We recently covered Advertising in our Creative Destruction 7 Act Play series. Here are Parts 1 and 2.

This week we spoke to one of the few remaining companies focused on semantic advertising – Crystal Semantics. We had covered them under iSense and SiteScreen as brand safety plays. But after speaking to their Managing Director, Ian Saunders, we see that as only one use case for their technology.

The technology is based on decades of linguistics research headed by Prof David Crystal (pictured above) with funding that Ian Saunders cheerfully admitted no VC would even consider. Now that the technology is available, we look at the chances of it having an impact in the market.

Category, Taxonomy Or Ontology? Take Your Pick

Crystal Semantics talk about having 3,500 “categories”. The work was born out of encyclopedias and pre-Internet publishing. At one point there was a team of 40 linguists working on this.

Here is an intro to Crystal Semantics:

Example:

What Crystal Semantics call categories or sometimes lexemes, can be seen as an ontology. In the example above, the fact that it is hierarchical makes targeting easier. You can target at high level (Health), Middle level (Medical Equipment) or Bottom level (Pulmonary Diseases).

That is clearly more powerful than word search.

Top Down But NOT Latent Semantic Indexing

Crystal Semantics is using the top down approach to the semantic web. This is the same as Google. The top down approach does not rely on meta tagging

Latent Semantic Indexing (LSI) is how Google does top down search. It is a statistical method as explained by Wikipedia:

Latent Semantic Indexing (LSI) is an indexing and retrieval method that uses a mathematical technique called Singular Value Decomposition (SVD) to identify patterns in the relationships between the terms and concepts contained in an unstructured collection of text. LSI is based on the principle that words that are used in the same contexts tend to have similar meanings. A key feature of LSI is its ability to extract the conceptual content of a body of text by establishing associations between those terms that occur in similar contexts.

“LSI overcomes two of the most severe constraints of Boolean keyword queries: multiple words that have similar meanings (synonymy) and words that have more than one meaning (polysemy). Synonymy and polysemy are often the cause of mismatches in the vocabulary used by the authors of documents and the users of information retrieval systems.”

A statistical approach like LSI is clearly ideal for Google. Other players in the advertising world may try linguistics to improve relevance and that is where Crystal Semantics may score.

Business Model

Crystal Semantics was acquired by Ad Pepper in 2006. They are now a tech division within a company that is an unusual fusion of an ad network and an affiliate network.

Crystal Semantics’s business model is a traditional technology licensing model. They want to be the supplier to all the ad networks, exchanges, sell side platforms and buy side platforms.

This makes sense. Ian Saunders explained how the online advertising market is undergoing a major transformation. All the players seek to apply the same analytical rigor that Google offers with Pay Per Click to the more traditional display advertising world. This is within the context of massive increase in inventory/supply and a consequent drop in price. In this environment, players start to compete for the available $$$:

- Publishers seeks to sell more direct, via self-service ad serving.

- Advertisers seek lower costs and more accountability via demand side platforms

- Ad Networks and Exchanges aim to sell efficiently at scale via via self-service sell side platforms

- Ad Agencies launch buying desks and compete more with Ad Networks.

In this environment Crystal Semantics could carve out a niche as a supplier of the core linguistic technology to improve relevance.

SemTechBiz is Less Than 2 Weeks Away

The Semantic Tech & Business Conference (SemTechBiz) is coming to San Francisco on June 3-7! Join us for case studies, innovative panels, tutorials, and keynotes that will provide you with practical advice, hands-on guidance, and breakthrough approaches to solving business problems with semantic technology. Passes go up $200 at the door. Sign up now and save !