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"Online advertising is the key to the future for companies that want to be successful, but a small firm called Lotame has just raised $13 million in Series B funding to take aim at advertisers and provide a unique way of getting in front of the target audience.\nRight now, online advertising is being dominated by companies that look to spend money based on the number of visitors to a site.\u00A0 For publishers, they offer a CPM (cost per thousand) advertising rate, which charges those companies a specified amount per 1,000 pageviews.\u00A0 Advertisers then hope that their advertising efforts pay off and it gets in front of the right people.\nBut Lotame tries to do something different.\u00A0 Aiming to capitalize on social networking, the company has partnered with more than 20 social sites and content producers, including Fotolog, Huffington Post, and Flixster, to place its proprietary technology into the code of the sites.\u00A0 From there, the company collects anonymous user data and user gender, age, and zip code to develop a full understanding of key demographics each site offers.\nAfter collecting this data, it keeps it on-hand for advertisers that are looking to target a specific audience.\u00A0 As the company's CEO, Andy Monfried, explained to me, advertisers will come to Lotame asking to advertise their product to \"a 27-year old woman who recently consumed or created content about something similar to their product.\"\u00A0 After analyzing data across all the sites, Lotame then returns to the advertiser with the number of 27-year old women \u2014 usually more than 10,000 \u2014 that have done just that and sells advertising to them not based on that number, but by the number of minutes they want their ad put in front of those people.\u00A0 In other words, advertisers can request a three-minute slot to put their ad in front of people they feel are most likely to use their product.\n\nAs you can see, Lotame's take on advertising is extremely different and snubs conventional wisdom on a number of levels.\u00A0 It should be noted, though, that the company doesn't work with MySpace or Facebook, or any other major social network, for that matter.\u00A0 Instead, it focuses on mid-tier services that adequately offer the kind of demographics most major US companies are looking for.\n\nBut it begs an important question: is Lotame's idea the future of online advertising?\u00A0 At first glance, it looks like a service that might actually change the way things are done forever.\u00A0 And in an industry that's expected to grow well into the billions, that's not such a bad thing.\nThink of it this way: right now, advertisers are at the mercy of publisher data in most cases and generally hope that the demographics provided to them are representative of the users when their ads are displayed.\u00A0 But by working with Lotame, advertisers can be far more specific in their needs and adequately target the exact demographic they want.\u00A0 And so far, it looks like it has worked \u2014 Lotame has a 90 percent retention rate.\nThat said, it's working with a variety of second-rate social networks and there's no indication that major advertisers will really want to work in the mid-tier if they think they can make it big with a major site like Facebook, which is hard at work trying to create a unique and extremely compelling advertising platform.\nAnd we simply can't forget that some people will complain about privacy problems and claim that Lotame is spying on them and capturing their private information.\u00A0 And although Lotame contends that it's in no way stealing private data and everything is anonymous, the debate will rage on regardless.\nBut I can't fault Lotame's intent on innovation.\u00A0 For the first time, advertisers can capture real data in real-time for a specific demographic that they really want to target.\u00A0 And although Lotame would be best-served working with larger organizations, it thinks it has found its niche and as it continues to grow, will continue to create a value proposition for advertisers that want to capitalize on the social networking space.\nWill Lotame transform the online advertising business?\u00A0 Right now, it's too early to tell.\u00A0 But rest assured that if it does, more companies will jump on this bandwagon in seconds."^^<http://www.w3.org/2001/XMLSchema#string>
<http://mashable.com/2008/08/19/lotame-13-million-funding/>