BlueKai Gets $10.5M to Improve Ads

BlueKai, an advertising startup that hopes to convince users to actively manage their online privacy settings and sell better intent-based advertising information based on such actively managed accounts, has raised $10.5 million in second-round funding from Battery Ventures and return investor Redpoint Ventures. The Bellevue, Wash.-based startup had previously raised $3.2 million. Because I’m trying to wrap my brain around the realities of online privacy, I chatted with Omar Tawakol, CEO of BlueKai,¬†about what he’s trying to do.

We agreed on two things, namely that, currently, consumers don’t care about their online privacy and behavioral advertising isn’t really working. As a former executive of behavioral ad shop Revenue Sciences, Tawakol speaks from experience. Rather than measuring only where a consumer has been on the web, BlueKai limits its data to sites that clearly indicate intent to buy something, typically retail goods, cars and travel.

I’m not an advertising expert, but it makes sense to me that there’s a higher correlation between me going to a travel site to book a trip to Tahiti and being receptive to travel advertising than me reading about Tahiti in an online magazine and being receptive to similar travel ads. And I also recognize that the web isn’t free. Advertising and a cheap distribution medium are what enables compelling free content to thrive on the web. So what BlueKai is trying to do is to make those ads more effective, while not crossing the boundaries of individual privacy.

The intent-based advertising BlueKai is pitching is supposed to be more effective than behavioral ads, and the ability to manage preferences is supposed to make data collection less intrusive than schemes such as NebuAd’s. However, I don’t see BlueKai’s efforts to get consumers to manage their ad preferences (which would generate better results for marketers) winning converts. And because it’s based on cookies, it will still irk some privacy advocates.

First off, the site offers donations to a charity as the primary incentive for consumers to tweak their preferences, which is nice but unlikely to drive a lot of traffic. Second, its registry seems tiny. I spend most of my day online, it’s there that I book travel, buy or research most of my purchases that don’t involve food or paper goods, and I didn’t have a cookie on my computer from one of BlueKai’s partners. So even if I cared, I wouldn’t have found anything to care about at BlueKai.

Ironically, some of the new funding will go toward better marketing of this service to consumers, says Tawakol. BlueKai is promoting a less intrusive way of managing online data, but it will likely face the problem in that the mass market won’t care, while privacy experts who do will find the use of cookies and any sales of personal information repugnant.