Extracting concepts rather than keywords will change the face of online advertising, vastly improving monetization, believes former Yahoo! executive Greg Coleman, who recently joined start-up company NetSeer as CEO and president.
This month comScore reported a first: Google had become the most popular Web site in the U.S. A slim margin of less than a half-million unique users separated the search giant from rival Yahoo! Between the two, a total of some 282 million users had visited during the month of April alone. But what's most astonishing is that fifty percent of these searches aren't monetized. Los Angeles-based NetSeer, operating in stealth since 2006, aims to change that. In an exclusive interview with JackMyers Media Business Report, new NetSeer President and CEO Greg Coleman explained a new vision for monetizing online search and explained the strategies being implemented by NetSeer, which he believes could add a valuable new dimension to search technology.
Last fall, Coleman announced his departure from Yahoo! as EVP for Global Sales. Coleman took Yahoo!'s ad sales from $500M to nearly $7B over a seven-year period. During his six-month transition from Yahoo! Coleman had the latitude to carefully assess what he wanted out of his next position. While there was no shortage of feelers from portals, established and start-up digital companies, and magazines "wanting to go digital," he realized he "wanted an adventure and something that is potentially going to be very, very big." He told suitors at the outset that "unless they gave me the top operating job I wasn't interested." This wasn't an ego trip. "A transformative agent," believes Coleman, "can never be subservient to the core business. Unless you are running it, you shouldn't do it. You have to lead the change."
Executive search firm Heidrick & Struggles advised him to check out a Southern California start-up. NetSeer co-founders Behnam A. Rezai and Vwani Roychowdhury, two UCLA Ph.D.'s, had remapped the entire Internet in a way totally distinct from either Google or Yahoo! using concepts rather than keywords. At the outset of their research, the NetSeer founders had no intention of solving the ad monetization problem. Rather, they were studying how communities formed on the Web. In 2006 they had their Eureka moment. In the process of parsing relationships and connections, they discovered that they had actually re-engineered how the Internet was formed. They had stumbled onto something of great magnitude; in indexing the whole Internet, their algorithm extracted concepts off the page, as opposed to keywords.
Coleman's background as head of worldwide sales for Yahoo! made it transparent to him that there was a need to improve in every metric including relevancy, efficiency, ROI, and cost per click. Here was a tool that offered not merely an incremental improvement, like Google's AdSense, but could be a breakthrough. Coleman performed due diligence; experts reported test results that were "incredibly dramatic." The object of the testing was to put conceptual head-to-head against keyword mapping. They found, Coleman reports, "that in a significant percentage of those un-monetized queries we found relevant concepts." Therefore, those ads held monetary potential that NetSeer could tap.
As an illustration, until recently "North Pole" had no ads associated with it. Using the black box that NetSeer refers to as its "Knowledge Bank" (in which it has indexed some 5B Webpages), concepts like "Santa Claus," "letters to Santa," and trips to Antarctica were revealed. These were "clear intentions," says Coleman, "that were not apparent with conventional search engines." This discovery spoke to potential for algorithmic search help with quality - which is non-monetizable - as well as content match.
For Coleman there was still a leap of faith. Could NetSeer scale? Could he build a business around it? Here's how he decided to go forward. "We created a pact with the founders, the VCs, and the team itself (now 27 and counting) that we're building a business that would be self-standing," he recalled. "We are not creating something to dress up and sell. I've seen too many companies do that and crash and burn."
Leveraging a Rolodex drawn from over twenty years in sales, Coleman introduced NetSeer to heads of agencies, search engine marketers, and other search advertisers. To his delight, "everyone was willing to test." While his small team is looking to hire a CFO and heads of business development and engineering, Coleman maintains that a first priority is to bring on board thirty to forty engineers since, "We believe that we will be testing and backfilling for some very large assignments with the Big Guys: players in portals, search engine marketers, publishers, as well as companies in the parking space domain (the niche that monetizes misspellings and folks entering search terms, not URLs, in their search box)."
"We have to be ready for prime time, to reach a critical mass to operationalize, while on a parallel track we recognize that we have to invest in and upgrade our Knowledge Bank," he says. NetSeer had its first round of funding in 2006 via ONSET Ventures and Mission Ventures. Coleman reports that they will have a second round later this year, even though he is not fundraising at this time.
Coleman embraces NetSeer as a technology solution. As such, Job #1 is executing proof of concept: delivering an incremental increase in revenues.
Rather than staff up with hundreds of salespeople -- and this is counterintuitive for someone with a lifetime in sales -- he's willing to outsource sales, rather than hire hundreds of salespeople. This focus, suggests Coleman, "should create a path. A new technology that could do something that large, established brands are unable to do." At present NetSeer is testing with one of the portals and companies in the parking space domain area. Coleman believes that these results - available in four months or so - will act as a compass for NetSeer's way forward.
"We will use our resources," he concludes, "to create products; in product management; and product marketing." For now, "we have to put points on the board." Conceptual mapping can add efficiency, relevancy, and better conversions to search. Even in an economic downturn, Coleman is unwavering; "all forms of performance-based advertising search will only grow."
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