An interesting turn of events

Aug 19, 2011 - Tom Chavez, co-founder and CEO - 0
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Interesting week.

At the end of March, Lotame tried to convince us that their network business was a feature, not a bug. 

We were skeptical and questioned their logic in an open letter to companies who attempt to blur the line between principal and infrastructure provider.

Andy Monfried vigorously disagreed in a response titled, “Fear Sells,” which touted the benefits of their model and accused Krux of fear-mongering.   If you go to their site to find the piece, you will see that it’s been taken down.  (Fortunately, for the curious, we retained a copy of that post in the Krux archive.  It can be viewed in its entirety below.)  

And now Lotame announces that it has shuttered its network business.

Quite a twisty turn of events, but I commend Lotame for their decision.   Markets are efficient, and the lesson they’re teaching here is that you can’t be fish and fowl at the same time.   Can we expect similar business model revisions from others?

 

____________

Fear Sells - April 25th, 2011

By Andy Monfried, CEO, Lotame

The sad fact of life at the top is that detractors, presumably driven by fear or malice, are going to take pot shots at you.  That’s just the natural order of things.  But at Lotame, we abide a strict code of professional conduct that leaves such behavior to others.  We’d never be drawn in by what’s little more than a bully trying to instigate a schoolyard fight, however, when inaccurate assertions are made, and falsehoods promulgated, we’re grudgingly left with no option but to clarify the record.

With this in mind, we respond to Krux’s “Open Letter to Lotame” - http://bit.ly/er9rvC

To begin, it’s important to note Lotame and Krux both deal in data, and we may – at times – compete for the same dollars.  But while Krux is primarily known for identifying possible data leakage, we’re a full service DMP that has evolved our business based on changing publisher needs. And what we do is offer publishers and networks three ways to monetize data using our platform:

1.    Keep their data to themselves for audience targeting, analytics and management under a license fee;

2.    Enable their own direct data sales to whomever they choose to sell to, like a private data exchange in a box;

3.    Make data available for purchase to other publishers inside the platform.

We work for publishers.  So we solve for the problems that keep them up at night.  We’ve built our publisher business on this premise.

In their Open Letter, Krux makes numerous references to a Lotame exchange or marketplace, which is odd as we don’t have one.  What we do have is a platform in which publishers can effectively manage and monetize data. In this platform, publishers freely choose whether to make their data available for sale and we in no way influence or mandate their decision.  How a publisher opts to run their own business is, well, their own business.  And while, when asked, we provide sagely advice and counsel, we dare not tell any publisher or network that we know their business better than they know their own.

Krux’s other apparent bone of contention is our ad network, and it being a client of the aforementioned platform.

Like any other client, our network purchases data from the publishers that choose to make it available – a fact about which we’re wholly transparent and openly publicize on our corporate Web site. So yes, we utilize our technology, in the same way both publishers and advertisers do to target more effectively.

And it’s that technology that really seems to be the burr in Krux’s saddle.  But consider this. Users of Google’s DFP for Small Business can optionally allow AdSense to compete for remnant media inventory, or OpenX adserver users can fill remnant inventory from the OpenX marketplace.  We’re not the first to leverage our own asset, nor will we be the last.

Ultimately, though, you needn’t believe us.  We let our technology – and our clients – do the talking for us.  To wit, a quote from David Rowley, director of ad operations at BlogHer:

“Lotame is a truly valuable and reliable partner in every sense of the word and one that we happily pay to responsibly manage our data.  We are given every assurance our data is not being misused or otherwise corrupted by them or any other 3rd party.  That’s why we pay the license fee – in order to make sure our data stays in house (i.e. not shared or monetized in their platform), and Lotame gives us that option.”

The key point of our original post was this – the ever expanding list of publishers with which we work get paid for their data and count on us to drive revenue.  We know what works for them because we use it ourselves.  We run a transparent data business, and don’t use fear, innuendo or doubt to sell it.

Sadly, we can’t know what motivates companies to make erroneous claims – perhaps a desire to poach clients or perhaps to undermine a sterling reputation.  We respect Krux’s point of view and appreciate what we hope is their well-intentioned dissent.  We believe high waters raise all ships and will support any company, competitors included, that champions the growth of the data market.

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