There’s a little problem with analog advertising on social media: businesses are getting sick of spending money on it when they have no idea whether it’s actually driving sales, and social media sites need to prove ROI if they’re to stand a chance of persuading advertisers to buy bigger campaigns. Which is where New York-headquartered Datalogix comes in: its platform deftly connects online advertising with offline consumer behavior, and most tech-savvy product managers would agree that that means it’s taking the guesswork out of marketing and replacing it with science.
Linking meatspace with cyberspace
Beginning life in 2002, Datalogix has risen to become a critical component in Twitter’s and Facebook’s monetization machines — and its partner list contains the kind of names to make the average product manager’s jaw drop. It’s populated by juggernauts like Yahoo, Google, eBay and many others, including firms featured on these pages like YuMe, Drawbridge and Tremor Video. And as a sign of the confidence it’s inspiring in the business community, it recently raised a thundering $45 million in Series C funding led by Wellington Management Company.
So, intrigued product managers, this is how Datalogix works. Let’s take Facebook: if you use a grocery store loyalty card to get a discount on, say, Listerine Ultraclean, that information gets conveyed anonymously to Facebook by Datalogix (it hashes your personally identifiable data). Facebook can then give this information to a competitor brand like Crest 3D White, which in turn can target ads for its product because it now knows you use mouthwash. If Crest buys $2 worth of ads neatly targeted to mouthwash users (including you), and between you, you mouthwashers raise your monthly spend on Crest 3D White to $10, the math is simple: Facebook lets Crest know it can give them $8 in ROI for a spend of $2. Result: Crest decides to buy more Facebook ads, and Facebook makes more money.
The recent Series C funding will be ploughed into developing a broader suite of audience and measurement products, and it seems pretty likely that most people won’t object to its tracking methods if they end up with relevant ads – it’s the irrelevant and obtrusive ones that tend to rub folk up the wrong way. For those with privacy concerns, though, there’s an opt out tool available.