Microsoft Embraces Micro Segmentation, Acquires Yadata and Leaps Ahead In Behavioral Targeting

May 19, 2008

Market Strategy

During Q4 2007, a couple of fellow students and I had the opportunity to put a market strategy together for a small Israeli market data technology start-up. We took a look at micro segmentation, behavioral targeting and cross-platform advertising campaigns.

YaData

YaData develops unique algorithms and rankings systems to help the market research neophytes, and time-starved VPs, uncover customer potential. The YaData software carefully sifts through vast quantities of data, culling groups that would otherwise fall prey to poorly targeted ad campaigns, or misaligned products that fail to satisfy needs. With more identifiable segments, everyone wins. Consumers receive more tailored campaigns for goods that are a better match to their needs, and goods are refined to meet more granular needs.

Micro Segments

The secret sauce in the YaData development lies in the ability to accurately identify smaller (micro) market segments within vast customer data sets. These are often difficult to identify, overlooked, and more difficult to reach. However, the pursuit has merit. As Malcolm Gladwell, author of Tipping Point and Blink, recently lectured: “In marketing, its the move from the search for universals to the understanding of variability”. Through embrace of this philosophy to recognize consumer delight as unique, we realize the need for micro segmentation.

We know that more accurate customer identification is useful, but at what cost do we abandon the advertising archetype and reach out to these finely sorted pools of profitability? To be sure, the answer is not simple, though technology goes a long way in resolving the dilemma. Already, mobile phones and televisions are an integrated part of the internet and are uniquely identifiable by service providers. You, the consumer are a unique node on the information superhighway and you reside in a complex database that is soon to be deciphered into micro segments.

Behavioral Targeting

Once you’ve been micro segmented, the proper course of action must be determined to most effectively trigger the call to action, a purchase decision. As marketers with this technology, we certainly face the apprehension of the big brother-fearing public; but, let us think outside of the proverbial box, for just a moment. Imagine an advertising campaign that migrates beyond CPM and leverages a true quality of impression. As we learn each consumer’s behavioral characteristics, we utilize our avenues of varied, inexpensive mediums of communication, such as web banners and video overlays, to deliver the optimal message at the optimal moment. YaData’s capabilities clearly help both consumers and marketers. However, without a vast set of data that capture user preferences across activities, micro segmentation and behavioral targeting may incur margin ruining overhead. This leads us to the strategic turning point.

Microsoft

Finally, we address the $30 million (approximate acquisition price) question. Microsoft and Google, both with significant portals and ad platforms that reach from mobile to TV to web, and track textiles to bio-tech, are ideal candidates for YaData’s intense micro segmentation engine. Each company may know more about your preferences and activities then you do. Moreover, as leading-edge software giants, they are uniquely suited to integrate this technology into their cross-platform tracking systems. While telecom providers like AT&T and Verizon also maintain some large cross-platform data sets, they have yet to integrate their data mining to truly benefit from acquiring an emerging technology firm.

For now, Microsoft charges ahead in the world of micro segmentation and soon, we will all become behavioral targets in the crosshairs of market snipers. YaData continues to improve its technology as a Microsoft company, and the Rady School of Management had a hand, or at least part of a finger, in the market strategy of this innovative micro segmentation startup.

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