Yesterday, 41st Parameter, a fraud detection services company for financial, retail and travel industries, announced a new product called AdTruth focused on device fingerprinting technology and audience recognition. Read the release on the company joining the IAB yesterday (PDF).
Ori Eisen is Founder, Chairman and Chief Innovation Officer of 41st Parameter.
AdExchanger.com: What inspired 41st Parameter to take its fraud detection business for transactions and turn it toward advertising?
OE: We decided to add another use case of our technology based on customer demand. For years we've been detecting bad guys on the Internet and doing it very, very accurately. Our customers ask us, "Why can't you use the very same technology to find the good guys and give them a better experience?"
With the regulatory changes that are happening in the world combined with the Do-Not-Track movement and the degradation of cookies, our technology was a natural fit. Our technology honors Do-Not-Track, allows the user to make a choice, and also honors the current regulations.
Do you consider 41st Parameter and your product AdTruth a competitor to compliance companies like TRUSTe or Evidon or ad verification companies like DoubleVerify, AdSafe Media or AdXpose?
Actually, neither one of them. If you look at the LUMA landscape we would probably be placed in the data providers because our technology is not doing anything other than provide the ad networks the ability to see the user and also honor/respect their choices not to track. So, we are not a registry. We provide technology and our customers will embed that into their networks.
If you need a competitor the closest one would be somebody like BlueCava even though we do things differently.
So then, what problem is 41st Parameter looking to solve in advertising with AdTruth?
But if a user says, "Please don't track me," then our technology will not track. It does a better job of tracking users than a cookie when tracking is allowed.
In your release you already have several companies in your pilot program. What is the go‑to market strategy with AdTruth?
We've conducted two pilots to-date that were very successful. We decided to do five more and have had very strong interest for that. After we are done doing the pilots and seeing that our value preposition maintains itself over time, we will then go to market with the product. Some companies decided to forego the pilot and just sign up before a pilot because the need in the market is so strong.
What can you tell us about the integration required on the ad network or client side, if you will? What about the costs involved there?
Do you see this technology, AdTruth, as an eventual replacement for the cookie?
Over a long period of time - potentially, but for now we are aiming to supplement and augment. For example, if the opt-in mandate happened, many of the cookies would not show and you just wouldn't be able to do anything. But even in countries where e‑directive has not happened, the technology gives lift and substantial enough for customers to adopt it and provide better coverage and conversion for the population you already have.
It seems that what 41st Parameter is offering in mobile goes beyond simply a privacy solution – I’m talking about extending reach. Can you talk a little bit about that and what AdTruth can unlock in mobile?
The other side of mobile is called mobile or native apps, which we also have a solution for. In that case essentially we're asking the application ‑‑ think about a game like Angry Birds ‑‑ to execute the native APIs of the phone to again collect enough intelligence from the phone to use and identify. And note - all this was done without the UDID, which as you probably know is going to be deprecated in [Apple’s] iOS five onward.
Part of the problem you're solving in mobile is right now users can't be identified very well. What kind of additional reach do you think you can get for your clients?
It really depends on the geography. As soon as we're done with all of our pilots we will publish all the data. So far we have had very consistent results, but we will not publish the results yet. Let me put it this way - when people see the early results, there's a great demand to pilot this technology again. So we want to be very conservative, especially with the name AdTruth in our name.
Thinking about Apple deprecating the access to the UDID - what your take on Apple's strategy? Do you see it as Apple locking it up for their ecosystem? What's your take?
Full disclosure, Apple is a customer of 41st Parameter. So I'll just start with that.
I would say that, to the best of my knowledge I think they're trying to avoid trouble by not having any kind of privacy issue. The best way to prevent abuse by a 3rd party is just to deprecate. I don't think that they're locking it up for themselves. They could, but I think it's just a way to avoid trouble rather than always try and be the policeman of their applications. I hope everybody would agree it's just hard to do.
Other solutions will have to come to bear in order to make non-Apple advertising on their platform viable. I do believe that must happen otherwise they are abandoning their publishers. I don't think that's what Apple wants.
What channels do you see AdTruth addressing, in particular? Are you thinking cross‑channel?
Perhaps. But, the center of this is the device. For example, Facebook doesn't have the problem of identifying the user because most of the users are logging in and basically telling Facebook who they are. In that case you can use five different devices and Facebook will know who you are. If you are serving video but you don't know who the user is, our technology clearly can help. So it's less about the channel itself and more one level underneath which is - which platform are you serving it to. That’s where we can help.
Getting back to device identification companies like BlueCava, can you briefly talk about where the differentiation is for AdTruth?
Yes. First of all we have clearly a patented technology that was issued by the US Patent Office that has been very successful to date. For seven years as 41st Parameter, [we’ve used the technology to] detect their machines very accurately and based on the Time Differential Linking technology.
The second is we are not SaaS. We are an on‑premise solution and it's a huge difference for this industry because in the original fraud business we were in ‑ it was OK to wait a few hundred milliseconds to get your answer. The ad space, because it's real-time biddable, you don't have a lot of time. So any solution that is on‑premise, there's an advantage.
But also the last thing is that we are not trying to aggregate industry data. That’s just not going to work for anybody. A lot of our customers tell us that they can't send us the data - just by contract they can't do it.
How is the company funded today? Any need for additional funding?
41st Parameter is funded by Kleiner Perkins, Norwest Ventures, and Jafco. At this point there's no need, because we can clearly see how this will sustain itself. But if we see that we need strategic investment, we might do something like that. But at this point there's no need for it.
Thinking about a year or two down the road, any milestones that you'd like to see the company accomplish in that time frame?
Today, AdTruth is wholly owned ubsidiary of 41st. If things go the way we think they will, we might split the companies altogether and spin AdTruth out.
The other one is if we can enable the market and get Nielsen, for example, to adopt our measurement, as well as comScore and others, we can basically provide a new leg up for the industry, especially the mobile guys who are looking to elevate their category.
We will work closely with the IAB and MMA and other organizations to try and help the category versus just help AdTruth.
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