DataXu, Recent Investment in Tow, Helps Brands Follow Consumers as More Ads Go Digital

5/20/11Follow @gthuang

Here’s a quick snapshot of a local tech company that lots of people talk about, but not usually in much depth. Probably because it focuses on helping online advertisers understand consumers, but it’s not for consumers.

Boston-based DataXu has been growing fast over the past year, and now has offices in Boston, New York, San Francisco, and Chicago—and soon, London and Asia. The four-year-old startup, which was stealthy until 2009, is coming up on 100 employees. When I spoke with CEO Mike Baker last September, DataXu was positioning itself as one-stop shopping for advertisers who want real-time data and insights on consumer behavior across Web, mobile, and video.

This week, the company has been touting its latest offering, called DX Brand, a software platform that helps advertisers measure things like brand awareness, recall, sentiment, and purchase intent among consumers online, which traditionally has been hard to do on the fly. It then turns those insights into predictions about how and where to place specific ads to optimize campaigns in real time. I caught up with Baker by phone to get a broader update on the company, whose overall mission hasn’t changed much in the past year.

“In this crazy digital world where the consumer is in control, how do you find the right audience for your product and engage them? You have to reach them wherever and however they are,” says Baker, who was previously with Nokia, Enpocket, and GrandBanks Capital.

There are plenty of other digital ad-optimization platforms, of course, but Baker says DataXu’s real-time decision-making and allocating of ad dollars “hasn’t been possible before” at Internet scale. The company’s technology is based on decision-support algorithms developed by aerospace engineers at MIT.

What’s interesting now is that DataXu and other ad-tech companies are trying to ride a wave of advertisers who are beginning to take the collective $80 billion a year traditionally allotted to TV ads, and spend more of it on Web and mobile ads. That wave has been slow to develop in recent years but might be gaining some momentum.

“We’re starting to sell to a segment of customers we haven’t done business with before—luxury car makers, cereal advertisers, frozen pizza, categories of goods very familiar on TV for brand marketing,” Baker says. “This digital migration is starting to heat up. It’s going to get really interesting.”

Baker wouldn’t give any specifics on company revenues or growth, but he said DataXu is “well ahead of our financial plan” and is “not looking to raise money.” He said the company is “looking very strong” from a cash-flow perspective and will be focusing on its international expansion for the rest of this year.

DataXu announced an $11 million financing round in March of last year from investors including Atlas Venture, Flybridge Capital Partners, and Menlo Ventures. That was on top of a $6 million Series A round in 2009.

More recently, DataXu received $10 million earlier this year from an undisclosed investor, according to a MoneyTree report that I previously wrote about. The company, and one of its previous investors, declined to comment on the transaction—so it’s hard to know if it might represent an inside financing round, a buyout, or a new, stealthy strategic investor.

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 or call him at 617-252-7323. Follow @gthuang

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