to do multi‑channel automated marketing, you have to automate some of the more mundane stuff. We worked with some of the biggest clients on the planet such as Ebay, Travelocity and Kayak. And I realized that the human cost of just managing where the pixels got put and making sure they're working - that's what ended up taking a lot of time. In fact, the structure of the company changed from being engineering‑focused to account management‑focused over a period of time, and that's the most important thing we're changing here at Lexity.

We’ve decided to go to the long‑tail and say, "Look, for the small business merchant who is running a one or two person shop, they don't care about where the website tags are, and they don't have an understanding of what retargeting means. They do understand high‑level marketing concepts though.”

And if we can remove the human from the loop as much as possible, we can actually bring eCommerce marketing performance  to the long‑tail, which is something that we struggled with at Dapper. We ended up moving more and more upstream to focus on bigger and bigger clients because of the human costs involved and because we hadn't built a technology that was required to automate many of these things.

So, our focus in the last couple of years has been to painstakingly automate every component of our system to the point now that some of our customers are live in 40 seconds.

Regarding the company’s funding these days, will you need to go out and seek another round, or are you OK?

We raised about 4.5 million in February this year from Spark Capital. Spark is behind a lot of media companies in the ad space. And True Ventures, who was our first investor, also participated, as did 500 Startups, Dave McClure's firm. We have a lot of cash in the bank.

And in fact, since we are a technology‑focused company, we are only hiring engineers, so the latest funding is going to last us for hopefully a long time. In fact, because of that funding we were able to open an India office ‑ again, a pure technology office in Bangalore. The  next year is really going to be for us to spread this product among all eCommerce merchants.

Last question  - what are your thoughts about milestones that you would like to have accomplished by one year from today?

We have a new product called "Live View," which allows you to see in real time what's happening on your site. Now, there's tons of real time analytic software out there, but in our case, this is eCommerce focused. So you can see at this very second how many people are visiting the site, how many of them are buying something, and how many of them have just checked out in their shopping cart. And then for each person who has checked out in the shopping cart, what is the trail like?

This is something which we think is unparalleled. You can imagine Wal‑Mart or Target having such a tool in‑house for their own users, but we don't know of any tool that allows these kind of useful insights for eCommerce merchants. That's going to be our focus in the next year.

Also, the way we think about [our future] is that pretty much every eCommerce merchant who is starting up needs to set up their online store and essentially waits for traffic to come in. There's usually a lull for a few months as they figure out that, "Oh, some proactive marketing is required to get the ball rolling." And the same thing for established eCommerce merchants who are trying to figure out, "What are the options that I have for marketing?"

A year from now, my hope is that any eCommerce merchant that wakes up in the morning and says, "I've got to kick start my business," comes and looks for a solution which gives them a full suite of interconnected marketing based on what needs are at that point of time and we think that solution is going to be Lexity.

So if we're not the top, sought‑after company at the Internet Retailer Conference next year, I'd be unhappy.

Follow Amit Kumar (@akumar), Lexity (@lxty) and AdExchanger.com (@adexchanger) on Twitter.

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