The story of nearly every business, great or small, begins with a problem. For Omri Morgenshtern, Ittai Chorev and Idan Zalzberg, it was the realization that many large organizations are spending millions of dollars on marketing campaigns, be they on search engines, social or display networks, that look the same in California as they do in New York — or Berlin, for that matter. In other words, the problem comes down to inefficiency.
Ideally, with conversion rates varying from location to location and market to market, the way companies tailor their messages, target certain customer demographics and how much they bid on particular keywords, for example, should vary accordingly. But, usually, they don’t. “We sat down and asked CMOs what their goals were for conversion and ROI in particular local markets,” Morgenshtern tells us, “and many would eventually admit that they didn’t have any.”
Once the problem had become clear, the three former Israeli Army Intelligence Corps veterans began developing a solution, drawing on years of experience in machine learning, statistics and Big Data. The result is Qlika, a startup based on patent-pending technology that enables advertisers to manage and optimize their campaigns for each local market, segment and media channel — and the nearly infinite permutations thereof.
Since launching in March as part of UpWest’s fourth batch of Israeli-American startups, Qlika has attracted a dozen enterprise customers, including Redbeacon, Thumbtack, Where2GetIt and HomeTalk, and will soon be managing a total of $200 million in aggregate ad spend for those customers.
At the outset, the startup has focused on the improvement industry and hospitality industries for the most part, using its Big Data solution to help companies better target their campaigns by identifying subtleties and differences between what it calls “micro-markets.” For example, Qlika was able to find a strong correlation between the average size of houses in particular areas to conversion rates, allowing companies that advertise to carpenters and local home care professionals to set goals and target messaging and bidding price accordingly.
With roster of customers growing quickly and with the co-founders expecting to hit $3 million in revenue next year, Qlika announced today that it has raised $1.7 million in seed funding from a handful of Israeli and American investors. Among those placing bets on Qlika are Hillsven Capital, an under-the-radar venture firm which has invested in Bleacher Report, Livefyre and Check, to name a few, as well as angel investors like Reply.com CEO Payam Zamani and Kaltura CMO Michal Tsur.
With its new funding in tow, Qlika plans to expand its current staff of 10 and begin applying its solution to new verticals, beginning with the travel and automotive industries, and eventually tackling the holy grail — retail. Over time, the startup hopes to capture a share of the $40 billion that is spent each year on search advertising by allowing companies that run huge, national marketing campaigns to avoid using uniform bids and goals across their target markets.
By parsing the landscape into micro-markets, Qlika lets marketers run thousands of differentiated, targeted campaigns, which, in aggregate, provide access to a larger audience while ensuring that messaging remains specific to each individual market. But, beyond allowing companies to understand the differences in micro-markets, like the average price a customer is willing to pay for a product in one city versus another and how that correlates to conversion, for example, Qlika’s solution also allows customers to automate the whole process.
The startup automates the campaign themselves as well as A/B testing, building the campaign structure, optimizing pricing and setting goals automatically for each market, according to what customers and channels businesses want to target. This is true even for mobile devices, the CEO tells us — to a degree. Like everyone else looking to advertise in search, Qlika uses Google Enhanced Campaigns, which allows one to set the “mobile bid modifier,” in other words how much you differentiate mobile bids from desktop and tablet bigs.
Thanks to the launch of Enhanced Campaigns in July, there is less control on mobile than there was beforehand, Morgenshtern says, but it still allows for a certain degree of differentiation. Qlika attempts to deal with this by calculating values separately for each micro-market, distinguishing between mobile performance in each market so that it can bid differently for mobile and desktop. While this approach may not be significantly better than what Google offers in its AdWords solution, it does allow visibility into campaigns “at a much higher resolution,” the co-founder explains.
The real value of mobile in the Qlika equation is that it allows for more accurate location information. With more targeted searches, Qlika can better correlate the demographics of each micro-market to help it optimize for each and, without that traffic, Morgenshtern says, there would be less accurate geo-localized data and thus would be much more difficult to find trends and correlations.
The reason that many marketers don’t use this kind of differentiated approach — and another reason why mobile search data comes in handy — is that, in splitting the map into micro-markets, companies generally don’t have enough customer data to optimize campaigns for specific locations. With a lot of customer data, conversions and so on, it becomes easier to build models, but without that data, the screen goes blank. As a result, it’s easier for companies to just use one form of messaging or the same bid price or targets for the whole campaign, applying it to each market.
Qlika’s Big Data engine parses demographic data, customer data and dozens of other sources to start identifying answers to questions, like, “are customer demographics in Austin more similar to San Francisco, or New York City.” The more data it has, the more accurately it’s able to answer that question and discover similarities between customer segments and markets, optimizing campaigns and bids accordingly.
Looking forward, Morgenshtern says that the team will be focusing on filling in the missing pieces around its dashboard and main UI, which is the main portal through which marketers can access their managed campaigns and set which channels Qlika will target as part of its cross-media marketing offerings. While customers will eventually be able to advertise across the major search engines, social and display networks, for now the focus is mostly on Google, which is where most of the money, and advertisers, still live.
The company is keeping an eye on a number of alternatives, including Bing, but most don’t offer the same scale afforded by the Google-sphere. As big as a name like Bing is, it still isn’t on par with Google, where Qlika is managing between 20 million and 1 billion keywords at a given time, the CEO says. The team has also begun experimenting with Facebook, but the social network demands a different approach, seeing as micro-markets will not be defined by location so much as demographics.
There are a lot of exciting potential growth areas, the co-founder tells us, but for years the rate of growth in the market has been hampered by an absence of tools that can help advertisers understand and manage the increasing complexity inherent to our new, hyperlocal world. By giving companies a more nuanced, differentiated view of their customer base and by optimizing and automating those campaigns accordingly, at scale, perhaps Qlika will be one of the first to help hyperlocal live up to its potential.
And with companies reporting up to 50 percent increases in marketing ROI from using Qlika’s solution, according to Morgenshtern, it’s off to a good start. If this trend continues, it likely won’t be long before Google and Facebook come calling.