‘Personalized’ Facebook ad tech pays off big for Israel’s Bidalgo
With $100 million in revenue, the start-up has quietly built an advertising empire on the world’s largest social network
For those who wonder how a free service like Facebook can make billions a year ($12.47 billion in 2014, to be precise), Israeli ad-tech start-up Bidalgo supplies a partial answer. Bidalgo is a large supplier of automated segmented advertising on Facebook, selling hundreds of millions dollars a year worth of ads for apps and products on the social network.
That work has paid off handsomely for Bidalgo, said Niv Yemini, Bidalgo co-founder and CTO. As one of the few official Facebook Marketing Partners in Israel, the company expects as much as $100 million in revenues in 2015.
“There are hundreds of thousands of groups on Facebook,” said Yemini. “They all have a specific emphasis, and need to be reached in a specific way. Different groups require different approaches and messages.
“Over the past five years, we have perfected a system of figuring out what those messages are, targeting each segment for advertisers to ensure maximum return on investment,” said Yemini. “Regarding how good the system is, I think the company’s results speak for themselves.”
Established in 2010, the Ramat Gan company has been profitable from day one, said Yemini – and has never had to raise even a shekel in outside funding.
The only way to manage an operation like this, said Yemini, is to automate it. There are just too many parameters for a human to consider for the nuances of the message, much less figure out what message attributes and features will work best in which group.
Then there are the media – text, photos, videos, and other forms of communication – that work best for each group. Another factor in deciding on how to manage a campaign is to decide which devices – desktops, tablets, smartphones – to target for each group. And, of course, there are geographical/cultural factors that need to be considered, since ad campaigns for groups could cross the boundaries of countries and languages.
One thing robots can do much better than humans is optimization,” said Yemini. “Dealing with data like this – which is as ‘big data’ as it gets – and which changes on the fly, is extremely complicated, and it took us a long time to develop the algorithms that are capable of doing this at the standards we were looking for. With those algorithms we can optimize the match between message, group, and campaign price, ensuring the best return on investment for advertisers.
“The world of online and mobile advertising, especially on Facebook, can be very lucrative, but it takes a lot of technology to succeed,” said Yemini. “Bidalgo is almost a pure-play tech company.”
Most of the firm’s 40 workers in Israel are working on perfecting the tech, and the small sales office in Israel will soon be bolstered by a staff in San Francisco, where Bidalgo will be opening offices in the coming weeks.
Facebook is the world’s biggest social network, and it intends to stay that way, said Yemini – and it’s been taking a page out of Bidalgo’s book to ensure that it remains so. “There are several trends Facebook is hoping to take more advantage of, with video being a top priority for them.”
But beyond that, said Yemini, Facebook was constantly tweaking its algorithms to ensure more personalization – the kind that Bidalgo itself has been working on for years.
Among the company’s customers are the biggest game app makers for Facebook, including Zynga and Plarium, said Yemini. “If Zynga is trying to market a new game, they will want to focus their ad campaign on Facebook users who are going to be interested in it, and the best way to do that is to find Facebook groups or pages that a lot of potential players follow.
“We look at the demographics of each page – where the users are located, their interests, if they have played games before, their age, common interests, other connections, and much more – all without specifically identifying them – and rate them in order of effectiveness. Then we examine the campaign they want to run – video, display ad, etc. – and see how much Facebook is going to charge them for it. By analyzing the user information, the page rankings, and pricing, we can ensure the best deal for Zynga.”
“A lot of people have criticized Facebook for displaying only certain posts from specific followers, and keeping out group and business pages from personal feeds, but the company’s research shows clearly that this is what users want. People want their information and feeds to be personalized and relevant for themselves.”
That goes for ad content too, said Yemini – and with its personalized ad tech, Bidalgo is in the right place, at the right time. “Facebook really thinks very highly of us, we have consulted with them on many issues,” said Yemini. “Personalization is definitely a major trend, and that is something we are very good at.”