Based in both Boston and NYC, Yieldbot may be delivering the biggest breakthrough the online advertising world has seen in a decade. The company has developed an ad optimization platform that ensures more relevant (and thus actionable) ads are served on a visitor-by-visitor basis — helping publishers increase revenues and ultimately the value of their content.
Just how breakthrough is Yieldbot’s platform? The company shared some impressive numbers with us: their technology has increased click through rates (CTRs) on ads across all their beta customers on average by a factor of over 60 — from the current average across the web of 0.06% to over 3.8%. In fact, for one of its larger and well-known beta customers, Yieldbot has driven CTRs to over 65 percent.
Yieldbot recently raised seed capital from Boston-based Common Angels, and will be announcing another follow up investor — a well-known ad agency — soon (their Form D filing shows a committed $805k out of an offered $1.2M). We spoke with the company’s founder, serial entrepreneur Jonathan Mendez, to learn just how massive of a play Yieldbot is, how their technology works, and when they plan to launch this spring.
Yieldbot Makes Ads More Relevant
Yieldbot leverages real-time data intelligence around context and timing to understand the intent behind why a visitor is on a particular site. In doing so, it addresses the gaping need for more relevance in online advertising — something that, without question in Mendez’s mind, is the largest opportunity to improve advertising results.
Mendez’s career has been in online analytics and advertising, having launched and led strategy for a slew of companies in the space including VitaminLab.com, DigitalGrit, OTTO Digital (acquired by Omniture), and Relevance AMPlified. He also currently sits on the board of Boston-based analytics company Performable.
Currently in the online advertising industry there is no accurate way for advertisers to time their message based on the actions of site visitors on a publisher’s site. “If you think about it for a minute, that’s insane.” Mendez went on to explain,
“There are no realtime rules for relevance in display besides third party cookie matching (re-targeting). This is horribly ineffective as it is based on previous behavior data, is not a scalable solution (since you see only a small percentage of all cookies), and does not take into account the two most important factors for relevance: timing and context. Not to mention the issues of privacy using third-party data.”
Yieldbot addresses all these inefficiencies and problems in online display advertising.
Yieldbot’s Impressive Beta Customer Results
‘This is amazing,’ ‘There’s nothing like this,’ and ‘I can think of a million ways to use this’ are some of the remarks you’ll hear from Yieldbot’s current beta customers. One campaign the company is incredibly proud of includes serving just over 25k ad impressions that received over 16k clicks — an unheard of 65.33% click through rate. An average display campaign with a click through rate of 0.06% would need to serve 30 million impressions to get that click volume. (Keep in mind Yieldbot will only show ads when there is a relevant match.)
“What a waste of media!” is how Mendez describes the current advertising paradigm that lacks the relevance his technology brings. “Overall the average CTR for all advertisers in the Yieldbot beta is 3.83% so we’re achieving our goal of bringing search level matching to display and publishers,” he shared. Currently Yieldbot’s beta platform is enjoying about 18M visits and 75M monthly pageviews. Mendez put that into perspective for Bostinno readers: “If we were a website we would in the Top 200.”
The company plans to rollout the first version of their product for publishers this Spring and their product for advertisers at the end of 2011. Their goal is to realize 10X growth in their data to 180M visits and 750M monthly page views by the end of 2011.
Breaking Down Yieldbot’s Technology: A Real-World Example
Here’s an example straight from Mendez that will help you wrap your mind around the company’s breakthrough ad optimization technology. One of Yieldbot’s beta publishers enjoys 2M visits each year from people searching for the string “cell phone reviews” on search engines like Google. People who visit the publisher from that search query click on an average of 8 other webpages on that site and have a return visit rate of 55 percent. Yieldbot leverages this data in real-time to get behind the “cell phone reviews” keyword to the actual intent of the visitor – e.g., what brands they are partial to, what phone features are important to them, and the price range they are shopping in.
Yieldbot collects this visitor data, mines it, and then serves ads to the visitor that are actionable based on the rules-based engine it has created. Mendez explained,
“We can send rules to ad servers, ad networks, dynamic creative, and even a content management system (CMS), at the exact moment we know a cell phone review person is interested in HTC vs. iPhone, Verizon vs. ATT, Camera vs. Memory. Our rules get the right message in front of that visitor at the moment it is most valuable to the visitor and thus the advertiser.”
For publishers, this real-time data intelligence increases the value of their media considerably — meaning Yieldbot literally equates to money for publishers.
On Building a Company in Both NYC and Boston
Yieldbot is yet another example of a startup operating in both Boston and NYC. We asked Mendez about his decision to do this, and which he believes is a competitive advantage for the company.
Going against advice from investor types at the time (who are now telling him how smart of a decision this was), Mendez sought an engineer who actually didn’t have experience with display ads. After striking out finding engineers in New York, he naturally thought of Boston. “My first call was to my friend David Cancel [founder of Compete.com and now Performable] and David mentioned that he had just met Richard Shea, and the rest is history,” shared Mendez.
Going forward, it seemed only natural for Yieldbot to build the product in Boston (they just added someone to their team of 5 from Kayak) and the sales and business development side in NYC where a majority of their customers (advertisers and publishers) are.
“So far it’s worked out great. It’s quick and easy to get to and from each location,” Mendez offered. “Most important, it gives us access to two of the best locations in the world for start-up support and talent. I see that as a competitive advantage.” Keep your eyes on Yieldbot as they move to expand their team in both Boston and NYC. “We are already getting a good amount of interest regarding our Series A, so I am sure that will happen at some point in 2011,” Mendez shared.
To learn more about Yieldbot, make sure you visit and read their CEO’s blog.
