When Lumeria Inc. was founded in early 1998, the Berkeley-based company undoubtedly had many advertising executives seeing red.
When Lumeria Inc. was founded in early 1998, the Berkeley-based company undoubtedly had many advertising executives seeing red. One of the leading privacy and anti-profiling services on the Web today, Lumeria has blocked potentially millions of dollars worth of consumer information from ever reaching marketers' hands.
With the founding of the independent Lumeria Ad Network (majority owned by Lumeria Inc.) in January, however, those same executives may be seeing green, but only so long as you want them to.
Although public access to the service is still some months away, the Lumeria Ad Network intends to global personal customization of Internet advertising, allowing individuals control over the type of advertising they see throughout the Web.
"Lumeria's approach transfers control back to the individual, who should be the primary beneficiary when their attention is sold," says Lumeria Inc. Chief Executive Officer Fred Davis. "Lumeria Ad Network is the first system to let users choose ads they prefer to see."
The process works by cataloging user interests in a way that is meant to benefit both consumers and advertisers within the Network. After filling out a list of preferences in Lumeria's SuperProfile system, users will access the Internet by directing their browser through the company's SuperProxy server. Acting like an interloper between parties, the server will automatically remove the original advertising from an individual's browser when they visit a page, replacing it with Network-member ads. This process guarantees user information is never transmitted directly to the advertisers, while still displaying ads to consumers whose profiles match the advertiser's market.
Privacy on the Web is a key concern of consumers, notes Dataquest analyst Harry Hoyle. "If you're going to collect information about consumers it has to be done on an anonymous, statistical basis or you have to give them an incentive to participate."
There's also an issue of overkill. "People are not interested in advertising primarily because they're overwhelmed with it and, secondly, it usually has nothing to do with their interests," says Colette McMullen, chief executive officer of the Lumeria Ad Network. "And while we can't do much for people feeling overwhelmed, we can at least add the element of interest.
"It's sort of like if you think about junk mail: If it's an advertisement that you are actually interested in then suddenly it is no longer junk."
Trying to make advertising more valuable to the user brought Lumeria into preliminary talks with Cybergold, an Internet-based electronic "currency" company based in Oakland that rewards consumers for their attention. With over 7 million members, consumers earn "CyberGold" by viewing ads, volunteering information, completing purchase transactions and fulfilling other advertiser requests. Unlike the Lumeria Ad Network, however, members must access the advertising through Cybergold's Web site.
"One of the strategies for Cybergold has been to make its offers available ubiquitously, so in that regard Lumeria is a very interesting choice," says Nat Goldhaber, chief executive officer of Cybergold. "The idea of having every ad be a wanted ad all across the Net is a marvelous notion. In essence it is not just permission marketing but literally permission advertising, which is something totally new."
Companies will pay more for a user's attention, adds Davis, if they know that attention is specifically directed by the user's profile. And if the company pays more, so the logic goes, the user gets more.
"By creating increased targeting, advertisers get more for their dollar, and are willing to pay consumers more for viewing," says Davis. "And since member advertisers of the Ad Network know they will be viewed anywhere a user goes, we can honestly guarantee viewing."
For the first time ever, the Lumeria Ad Network will also provide comprehensive geographically-sensitive advertising. Advertisers on the Network will be able to pay to have their ads only reach users in specific market areas, avoiding the unnecessary costs of "blind" advertising that reaches users in areas where their products and/or services may not be available.
"The great thing about the Ad Network is that it allows the customer to control the revenue stream," says Davis, with no small hint of enjoyment. "The problem today is that the Internet's like the Wild West, and online security police like TRUSTe and even the FTC for that matter have no real power to ensure online companies always follow privacy laws. At Lumeria, we can ensure our users' privacy because we copyright their profile, and any company that signs up with us has to follow the privacy laws we set forth. "If a company violates that privacy and the user tells us about it, we not only yank the company from the Network but we also go after them with our team of lawyers," adds Davis. "We are, in effect, agents for the user on the Internet."
Lumeria Ad Network is currently in the middle a $15 million Series A venture financing round, that includes angel investors Ted Waitt, founder of Gateway; Louis Rossetto, founder of Wired; Waring Partridge, former Exec. VP. of Corporate Strategy for AT&T; and Dick Fredericks, formerly of Montgomery Securities and BankAmerica. Institutional investors for the round include Altamira, a major Canadian investment firm, and Tejas Securities, an investment consortium based in Austin, Texas. The round is being lead by Assurant Group, a subsidiary of Fortis.
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