DataXu CEO Mike Baker on the Online Advertising Startup’s Move Into Mobile and Video

9/24/10Follow @gthuang

Things are evolving quickly over at DataXu. Six months after announcing a new $11 million round of venture financing, the Boston-based online advertising software firm has expanded its focus to help its corporate customers reach a wider swath of consumers wherever they are.

Earlier this week, DataXu (pronounced “Data Zoo”) rolled out what it calls “the industry’s first three-screen demand side platform.” That’s online ad-speak for giving digital advertisers new tools for optimizing how, when, and where they place ads across the Web, video, and mobile devices. So the company now gives buyers of online display ads a way to make spending decisions across these separate digital channels.

“It’s a big change for us—a big addition,” says DataXu CEO Mike Baker, who was previously a vice president with Nokia (after its acquisition of his startup Enpocket). Baker is also an active angel investor in digital media, and was formerly a partner at venture firm GrandBanks Capital.

DataXu’s core technology helps online advertisers decide which ad purchases are most likely to pay off in terms of click-throughs and conversions. It analyzes dozens of parameters such as the location of the viewer, the day of the week and time of day, and the content of the ad. The software does all of this 100,000 times (or more) per second, “learning” as it goes by measuring actual click-through rates for ads the engine has placed. The startup’s 50-odd customers include big companies such as Ford, American Express, and Adobe, says Baker.

By expanding to mobile and video, DataXu is positioning itself as one-stop shopping for advertisers who want real-time information on consumer behavior across all available digital channels—especially mobile advertising, which might finally be ready for prime time. The company’s new product includes tools to measure consumer intent through surveys and other kinds of engagement metrics, Baker says.

Still, DataXu plays in a crowded and noisy sector, with hundreds of startups tackling different pieces of the digital advertising optimization puzzle. “We’re saying you don’t need to work with 10 startups—our demand-side product is scaling and getting lots of traction,” Baker says. “Customers want one really good vendor.”

He declined to give any details about the company’s financials, but said it is in “hyper growth” mode, with strong revenue increases from month to month. He also said it is “growing faster than any company that as an entrepreneur I’ve been associated with building.”

What is driving all this growth in the industry? Presumably the migration of advertising from traditional media like TV, radio, and print to always-on digital media that can reach consumers wherever and whenever they’re online via laptop, tablet, or smartphone. And although some experts—including Nick Hanauer, the founder of Avenue A Media, which became digital advertising giant aQuantive, now part of Microsoft—have said the online advertising ecosystem is already baked and has little room for new approaches, clearly DataXu would disagree.

Baker acknowledges that the mechanics of serving digital ads and measuring their performance is already solved. “What is unsolved is understanding consumer behavior, especially on a real-time basis,” he says. Which is exactly what DataXu is trying to do now, across all types of media platforms. “As an entrepreneur, I’m licking my chops,” he says.

DataXu was founded in 2007 around technology originally developed by aerospace engineers at MIT. The company’s investors include Atlas Venture, Flybridge Capital Partners, and Menlo Ventures. As of earlier this month, the firm had just over 50 employees and was in the process of moving into new office space on Summer Street near Boston’s Seaport District.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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