New Ad Network Calls Consumers By Name

Imagine you’re visiting your favorite Web site when a message in a 468 by 60 banner catches your eye: “[Your name here], get 10 percent off on your next meal at Joe’s Restaurant with your American Express card.”

That’s the vision behind a new ad network, Dotomi Direct Messaging, that delivers personalized, opt-in messages in banner ads — similar to those in email marketing. The network is launching in the United States after a year of operations in Israel.

The company, which has two major U.S. clients so far, is likely to be noticed, if only because of its well-known management team. John Federman, the company’s president and CEO, was previously the CEO of Newmediary, which was sold to CNET Networks. Prior to that, Federman was CEO of CMGI’s Adsmart. He also served a 12-year stint at Ziff-Davis, attaining the position of publisher at PC Week. Another founder, Yair Goldfinger, was formerly CTO of Mirabilis/ICQ, the pioneering firm credited with inventing instant messaging. Mirabilis was later acquired by America Online.

The company’s network covers about 70 percent of the Web, with hundreds of partners including Lycos, NYTimes.com, Advertising.com and MaxOnline, according to Federman. Rather than representing publishers, as in a traditional ad network, Dotomi instead buys inventory and then re-sells it, adding value with its personalization. Ads are sold on a CPM basis.

The company began in Israel in March of last year and has snagged 65 marketing clients and 10 percent of the active online population in Israel, according to Federman. The CEO claims an impressive 7 to 12 percent clickthrough rate for Dotomi.

Consumers opt into Dotomi in a variety of ways. For example, customers at Burger King, a client in Israel but not the U.S., either enlist through a banner ad or by signing up on hardcopy forms distributed at Burger King outlets in Israel. Those who have already opted into an email list, such as that of American Express, also an Israel-only client, automatically become part of Dotomi.

Each newcomer receives an email explaining the system. The message tells the consumer that Dotomi will use a cookie to alert the company of that user’s presence on a given site on the Dotomi network. If there is a Dotomi message to be served to the consumer, Dotomi will serve that message. If there is no such message — for example, if that customer’s chosen advertiser has no campaign currently running — the publisher will serve whatever it would have normally served.

“We’re probably not going to be in the high CPM inventory,” noted Federman. “The power of Dotomi is that we can take inventory that might not be able to generate a good CPM and make it efficient because you’ve got a guarantee that the user is interested,” the CEO said.

“It’s a great idea,” said Marc Ryan, director of analysis for Nielsen//Net Ratings. “In the ad market space, people are turning more and more to personalization.” Ryan said that when the novelty of the idea wears off, however, the ads would need to be contextually placed to take full advantage of their potential.

The analyst’s other concern was the issue of privacy. “There’s going to be a portion of the audience out there that’s not going to realize they signed up for this opt-in service.” To handle this, Ryan said, the ads should offer details explaining why they are personalized, how the person’s name got on the list and simple instructions on how to opt out.

Otherwise, Ryan said of the idea, “Overall, it’s a win-win.”

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