ADOTAS EXCLUSIVE — Roy Shkedi has had an interesting career trajectory — from working for the Intelligence Branch of the IDF to doing equity research at Ofek Securities – and now as the founder and CEO of AlmondNet. As the head of a leading behavioral targeting company, he has a bird’s eye view of the industry and how its practices have evolved. ADOTAS sat down with Shkedi to find out more about the company’s behavioral targeting business and get his take on search advertising, consumer privacy and some of industry’s latest ad-targeting scandals.
ADOTAS: Roy, you have an interesting background. Can you run through it quickly with me and tell me how it prepared you to launch and run AlmondNet?
SHKEDI: Thanks, I think my military background is similar to that of other Israeli entrepreneurs in the high-tech space. I spent six years working in the Intelligence Branch of the IDF (Israel Defense Forces). This provided me with technical knowledge and training, and experience in managing teams involved in the development of complex multidisciplinary projects from core idea to system implementation. I also worked as the principal equity research analyst for Ofek Securities, then Israel’s largest asset management firm, which provided me with the opportunity to examine many high-tech industries and allowed me to identify internet advertising as one of the more promising ones.
ADOTAS: AlmondNet is a pioneer in the behavioral targeting business. How have you seen the business change since AlmondNet’s inception in 1998?
SHKEDI: I would say that the greatest change since we launched is market awareness or consciousness. When we started evangelizing behavioral solutions back in 1998, people looked at us with a blank stare. Today most people get it, and now it’s all about execution. Behavioral targeting is truly an exciting market, and I believe we’re only in the second inning, to borrow a baseball analogy.
ADOTAS: Do you think companies or more or less conscientious about protecting consumers’ privacy than they were 10 years ago and why?
SHKEDI: Overall, companies are more conscientious today, which makes sense since more are implementing behavioral targeting today. The NAI, TrustE, and IAB are doing a great job raising awareness within the industry and working with those outside the industry.
ADOTAS: What do you say to publishers who are skeptical about behavioral targeting?
SHKEDI: At present, we rarely encounter publishers who are skeptical about behavioral targeting. I think everyone pretty much gets it today. Consumers spend 99% of their time off the typical publisher’s site. Why not try behavioral targeting when it could become such an important revenue stream?
ADOTAS: Phorm and British Telecom’s decision to conduct trials of ad-targeting technology – without the consent of its customers — has certainly been in the news a lot of late. The European Union may intervene – what’s your stance on the situation?
SHKEDI: We are members of the NAI and favor industry self-regulation. We encourage all companies in our space to join the NAI or a similar organization in their country.
ADOTAS: Do you think the media and / or the E.U. have held Phorm up as a scapegoat for a widely committed practice or do you think what they’re doing really is unusual?
SHKEDI: I cannot comment on the specifics of the Phorm case in detail. However, I think all behavioral companies should follow the principles of user notice and consent. If the consumer is unhappy, our industry will not prosper. Ensuring consumer comfort should be core to all companies’ business model and practices.
ADOTAS: What’s AlmondNet’s stance on using ISPs as data partners?
SHKEDI: We’re focused on gathering data from vertical sites. There is plenty of data in the long-tail so that is our focus.
ADOTAS: You’ve said that vertical sites are more valuable to advertisers than general search engines; can you explain why and how AlmondNet leverages vertical sites for clients?
SHKEDI: The typical consumer spends 1.7% of their online time conducting commercial-related searches that demonstrate purchase-intent on general search engine sites and 15.4% of their online time demonstrating commercial-intent on vertical-oriented sites. Further, approximately 83% of consumers’ online time is spent browsing other ad supported content that is mostly either unsold or sold for low rates, so tremendous opportunities are available for aggregating data from vertical sites and using it to enhance the consumer experience wherever they are on the Web.
ADOTAS: What’s kind of ROI would a typical search engine get vs. a typical vertical site?
SHKEDI: Only a third of the searches conducted on general search engines are commercial, so they need to generate a much higher volume of searches to generate the same number of commercial queries. Also, consumers tend to use general search engines as a jumping off point in their search. For example, they’ll use the keywords “digital camera” on a general search engine, but will then conduct a more granular make and model search on a vertical site. This means that the vertical sites tend to have more granular data and users who are further down the purchasing funnel.
ADOTAS: You’ve talked about monetizing the long tail. Can you explain how AlmondNet plans to go about this?
SHKEDI: Our model involves aggregating data from the long tail of vertical sites and makes it available to entities that are selling mass inventory.
ADOTAS: AlmondNet has partnerships with 15 of the top 30 ad networks and about 100 million consumer touch points. How do you plan to move forward and continue to spur revenue growth?
SHKEDI: We’re constantly evolving to provide solutions in response to the needs of our partners. While we lead the market and educate our partners, their feedback is equally important to us.