iMedia's senior editor talks with ContextWeb's CEO about contextual targeting and the role of ad networks.

Anand Subramanian is CEO of ContextWeb Inc., an ad network that provides "high-precision, real-time contextual advertising solutions guaranteed to maximize the results and impact of online advertising." Subramanian brings to ContextWeb extensive experience in technology sales and delivery. His background in both the pre- and post-engagement processes of consulting projects and thorough technical and sales knowledge allow him to make valuable contributions to all aspects of ContextWeb's business. We talked with him about what ContextWeb brings to the table for advertisers, and how ad networks in general aid marketers.

Dawn Anfuso: What's the history of ContextWeb? How did it come about and what is its mission?

Anand Subramanian: Based in New York, the company was founded in 2000 on the vision to provide an alternative means to target people online. Behavioral and collaborative approaches to online advertising were being deployed, but there was a lack of a technology that was truly based on the mindset of the user. ContextWeb developed the first fully automated contextual technology to serve ads based on the content the user is viewing, providing a more targeted and accurate method of serving ads. ContextWeb's technology, ContextAd, uses both categories and keywords for analysis and matching, delivering unprecedented accuracy, dramatically extending audience reach and significantly increasing sales conversion rates.

Anfuso: What differentiates ContextWeb from other ad networks?

Subramanian: ContextWeb is unique in its ability to accomplish real-time targeting from a content level. The core differentiator from its competitors is that ContextWeb can optimize and target ads in real-time using a fully automated network, while other providers have some manual processes integrated in their solutions. Through the optimization process, ContextWeb has the ability to target at the page level, removing excess spillage.

Anfuso: We keep hearing from advertisers and agencies about an inventory crisis, and about rising costs of inventory. How do ad networks in general, and ContextWeb specifically, help the situation?

Subramanian: Inventory is definitely becoming harder to get, due to the fact that a lot of people are locking up inventory, resulting in higher costs. However, ad networks are helping to ease the situation. 

Take a motorcycle manufacturer, for example. It is interested in buying online media on sites such as motorcycle magazines and other highly targeted sites. Since there is a limited amount of inventory, it is expensive to buy content directly on these sites. An ad network like ContextWeb can cut costs with its ability to find content in non-endemic sites with motorcycle content, opening up new avenues to advertise. This creates more of a supply from which to buy, which can be sold at a much cheaper price. The result is the network can provide a horizontal level of pricing with the advantage of vertical targeting and quality of a site-specific buy. ContextWeb's contextual technology provides the utilization of both keywords and categories to publishers including TheStreet.com, HighBeam Research, Better Homes & Gardens and USA Today.

Anfuso: Let's talk about contextual targeting vs. behavioral targeting. What, in your opinion, is the advantage of contextual targeting over behavioral, and how do the two work together?

Subramanian: Both contextual and behavioral have unique advantages, which greatly depend on what type of campaign they are serving. Contextual centers on understanding the user's mindset, whereas behavioral looks at a person's past behavioral information. There is a greater waiting period for behavioral to be effective, as it requires a week or two to monitor and develop results from users' behaviors. On the contrary, real-time contextual solutions can make a match between an advertiser and user in under a second.  
If advertisers want to truly optimize their campaigns, an integration of both contextual and behavioral is the best strategy. Behavioral provides a broader reach while contextual works in conjunction with a specific content category. We are seeing sophisticated advertisers use the two together; however, most advertisers have yet to adopt using the two technologies in conjunction with one another since it is more complex to manage both. It is our theory that although this merge will take some time, it will eventually become the norm for advertisers.

Anfuso: What's in store for ad networks in 2006? Will we continue to see more spring up; will there be consolidation; will they gain in importance or wane, et cetera?

Subramanian: In my opinion, the advertising space is so large that there is room for many players to co-exist, each specializing in their own specific niche. Online advertising currently accounts for only 10 to 15 percent of the whole so there is plenty of room for it to grow. It is still an early stage for the industry and we have a way to go before we will see complete saturation. I predict we will see more networks in 2006, with consolidation of the market happening three to four years from now. We will see new avenues and channels for advertising, including a host of niche players in the video advertising space, as well as online radio advertising.  

Anfuso: What's in store for ContextWeb in 2006?

Subramanian: We are doing very well and are extremely strong in the marketplace. You can expect us to release several innovative products that will be unlike any others in the space later in the year.