Chahal was kind enough to spend some time describing the workings of RadiumOne and how social media and networking have changed the behavioral targeting equation.

ADOTAS: You sold Blue Lithium to Yahoo in 2007 — what have you been up to for the last three years? Pick up any new hobbies? You didn’t blow that $300 million in one place, did you?

CHAHAL: In my down time, I did do some great things. Wrote a bestselling book, got involved in various charities with plans on launching my own foundation in 2011 and also got the chance to be on Oprah to share my journey with millions.

I’m proud that BlueLithium was so successful, but as soon as I sold the company, I kept thinking, “What’s next?” Don’t get me wrong — money is great, but it doesn’t drive my team or me. We learned so much from building BlueLithium, and we wanted to put those lessons to work in our next company.

Making money doesn’t motivate me – I guess it’s just a way of keeping score. It’s more important to me as a benchmark. That’s the number we’ve got to beat. And I wouldn’t have started RadiumOne in mind if I didn’t think we could do it.

What was the inspiration for RadiumOne? Why that name?

It’s basically picking up where BlueLithium left off. And regarding the name — Ha, I guess it’s our way of saying we’re one degree away from executing our checkmate strategy on existing ad networks.

How does it feel to be back in the startup again?

Our team is very excited. This is what we do — start new companies and disrupt markets. Because of my non-compete with Yahoo, we have had to operate with one hand tied behind our back. Now, the gloves are off! We can’t wait to show industry how we plan to add value into the ecosystem again.

What lessons from your BlueLithium days came in most handy in setting up RadiumOne? How do you feel RadiumOne really improves on your prior endeavor?

Since 2007, the Internet has seen one megatrend: social. It’s become the epicenter of everything we do on the web. People are spending time in areas of the web that are all about a social experience. All of this social activity has created a vast amount of data, but advertising hasn’t really cracked the code on how to apply this information to the targeting process. RadiumOne will help solve this problem. Social won’t be a nice tick in targeting — it will become the holy grail of ad targeting.

Our experience with BlueLithium gives us an edge for two reasons. First, we have deeply entrenched relationships with major advertisers that we intend to leverage for RadiumOne. Second, Yahoo bought BlueLithium in large part because of the engineering team we put together. Our team built the first behavioral targeting technology that could really scale. All of the original dream team are back on board for RadiumOne.

What have been the biggest changes in the behavioral targeting ecosytem since you sold BlueLithium?

The problem is that there hasn’t really been change in the behavioral targeting ecosystem since BlueLIthium. Ad networks still basically look at previous ads a user has shown intent on to determine what kind of future advertising is most relevant. That is extremely limiting and has a scale problem.

Think about the data that exists from just that — it’s such a small snapshot of online behavior. We’re going to bring volumes of new data to the targeting process. Our goal is to gain visibility into about 90% of user’s online behavior so we can better target advertising. And to get this greater visibility we’re going to add data from their social indirect and direct connections

Would you mind explaining the idea of social retargeting? Could you give an example?

RadiumOne looks at eight different categories of data, and then we plot that data on a social graph. We can then look at the plot to accurately describe a user’s behavior. The eight datasets that RadiumOne uses are:

• gWallet Social Data (Purchase & Transactional behavior on 75 million monthly active gamers)
• Website overlap (sites visited by the consumer across R1 Network)
• Blog Platforms
• Social networks (outside of Facebook)
• Microblogging/Status platforms
• URL shorteners
• Applications & Social Widgets
• Photo-sharing Websites

It’s all about extrapolating direct and indirect connections. A direct connection involves someone sharing something (blog, link, picture). An indirect connection is a frequency of three social behaviors that mirrors someone else’s. All of these become increased audiences for us as we try to find new intenders to add into the funnel vs. retargeting which only reaches people that have already expressed intent.

What’s makes you believe your new targeting methods will improve ad conversion rates by up to 500%?

We’ve tested our algorithms, our data sets, supply sources and partnerships and know we perform better than our competition. Our prelaunch tests have shown that when compared to traditional display ad networks, we generate up to 75% higher conversions without sacrificing scale. If an advertiser is transparent with us, we’ll gladly live up to the challenge of hitting or beating their existing campaigns.

Why does your network only consist of comScore top 500 sites? Do you have any plans to move out to the longer tail?

Ninety percent of the audience spends time on these 500 sites, so we’re only interested in this set of inventory. Reach, frequency and content of the sites matter as we optimize the full scale of our product both on display and mobile. We don’t have any immediate plans to move to longer tail sites. We have more than enough inventory to monetize now.

What is your relationship with gWallet? What other ad verticals would you like to enter?

gWallet is a subsidiary of RadiumOne, and it will supply social data and game inventory to RadiumOne. However, gWallet represents just one of the verticals that we will target. As mentioned above, there is a wealth of social data that we can glean from blogs, photo-sharing sites, etc., all without having to access personally identifiable information of any kind.

Your technology aims to group users with people they know and their interests. How would you respond to allegations of stalking or abusing user privacy? What kind of opt-out program do you offer?

RadiumOne collects no PII of any kind, and we maintain the highest privacy standards in the business. Since this our third time with an ad network — we know consumer’s privacy must be protected first and foremost. In our view, the actual identity of a consumer is completely irrelevant to what we do; what we care about is how a given consumer fits into the various social clusters that we have assembled. We care about intent, not their identity. Essentially, we’re just picking up where behavioral targeting left off and applying more prevalent social data into the mix.

We are fully compliant with IAB and NAI opt-out policies and intend to be an industry leader in protecting users’ privacy.

What were your feelings about the FTC’s privacy roundtables? How do feel about the likely decision regarding industry self-regulation?

Self regulation or governed regulation, our stance is that individual’s privacy should be protected. At RadiumOne, we believe it to the core. We don’t need personal information; in fact, our experience is that PII is completely irrelevant to the success of our campaigns.

Do you ever visit the Yahoo Advertising homepage and get nostalgic?

Ha –- no. But I get excited every time I see the RadiumOne homepage.

These networks have shown that effective targeting can create a better return on investment for advertisers, and the large reach networks like AOL and Yahoo have acknowledged this fact through the allocation of dollars to acquire these networks. However, this is only the beginning of the story, and audience-targeted advertising is still in its infancy.

As the economy continues to decline, advertisers and agencies are taking note and testing these networks as efficiency in marketing spend becomes increasingly more important. This will drive a key shift in the industry: as the need to be more efficient in advertising expenditure grows, so will the demand for audience targeting – until it eventually supplants traditional network reach advertising.

This trend will be accelerated by the current economic downturn in three ways.

First, with advertisers scrambling to reduce budgets and find pockets of high return on their advertising dollars, they are going through a metamorphosis in how they think about allocating marketing spend. Shrinking budgets force each dollar to be used more effectively, and wasted impressions can no longer be tolerated as marketers and agencies are increasingly accountable for exactly where the dollars are going.

Second, as the rounds of layoffs hit the technology industry, marketing and agency teams have to do more with fewer people. This means that they no longer have the capacity to manage the dozens or even hundreds of vertically-focused sites that give the scale necessary to feed the company’s revenue goals. Finally, while marketers are reallocating dollars to be more efficient, undifferentiated ad networks that were just barely hanging on when times were good are finding themselves looking like emperors without clothes as the economy goes into decline. There have already been a few early victims , and 2009 will see a further significant contraction of these players. The survivors will be the big and the differentiated.

Enter audience targeting. With the ability to buy only impressions that are specifically suited to an advertiser’s audience of interest, a few things can be accomplished. First and most obvious, the performance of the advertising campaign improves simply because there is no waste, and no impressions delivered to someone who would never be a prospect. Second, and possibly more important for return-on-investment, the advertiser can see exactly which audience is performing and which isn’t.

This not only allows for current optimization of spend, but allows the marketer to plan new, more effective campaigns over time. Finally, ad networks that are able to aggregate and target the right audience across hundreds of sites and then optimize for success will be much easier and cheaper to manage with a reduced staff then a myriad of targeted sites.

As an example, Bizo, a B2B advertising network that uses bizographic data for targeting, has a client that is testing different industries and seniority levels, all targeting the small business audience. From a baseline CTR, there were three industries that improved the response rate by over 2-4x. The following shows a portion of the results of the industry test:

Business Services: 4.35x increase

Retail: 3.98x increase

Real Estate: 2.48x increase

Transportation and Travel: 1.87x increase

Advertising and Marketing: 1.36x increase

Consumer Services: 1.09x increase

Accounting: 1.05x increase

Insurance: 0.01x decrease

Media and Internet: 0.12x decrease

Legal: 0.32x decrease

By moving the advertiser’s budget to the performing industries at the top, Bizo was able to deliver a 3x more effective use of their dollars. This allowed the advertiser to drive an equal number of customers with roughly 1/3 of the cost.

What does all this mean if you’re a marketer? Target your audience!

This kind of re-allocation of resources and efficiency is how successful marketers will survive in a down economy. In a recent eMarketer study, 90% of advertisers said they plan to use ad networks in the coming year and the top two factors that they will use to differentiate networks were the quality of inventory and the audience targeting. Networks that have quality inventory and rich audience targeting capabilities should be some of the first places marketers and agencies look in 2009 and beyond to keep revenues flowing at lower costs and greater efficiency.

The focus on audience and efficiency will help these companies to survive the downturn and be in a great competitive position when the economic climate begins to thaw.

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MediaPost was the first to report on the suit, which was filed in federal court in Los Angeles. In the past, ValueClick has sued Blue Lithium and Revenue Science on the same grounds. Both cases have been resolved.

In its suit against Tacoda, ValueClick alleges that it informed Tacoda of the infringement last year.

The network has extended the availability of “Surround Sessions” to be included in all of its weekly 30-minute podcasts. The podcasts have increased to 16 hanks to the addition of “DishyMix”. DishyMix is an interview show that focuses on digital marketing and media player and is hosted by CEO Susan Bratton. Having moved is not the only new development with the show. Two new advertisers have been added to DishyMix’s roster including Blue Lithium and Aegis Group’s Isobar.

Another advertiser using surround Sessions is the Omega Institute which sponsors four lifestyle shows on Personal Life, which target the socially conscious adult.

Blue Lithium ad packages will contain 20-second pre- and post-roll, and 30-second mid-roll. The lengths can vary, but this will be the standard sample package for the company.

Blue Lithium rose two positions to number six on the top 50, surpassing Google and AOL Media Network. Blue Lithium’s reach in May fell over 66% of unique viewers. But Blue Lithium is not the onlycompetitor gaining momentum.

Undertone Networks may not be in the top five yet, but climbing up nine spots to number twenty-nine makes this company a threat to anyone else sitting in the coveted spots. With many companies maintaining their momentum, will any of these contenders ever dethrone the #1 Advertising.com? The results for May’s top 50 according to comScore are available at ComScore:

http://www.comscore.com/press/release.asp?press=1482