Microsoft Vet Promises Publishers a Better Deal

Rare Crowds aims to make display work—and sell—just like search ads do

Given that performance advertising still tends to dominate the online ad world, and given that banners remain stubbornly cheap, the industry is rife with companies claiming to have just the right technological solution to dial up the value of Internet advertising.

And here comes another. But this one can claim a strong brand advertising pedigree as well as backers with a solid history of smartly investing in the space.

Launched in early 2012, Rare Crowds is led by longtime Microsoft Advertising exec Eric Picard, who founded rich media pioneer Bluestreak in the late 1990s. Among Rare Crowds' investors are Nick Pahade, North American CEO of Initiative Media; Tom Shields, who founded both Yieldex and previously NetGravity; and former Adtech CEO Dirk Freytag.

The startup promises more sophisticated, deep online ad targeting, and ultimately better pricing for the whole industry. Doesn’t everybody?

Well, in this case, Rare Crowds claims that it can deliver advertisers precise, highly complex target audiences at scale—ad buys that go well beyond the typical promise of delivering in-market car buyers. “We’re trying to change the economics of the entire ad space,” said Picard, who most recently ran product at the ad tech firm Traffiq. “Our goal is to find large pools of very specific inventory.”

To explain: Picard argues that brands spend thousands of dollars researching their targets, creating rich, multifaceted profiles of their primary, secondary and even tertiary target segments. Think profiles like: green-conscious, consumer soccer moms who use coupons and care about politics, safety and religion. Or something along those lines.

However, when it comes to executing ad buys, Picard argues, they end up simplifying their target down to one or two key variables since it’s simply too difficult to purchase such nuanced audiences given the current set of ad targeting tools, at least without whittling their ad buys down to a handful of people.

“That’s why you see so many RFPs almost getting ignored,” said Picard. “The cost of doing business in this space is ridiculous because we tried to emulate traditional media and couldn’t do it. Even with DSPs and exchanges and all this technology, we still target on one or two parameters.”

Rare Crowd’s tool promises to change that. It's called the “dynamic allocation engine.” How does it work? Aimed at publishers and ad networks (anybody on the sell side, essentially), the engine plugs into every available data source that seller has, including its current ad technology vendors (like DoubleClick) and any other third-party yield management company the publisher employs. Plus, Rare Crowds also pulls data from data sellers like Lotame and BlueKai.

Then the "allocation engine" technology crunches the data all together and, per Picard, identifies ad inventory, meeting hundreds—even thousands—of targeting criteria. The promise is that publishers will find a lot more high-value inventory they probably didn’t know they even had (again, not unlike some other companies in the space, like say Lotame).

“Everybody has tons of data,” said Picard. But publishers can’t always see what audiences buyers are looking for. “They ought to be able to see that."

Picard’s more lofty goal is to make display advertising more like search, which has been a virtual goldmine of direct response advertising (see Google, Mountain View, Calif.). That’s as bold as it gets, and not unlike the claims of other companies in the space (think Criteo).

But among the dangers of comparing the display business to search are that the display ad will never likely be able to match the commercial intent mind-set common to search (i.e., the act of searching for shoes because you want to buy shoes). Plus, does display really want to limit itself to the direct response end of the pool?

Picard says that’s the wrong way of looking at it. He’s really after search’s marketplace principles. “As supply grows, search gets better," he said. "Clients buy all they can. That’s the opposite of almost every other medium.”

Sounds great, but it's early. Picard has just started talking to publihsers, ad networks and supply side publishers—promising CPMs in the $6 to $8 range. At least one publisher has already signed on.

”I don’t believe anybody out there is doing what we’re doing," said Picard.