Google gets a new ad-versary
BlueLithium innovates online advertising by tracking user clickstreams.
By Erick Schonfeld and Jeanette Borzo, Business 2.0

SAN FRANCISCO (Business 2.0 Magazine) -- The Disruptor: BlueLithium

The Innovation: Serving highly targeted ads on the Web by monitoring everyone's clickstreams

The Disrupted: Google and plain-vanilla CPM ad networks like ValueClick and 24/7 Real Media

It's not often that you find a startup CEO openly mocking Google (Charts). But Gurbaksh Chahal, founder of BlueLithium, thinks Google is a one-trick pony when it comes to Web ads. "They've miserably failed in the last year with display ads," he notes, "because they look at the world through text advertising." It's big talk -- and you'd be tempted to dismiss Chahal entirely were it not for his claim that BlueLithium has been profitable since its third month of operation and is on track to hit $100 million in revenue by the end of next year.

Google's better-performing text ads created a huge shift of marketing budgets away from other online ads, as well as from print, radio, and TV. But Chahal thinks the pendulum is about to swing again. He says he's carving out a new space for online advertising, helping to bring back the banner ad by making it the vehicle through which marketers can, in effect, watch the audience.

BlueLithium was founded in 2004 and already serves up 8 billion ad impressions a month to 100 million users of the Web's top sites. Each of those ads drops a cookie on your browser, and when you show up on another site that serves BlueLithium ads or on one of its advertisers' Web sites, it adds that history of clicks to its database. Using this "clickstream" data, it determines within 10 milliseconds which ad to serve up the next time you come to any of the 1,000 handpicked sites where it buys ad inventory.

By building a picture of your clickstream, BlueLithium can target you individually. "The more we see you, the more we know about you," Chahal says. He might not know your name or address, but he knows what sites you've visited, what ads you've clicked on, and what ads other people with similar clickstreams have clicked on. Most display ads on the Web are random because they're targeted to the site, not to the viewer. But if you visit T-Mobile's Web site to check out pricing plans and then click off to a news site, BlueLithium might show you a T-Mobile ad even though you're now reading about Iraq. Chahal is also using BlueLithium's 100 million clickstream histories to direct behaviorally targeted video ads.

Couldn't Google do the same kind of thing? "They might be coming out with the next microwave too," Chahal quips, "at the rate they're going." Chahal knows that Google was a classic disruptor. But in his view, this time around Google is the incumbent -- and Chahal has the disruptor's advantage.


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Click here to see the full list of Disruptors

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