The Future of Online Advertising - Peer39

August 7, 2008

Peer39, an Israeli-based high tech company, came out of the woodwork a few months ago. The company has been in stealth mode since 2006 and recently have been receiving a lot of internet credit. A month ago Peer39 finished their pre-money valuation pitch of $50 million. That's a lot of money for a company whose technology has yet to be perfected. But then again the company claims to have developed an advertising network that will rival Google's - a tall claim I know.

This new network uses semantic algorithm to effectively display super precise advertisements. This is very different from the programs that are used today that use keywords found in content and metadata and then matches them to a semi-relevant advertisements. The program's semantic analysis engine (SemanticMatch) uses its knowledge of natural language to analyze the entire page's content and matches the possible derivatives of each word to its specific category. This produces extremely relevant advertisements.

"In an interview with TechCrunch, Amiad Solomon, the company's CEO, claims that through the networks' 30 top-level categories and thousands of sub-categories, Peer39 is providing advertisers, on average, clickthrough-rate improvements of four times what they were getting before. Publishers hail from all verticals, including technology, automotive, finance, and health."

Currently, the network only offers CPC and CPM advertisements to publishers. I'm sure the company will add more tools to broaden their network. However, what I find interesting is that although they claim a higher click through rate and better conversions, they don't utilize CPA advertisements. CPA advertisements if are properly displayed are the most effective way to gain a lot of revenue, I would think that SemanticMatch would be able to, if not quadruple, at least double the click through rate of any given ad campaign.

Ranting aside, recently Peer39 has setup shop in New York, adding an office there. The company still plans on having an office in Israel as well. In February of 2007, Peer39 its Series ‘A' financing and was funded by Dawntreader Ventures which totaled $3 million. Then again in September of 2007, it received an additional $8.2 million as its Series ‘B' funding. This time it was financed by a series of VC's including: Caanan Venture Partners, JP Morgan and Dawtreader Ventures.

This media-shy company is now over 44 strong and will be a force to be recon with in the online advertising industry in years to come.