Yahoo was the first of the major search engines to use search query data to inform and influence subsequent display ad serving. However, as Magnetic CEO Josh Shatkin-Margolis pointed out to me, that only works within the Yahoo network, not across the broader internet. He would know, having worked as a Director of Engineering at Yahoo, and before that at DoubleClick and Performics.
What his company Magnetic (previously known as Domdex) is doing is seeking to make search re-targeting available to potentially any publisher, ad network or ad exchange that wants to buy the query data. The company formally launches today with an announcement of $1.25 million in funding.
The company’s press materials sum up how Magnetic works very succinctly so I’ll simply quote them: “Magnetic technology collects data on your custom selected keywords using a universally compatible re-targeting pixel tag on sites serving Google and Yahoo sponsored search content (reaching 200 million internet users).”
Magnetic isn’t getting search query data directly from Google or Yahoo, but indirectly as a feed through their partners, which serve paid search ads on their respective sites. In other words a user on news site, for example, that shows Google or Yahoo sponsored search ads conducts a search of one sort or another, say for “Toyota recall.” A pixel is dropped and that user is later served a display ad that may be directly or indirectly related to that earlier query. In my example it could be a display ad by Toyota about its cars or recall-specific actions the company is taking. It could also be from a competitor (e.g., Ford) that wants to promote the quality or safety of its new vehicles.
Keywords and phrases captured by Magnetic are analyzed and organized in several ways for different levels of targeting precision: by keyword, topic and category. That includes location targeting if a geographic modifier is part of the query string. Search marketers can also upload their own keyword lists if they’re working directly with Magnetic.
The latter scenario is going to be less common; Magnetic is positioned mostly a data marketplace for third party publishers and networks. Search query data are purchased by those publishers or networks, which then use them to improve targeting of display and other types of ad inventory on their sites — and presumably exact higher ad rates accordingly.
One of the points that Shatkin-Margolis made when I spoke to him last week is that search marketers gain search-like targeting on display oriented sites but may “cast a wider net” than in traditional SEM. Advertisers and agencies relying primarily on display gain the “targeting efficacy of search,” provided that the intended publishers or networks are working with Magnetic. But the company already has a roster of partners.
Targeting can be “scoped” more broadly or narrowly by marketers; so a company in a related industry such as such as car insurance might buy that same user or group of “Toyota recall” searchers. This would happen hypothetically on a site like CNN, which would sell the advertiser a more precise targeting capability around user intent.
Magnetic’s objective is to offer a true marriage of search and display in an effort to raise eCPM rates for publishers and improve performance for advertisers. Magnetic promotes the idea that publishers can gain “10x to 100X higher click through rate[s] over non-targeted ads.”