BlueKai: Not Just a Data Warehouse Anymore

Ad tech firm expands its offerings

Ad tech firm BlueKai derived its name from a book, Blue Ocean Strategy, about identifying untapped markets. Originally that market was operating the Nasdaq for companies to buy and sell consumer data. Over the last year and a half, though, the five-year-old firm has looked to pivot from just buying and selling data to helping companies get the most out of it.

“If data is like electricity, we want to be the utility grid for the nation,” BlueKai co-founder and CEO Omar Tawakol said.

BlueKai already had the data through its exchange business. It began putting down wire when it put together a data management platform in January 2011. With the DMP, brands could house their own data (like site visitor characteristics) and cross-reference it with third-party data from companies like MasterCard and Nielsen to build audience segments for ad targeting. BlueKai got the idea to build the DMP when it saw marketers were overwhelmed with data and needed ways to keep up with it, Tawakol said.

“It was basically like the Gold Rush and Levi Strauss realizes, ‘I don’t actually have to discover gold but can instead sell tools to whoever’s gold digging,’” he said of developing the DMP business.

BlueKai didn’t strike it rich overnight, but the company’s revenue run rate has doubled over last year to $50 million, with the DMP business on track to increase its revenue by 200 percent year over year. Contrast that with the traditional data exchange business, which is expected to grow 100 percent year over year.

“By the end of 2012, net revenue of that [DMP] business will exceed the [exchange] business started in 2008,” Tawakol said.

BlueKai’s success isn’t entirely surprising. “Once you get over the yearlong sales process, [a DMP] seems to be a much stickier and more strategic business [than a data exchange] when it comes to deeper relationships with brands,” Forrester senior analyst Joanna O’Connell said. But “to be effective as a DMP, you have to have tags everywhere,” she said. Fortunately for BlueKai, it has flooded the Internet with pieces of code that can collect data on and track users for first- and third-party purposes. Online security firm Truste recently examined 100 of the Web’s top sites and found that BlueKai had dropped even more cookies than site traffic giant comScore.

BlueKai isn’t the only ad tech outfit looking to get cozy with marketers, and it may face a disadvantage with companies such as demand-side platforms—which are already used by media buyers to run ads online—to add DMPs to their businesses. “There’s a debate on whether a DMP has to be part-and-parcel with a [demand-side platform],” said O’Connell. Turn, one of the best-known DSPs out there, is among the most vocal proponents of the paired approach, having launched a DMP to pair with its DSP last year. Its integrated approach gives marketers a one-stop ad targeting shop. That’s an alternative to advertisers having to daisy-chain different ad tech partners whose platforms are able to plug into one another.

But Tawakol isn’t too worried about DSP/DMP hybrids eating his lunch, describing that approach as “fundamentally the opposite” of BlueKai’s. The fundamental difference? Business models. “We don’t make money off running your ads,” Tawakol said. That means BlueKai can plug into not only DSPs but also platforms that have nothing to do with advertising but are crucial to brand marketing, such as site optimization. “We have no execution [platform], but we plug into every execution platform.” Like electricity in every home.