05:53 AM

Adchemy: Creating Relevant Advertising On-The-Fly

Adchemy is probably the largest Silicon Valley advertising technology company you have never heard of before -- I certainly hadn't.

It is based in Foster City with 150 employees, of which 90 are engineers. It has developed a hosted advertising services solution that makes advertising more relevant to users searching for products.

I met with the founders: Murthy Nukala, Chairman and CEO, and Anurag Wadehra, Senior VP Marketing and Product Management.

Here are some notes from out meeting:

- The problem with search related advertising is that it is difficult to serve the right landing pages. Search engines such as Google try to match the search terms with the right advertiser but if the advertiser offers a home page, then user still has to find the product or service they were looking for, on the site. We take them directly to the product they are looking for.

- There is only so much Google can do in serving up contextual advertising, the rest is up to the advertiser. Google could become a much larger compay if advertisers were better able at converting people into customers.

- The advertiser has a big part to play in making the advertising experience relevant to people. At least half of the drivers for making advertising relevant is in the hands of the advertisers.

- We create landing pages in milliseconds that are targeted to the search term. If you search for "stripy red shoes" we will create a landing page customized for you and the product, rather than just leading you to a retailer's home page.

- We create 'word maps' which are based on the natural language people use to search. This means you can bid on keywords that are better suited for your customers. These word maps can be complex. In some categories there can be 20 million terms.

- When you make the advertising experience more relevant it dramatically increases conversion rates. A security company using Adchemy increased its conversion rate from 1 per cent to 8 per cent. Most clients see a four to five times improvement in conversion rates.

- The Adchemy platform learns from users. Conversion rates can increase over time.

- Accenture is a key partner. Adchemy has about 300 customers. We've been able to win customers by showing a results based trail.

- It's not easy to make advertising more relevant. We have 14 patents on our technology.

- Mobile advertising is an interesting category because it's not the same as a desktop approach. IP addressable TV is interesting too, because that will enable new types of relevant advertising.

Please see:

WSJ Lists Adchemy in Top 50 Venture Backed Companies

[Future] Audience relationship management: Accenture, Adchemy, Procter & Gamble: Consumers study products. Products study them. | The Mercury Brief

Adchemy Experiences Rapid Growth In Revenue and Company Size - January 19, 2010