Chitika Announces Local Ad Exchange

Search-based online ad network, Chitika is announcing a new local ad exchange (“LAX“) this morning. Like CityGrid it will span platforms and reach into mobile. There will also be an emphasis on PPCall in mobile.

As  you can see, the promotional materials refer to LAX as “The World’s First LOCAL Ad Exchange.” If we define ad exchange very specifically that might be correct. But in terms of the larger landscape and who’s offering local distribution and qualified clicks and calls to publishers and advertisers there are now a range of folks:

Cross-platform:

• CityGrid
• Chitika/LAX

Mobile only:

• Local Ad Xchange
• Where

PPCall (cross-platform):

• Marchex

This of course doesn’t include all the conventional networks/exchanges that offer geotargeting.

I spoke briefly with Chitika’s CEO and co-founder Venkat Kolluri yesterday. To say he was enthusiastic about the launch is a bit of an understatement. He said LAX would be totally open, platform agnostic and able to accommodate any ad unit type or format, including video.

However in the case of search/text ads Chitika will build units dynamically to optimize them for PC or mobile. It will detect the device or platform and then dynamically serve an appropriate ad. Here are mocked up examples of text feeds turned into display ads for both PC and mobile devices:

Kolluri told me that today Chitika serves 3 billion impressions, a billion of which are search based impressions. He also said that they serve 100 million monthly local impressions on mobile devices. I asked how he defined “local.” He said it was defined by the use of a geographic modifier in a search query or the context and content of the page that a user was viewing.

Kolluri said that Chitika currently works with over 80,000 publishers and added that one should think of this as the equivalent of “Google AdSense for local.” CityGrid, a potential competitor, is apparently also going to be utilizing LAX (as the graphic above indicates). Yellowbook and Topix are also launch partners.

Ad optimization for publishers and advertisers is also a part of the platform. Interestingly Chitika may not serve ads if it doesn’t have a good ad to show. “We choose not to show anything when we can’t deliver the CPM for the publisher and ROI for the advertiser,” explained Kolluri.

I asked him “why now?” What has made the time ripe for this sort of launch?

He observed that local is one of the “Fastest and most lucrative segments for advertisers and publishers today.” The rise of local search, the emergence of the mobile Internet and the movement of more local and small advertisers online made the timing right.

Finally, I also asked him about the performance of local ads vs. national or conventional ads on Chitika’s network.

He said that in testing out LAX and local ads with publishers Chitika found that a local ad impression in a local publisher context showed a “3X improvement in revenue to the publisher.” This really “opened up our eyes,” added Kolluri.