MyBuys, behavioral targeting for online retailers, raises $10M

In case you haven’t noticed, one of the frothiest areas in start-up world lately is behavioral targeting.

With hordes of advertising money moving online, entrepreneurs can make a killing by analyzing user behavior, and hooking that user up with the right ads and products.

MyBuys, which tracks user behavior to help online retailers make better recommendations, has raised $10 million.

The Redwood Shores, Calif., company is one of many trying to improve online shopping. We covered StyleFeeder last week, which raised $1 million for its community recommendation site. Mybuys’ behavioral targeting technology also competes against Wunderloop (our coverage), Baynote (our coverage), Matchmine (which also recently raised $10 million), and Aggregate Knowledge (our coverage).

These services are used by online retailers to show you potentially interesting merchandise, by tracking what you have already been looking at or buying. If you do a lot of online shopping for designer jeans, a service like MyBuys may recommend especially popular or discounted designer jeans to you.

MyBuys claims to deliver the highest converting recommendations, with 300% more revenue per interaction between a user and a retail site.

The company makes money by receiving a cut of revenue from the retailer when users purchase suggested products.

The demand among online retailers for better behavioral tracking is so high right now that MyBuys and its startup competitors are all able to gather this “low hanging fruit” — for the time being — Lightspeed Venture Partner’s Peter Nieh tells us.

The market shakeout in behavioral targeting will resemble search engines startup in the 1990’s, Nieh thinks: Many companies were able to search the web, but Google ended up doing it way better than the others, and captured the largest portion of the market.

Mybuys is already being used in retail sites such as camera site Ritz Interactive, urban style site Karmaloop, and fabric site Hancock Fabrics.

Lightspeed is all over e-commerce. We are only seeing the “tip of the iceberg” in e-commerce, the firm’s top blogger Jeremy Liew wrote in June — he thinks there will be “many more” e-commerce companies that grow to make more than $500 million in revenue by using behavioral targeting and other methods of matching purchasers with products they’re most likely to buy.

Lightspeed participated in this latest round, which was led by Palomar Ventures.