Magnetic Finds Display Polarity Through Search Retargeting

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target_small.jpgADOTAS – “As much as we’d like to say we can, we can’t mash together search and display,” says Josh Shatkin-Margolis, CEO of Magnetic. “But the line is getting more and more blurred….”

With Google introducing retargeting to AdWords and Criteo immigrating to the U.S., retargeting is on many an American advertiser’s mind. But there are many types of retargeting, says Shatkin-Margolis, and Magnetic’s specialty — search retargeting — offers a broader audience than site retargeting as advertisers reach beyond users who have merely visited their sites.

Similar to data merchants like BlueKai and eXelate, Magnetic is a data marketplace, but unlike the aforementioned peers the company is selling keywords, not audience.

“What we’re selling isn’t data per se, it’s the ability to retarget a user based off of their history,” says Margolis, a veteran of DoubleClick and Yahoo where he held high-level data processing roles regarding advertising. In effect, Magnetic is making keywords accessible to display advertisers, many of whom don’t have the lengthy keyword lists that search marketers do.

Magnetic brought home $1.25 million in investor cash before its public launch in late March, and since it has be busy partnering with DSPs. Most recently the company announced integrations with ad networks interCLICK and Undertone Networks, combining the power of search data with the reach of premium ad networks

Data guys are obsessed with exchanges and lower-quality inventory, but Shatkin-Margolis finds premium inventory far more exciting.

“I don’t think enough time is spent talking about the premium sites — the CNNs, the L.A. Times,” he says. “A lot of people say, ‘You can buy audience; media doesn’t matter.’ Personally I disagree because from a marketer’s standpoint, everyone wants to put their ads on the premium sites because that’s how you build a strong brand — you associate yourself with sites people like.”

But running ads across premium sites is not kind to the wallet. Magnetic’s technology allows advertisers to show display ads on premium sites to users that have shown intent via search queries, effectively making high-quality branding affordable.

Magnetic’s system takes in hundreds of millions and advanced algorithms make it easy for buyers to navigate them and giving them the ability to specify target criteria though millions of categories; control the relevancy of each keyword, from exact match to a broad match “on steroids”; or upload a home-grown set of keywords.

As search marketing typically has the best conversion rates, search retargeting applies keywords to various forms of media. Bypassing the competitive and price limitations of search allows advertisers to reach audiences at any time.

In addition, search retargeting allows advertisers to reach users at any level of the purchase funnel. Someone searching for a home loan is likely to also need a credit report, Shatkin-Margolis points out, but PPC models make it hard to target upper-funnel keywords, especially considering the intense competition in the field. In general, search marketing is mainly effective in targeting users at the bottom of the purchase funnel.

“One person’s bottom of the funnel is the top of another’s funnel,” he says.

For example, video game advertising is dependent on building name recognition, which is no easy task. The upper funnel is fertile ground — the video game purchase funnel starts when someone searches for a 3-D graphics card or an Alienware computer, Shatkin-Magolis has learned.

Conquesting, the practice of buying competitor’s keywords (e.g., BlackBerry buying “iPhone”) that used to be banned by Google, is very expensive to do in search marketing because of the low click-through rate and out-of-context search ads tend to be prohibited on search engines. Anyway, text search ads don’t offer the same visceral response as a display or rich media ad — “What they want is to show some flash video of a monkey in a tree swinging a sword, showing them this is the coolest game ever,” he says.

But there’s a great deal more display space available for less cash and it’s less competitive. Toss that sword-buckling monkey on a premium site through an ad network? Well, OK then.

While Magnetic is focused on making search retargeting straightforward for display advertisers, some search engine marketers are beginning to dabble in the display space and chatting with the company. The once fine line between search and display continues to disintegrate.

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