Well, that was fast. Only two months after launching at TechCrunch Disrupt, startup Compass Labs has already raised a round of funding. Compass Labs, which aims to provide targeted advertising on social networks like Twitter and Facebook around what users intend to purchase, has raised $5 million from NEA, Triple Point Capital, Jim Clark, Mike Ramsay and others. This brings the startup’s total funding to $6 million
Compass Labs looks at Twitter streams and tries to determine when someone has an intent to purchase a product, then it serves up related ads either through direct messages or through banner ads on third-party Twitter clients. So if you Tweet, “I’m looking for a Canon camera” it will reply in stream or on a banner with an ad from a camera retailer for that camera. Compass Labs uses natural language processing to parse out the Tweets that have serious intent versus just talking about a product generally. Campaigns can be set to target people at different parts of the purchasing cycle, from exploratory to ready to buy right now.
Of course, advertising on Twitter recently came into question after Twitter revised its Terms of Service, prohibiting any third party to inject paid tweets into a timeline on any service that leverages the Twitter API. But Compass Labs says that it complies with Twitter’s TOS because it serves display ads, which are not in-stream and simply uses real-estate on a publisher site, much like an ad network. In fact, the startup expects that Twitter will actually embrace Compass Labs’ solution as an example of how to monetize while benefiting the entire Twitter ecosystem.
Founded by Google and Yahoo veteran Dilip Venkatachari (he led Google’s mobile ad business), Compass Labs will use the funding for product development as well as bulding out sales and business development channels. The company now has a number of advertisers and publishers using its platform (Venkatachari declined name these partners) and is starting to see revenue from its network.