Lookery’s ad data sales business crystallizes, as it raises another $2.25 million

September 4, 2008 | Eric Eldon | Comments | |

Lookery began life one year ago as a banner advertising network for third party applications on Facebook, with plans to target ads to users based on demographic data. It’s ended up as a company that collects anonymized demograhic data about sites around the web, and sells this information to ad networks in order to help them target ads.

Rivals, like Revenue Science, attempt to track complex user behaviors, and charge five dollars or more per thousand users. Lookery sells its data at 25 cents per thousand users — simple data sets that includes only age, gender, general location, and related keywords generated through searches that lead users to sites. Using “cookies,” or small snippets of code that collect data about web users, Lookery runs ads on its network for 25 other ad networks. It currently gets four billion impressions, web-wide.

So if a 27 year old male living in Mountain View, Calif. were to visit a political site, Lookery could help target a political ad that might be especially meaningful to him.



Unlike many ad-targeting technologies, Lookery isn’t a technology play, it’s economic war. “We think these lightweight profiles should be cheap and publicly available” for advertisers, says chief executive Scott Rafer. Lookery publishes the data it collects about other sites on its own site; if an ad network likes the basic data it sees, it can buy the more complete data sets from the company.

Right now, “advertisers can’t buy this data in volume,” he says. Some companies already have such data, of course, but they’re not selling it. For example, Google targets ads on MySpace using this data, but doesn’t share such data with other ad networks.

The company has a couple ways of gathering this data. It lets sites that want to learn more about their users install a snippet of Javascript code that records the information (check out the screenshots for Lookery data about the product review site ThisNext). Lookery is also buying data from other companies.



This doesn’t include Facebook user data, though, because Facebook doesn’t let third party ad networks target ads using its users’ information. Only third-party applications themselves can do that, and only with their own ads, not a network’s. Lookery instead imports the data it collects elsewhere to target ads inside Facebook. Large app developers like Slide have their own ad networks, and can target their own ads using that data; Lookery aims for smaller app developers who don’t have the resources to do so themselves.

So why did Lookery bother with Facebook in the first place? “We threw up that stupid banner network after nine days of work, realizing it was a bad business but that it would lead to the right place,” Rafer tells me. “We served up a lot of ads, got a lot of data, and saw where it led — it wasn’t until last October that we had a glimmering of a business plan.”

He says that the sales relationships the company now has with ad networks were a result of them using Lookery to run ads within Facebook. The Facebook ads themselves “make a little bit of money,” he adds. The company has “good” revenue so far, according to Rafer. As part of its plan to drive down the cost of profile data sales, the nine-person company is lean, using only web-based services to operate.

It’s not clear if Facebook or MySpace plan to encroach on Lookery’s model by selling their own data to ad networks, or running their own web-wide ad networks.

Regarding privacy: While some ad networks collect personally-identifiable information in order to target ads, Lookery chief executive Scott Rafer claims his company is “a bunch of privacy freaks,” and points out that all data is anonymized as part of the company’s terms of service. It doesn’t collect names, email, exact birth dates, or other information that violates privacy regulations in the U.S., the E.U. and in countries around the world.

The company already raised a first angel round of $1 million from prominent angel investors. In its latest $2.25 million round, it has re-upped from some of them, including Salesforce chief executive Marc Benioff. It has also raised funding from an investment group called ATTRACTOR, Sand Hill Road VCs who invested independently of their firms, and strategic investor Holtzbrinck, the German publisher that owns the German Facebook clone StudiVZ.

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About the Author, Eric Eldon

Eric currently covers digital media technology and business news, especially what's happening on social networks and their platforms. He also writes and edits stories about venture capital, and lots of other stuff, too. He started at VentureBeat in the spring of 2007, half a year or so after Matt Marshall left his reporting job at the San Jose Mercury News to found the site. Eric previously cofounded a startup called Writewith, that was building editorial software for newspapers and other groups of writers. The startup didn't work out, but he learned a lot.

  • Jon S
    This is EVIL!!!!

    I hope what happened to Nebu Ads happens to Lookery.
  • @ Jon S, Tough to tell if you are taking a real look at the situation with your remark, but it's worth being clear on this point. Nebu and the like install big hardware in your ISP and watch every single thing you do and target ads to you individually. It scares me too.

    We don't watch you at all. We try to get age, gender, location, and some of your search into -- with zero ability to connect it to you as a human -- and help sites and marketers generally steer the web your way. It's a less invasive level of information than behavioral networks use today (and priced accordingly lower), but it's a level proven effective by marketers over 50 years.
  • Jon S
    Thanks Scotty for the reply, but can you seriously look anyone in the face and say what you are doing is not evil and will result in a overall loss of privacy?

    Do you really think your records, I mean the records of millions of users who have no idea you are collecting info on them and selling it, won't be subject to subpoenaed under the Patriot Act?

    Can you really say that a cookie Lookery places on my machine can not be matched to a cookie in the Lookery system? That is how easy it is to connect your data to humans.

    Have you run your system past folks like the EFF and gotten their AOK?

    Do you allow users to opt in? or just assume everyone is AOK with Lookery pimp'ing their data?

    Do they even know the you are placing a cookie on their machine and selling that data?
  • @JonS Of course we can match a cookie on your machine to the record in our system. That's the only reason cookies exist. What we can't do is match it to your name, email, birthdate, hair color, drunken party pictures, whatever (unlike Facebook, Nebu etc.) I've spent a lot of time with the EFF over the years, including on the giant cookie system called MyBlogLog which I ran. I love and support the EFF, but each and every commercial internet venture makes them squeamish.

    Like you, the EFF makes the blanket request for opt-in systems, and then ones that store no PII. I believe that commercially viable systems can be created that meet either request, but not both.

    We're working hard to both 1) exist, keep creating jobs/salaries/etc., and 2) add the easiest, clearest opt-out system anyone's ever seen. I'm not thrilled that we haven't had time to finish it yet, but we're doing the best we can.

    Do you know that each ISP in the US sells your data an average of 10x a year? And they have all of it. Nebu's pitch was "Quit selling user data to ad networks, Quantcast, and Comscore. Go to marketers directly and make much more money."
  • Jon S
    Thanks Scotty for the response.

    It basically confirms what I thought - Lookery is designed so that no users know what you are doing and won't unless either Congress or EFF make a stink.

    Clearly, Lookery is not going to do a marketing campaign to say it's collecting user data and selling it without their implicit consent or knowledge.

    That you have to resort to arguing by corollary that because ISP's engage is a similar practice, it's AOK for Lookery to do it as well, speaks for itself.

    If you were really bringing value to users, it would be self evident.

    What you are really doing is stripping users of their value and fooling yourself, and your employees, into thinking you are really creating a better world.

    The reason Congress is getting involved is that user data is now being used to target advertising without their knowledge, though ways that are not evident.

    It's one thing for DoubleClick to say every time we put an ad up, we know more about you, it's another for a company to gather that data disingenuously without any way for a user to know.

    Further, DoublClick uses it within their system, Lookery is creating a marketplace for it.

    That you think the it is OK to employ people to do this comes down to how you want to make money, what kind of world you want to see created, and what you are OK to tell your kids about how their father made his money.

    That you have built a Giant Cookie Systems before now seems to have given you the opportunity to exploit users further by selling their data so people can put "better" ads in front of them.

    I'm glad you realize that you have sold your soul to the advertisers and are able to rationalize it to yourself.

    But please don't sell everyone else's , esp without their knowledge!!!!
  • Jon,

    I agree that [paraphrasing you] "the value we bring ot users needs to be self-evident" and that it is not yet. We've got a great tech team, but software takes a while to write and deploy. We'll be satisfied on our basic transparency in another 4 to 6 months, at which point we'll be as good as it gets within the ad and targeting world (though i'd guess you care little about that relative measure).

    I think the details of user data collection and targeting are important, but I can happily accommodate you and speak in generalities. At the broad strokes level you wish to discuss the topic, DoubleClick does the exact same thing as the rest of us. There's no rationale to exclude them unless you have some agenda beyond privacy concerns that you are not disclosing. A very, very small percentage of users (effectively zero) know that viewing an ad includes the implicit, opt-out arrangement with regard Doubleclick's user data and clickstream collection.

    Like Doubleclick, Lookery is also an ad network. We run a billion ads a week on MySpace apps, Facebook apps, and similar. We've been doing that for a year and the data services for a few months. We uncovered a desire from a variety of sites large and small to learn about their audiences, anonymously and in aggregate, without being forced to run advertisements. We're satisfying that desire.

    If you ever want to chat details, any action by Congress would impact us AFTER all the other companies mentioned in this thread. We're the least invasive of the bunch. If Congress shuts down all user targeting by networks, we will of course be affected.

    Scott

    P.S. I'm happy to exclude the ISPs from the conversation. It appeared you weren't aware of such practices.
    P.P.S. If you want to know which web sites you visit are running third-party measurement systems that are not attached to ads, I'd encourage you to install this Greasemonkey script that our CTO built: http://davidcancel.com/2008/07/01/my-web-beacon... Web site owners choose to run these things in order to improve their sites, nobody forces them.
  • Jon S
    Scotty,

    Thanks for the reply.

    You are still missing the point: there is a difference between serving ads and selling user data. Contractually, this is a third party rights issue. Networks like DoubleClick (I have no relation to them as you insinuate) do not sell their data to anyone. There are no third party rights issues involved. Lookery does sell it's data. There is a big difference here, and folks that sell data may very well get restricted by Congress even though folks like DoubleClick will not.

    Look, this is what your website says: "Lookery is aggregating user-reported data from, and with the permission of, social networks, dating sites, ISPs, and e-commerce sites. We are offering the aggregated targeting data back out via our ad network customers, statistics widgets, as well as unbundled targeting, APIs."

    There is nothing that says "with the permission of users." You are taking data from one source, selling it, and using it for another purpose. This is deceptive, I hope you get shut down.
  • @JonS I was missing your point on 3rd party issues. Thanks for clarifying. It's why Lookery draws such a bright line at PII. We think that we can lead the industry into an ethically better place than it is today. Selling Personally Identifying Information is not reasonable, will likely be illegal at some point, and is common practice today. Don't be fooled by other networks' web sites about what deals they are willing to cut and what deals they aren't.
  • Jon S
    I"ll leave the last word to you Scotty...
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