The Digital Anthropologist: Adchemy’s Murthy Nakala on Making Sense of Big Data

Murthy Nukala was the founder and CEO of Adchemy in 2013. This article originally appeared in The Advertising Technology Review in 2013

Mr. Murthy Nukala is CEO of Adchemy, a company that uses proprietary intent-mapping technology to help companies like Macy’s, Verizon and Overstock.com optimize their digital campaigns around consumers’ intentions when they search online. Mr. Nukala believes that digital marketers need to help refocus the advertising technology industry’s emphasis around helping advertisers make money, not simply selling more ads.

Have we failed to communicate to brands and marketers how data really works to connect digital campaigns to real world sales?
I think leading marketers already know that online consumers who are ready to buy convert into sales, both online and offline. For example, Macy’s recently announced that every dollar it spends online leads to $6 of purchases at stores within the next 10 days. The online advertising industry just can’t be focused on selling more ads at higher prices – the industry needs to be focused on helping advertisers make more money.

Why is there so much confusion about Big Data in ad tech? 
This is a typical “boil the ocean” problem. Just because the online advertising industry generates a lot of data doesn’t mean all the data is actually of value. There’s a lot of energy spent building enough capacity to physically store all of the data, moving the data to the same place, merging and cleaning the data, and then having the right tools to analyze the data – all with the presumption that there’s got to be something of value in the haystack. The industry needs to be more hypothesis-driven. What’s driving value in online advertising?  What data will actually help marketers derive more of that value?

How do you define consumer intent in a Big Data dominated industry?
Consumer intent is a consumer’s objective – what he or she trying to achieve at any point in time. One way of looking at the online advertising industry is it’s dominated by Big Data – tracking every single click of each consumer, combining that intelligence with demographic data, and then trying to make good inferences about those users. However, another way of looking at online advertising is that it’s really dominated by intent. The majority of dollars spent in online advertising is really spent in channels where consumer intent can be clearly inferred, whether that’s paid search, on a media or e-commerce website, or a mobile app.  Channels where consumer intent can’t be inferred are of less valuable to advertisers since they don’t allow for the level of personalization that consumers have come to expect. Obviously, the channel where consumer intent is stated most explicitly is paid search. However, as we see more and more people come onto the web using mobile devices, we’re going to see consumer intent become more implied, based on the app they are using and the their location.

How do we shift the focus from keywords to intent?
Before explaining how we shift from keywords to intent, it’s first important to explain why the shift matters in the first place. Because different people who are actually looking for the same thing use different keywords in their search queries, it’s not uncommon for a search marketer to acquire and manage dozens, if not hundreds of keywords for a single product. For large brands, this translates into having to manage literally hundreds of thousands of keywords— a very expensive, time consuming and ultimately sub-scale task. Moving from keywords to intent is not just a cool new way of looking at your SEM campaign – it’s a way to make more money. A lot more money. As a result, many very large advertisers have already begun to make the transition from managing their paid search campaigns around keywords to managing around intent. By managing campaigns around the underlying intent of a consumer’s search query instead of keywords, our customers are simplifying their campaigns by 1,000 fold and reaching more prospects with more relevant ads. Marketers, according to our case studies, who have used Adchemy IntentMap technology to shift from keywords to intent have increased their ad spend by 90 percent or more, on average, while meeting or exceeding their ROAS goals.

What’s the difference between a “point solution” and a true improvement on the existing ad tech ecosystem. Where do you believe that Adchemy fit in?
At Adchemy, we’ve seen how point solutions can really introduce choke points in other parts of the customer acquisition funnel. For example, in display, showing a banner ad that says, “Which of these celebrities is Paris Hilton?” might generate a lot of clicks – because everyone knows who Paris Hilton is – but the same banner is going to cause your landing page conversion to plummet. Looking at paid search, Adchemy has found that, for some of our clients, using the verb “Buy” in ads has a much higher click-thru rate than other verbs, but post-click conversion is actually very bad and, from a system-wide ROAS perspective, other verbs are better than “Buy”. Any solution that optimizes just one level of the customer acquisition funnel is a point solution. Any solution that looks to maximize ROAS, or maximize revenue while meeting or exceeding a target ROAS, is a true improvement to the ad tech ecosystem. Adchemy offers the latter.

Murthy Nukala was the founder of Digital Jones, which was acquired by Shopping.com, a $130 million company that was the best-performing IPO of 2004. At Shopping.com, he held the position of senior vice president of enterprise products, overseeing the company’s strategic initiatives and businesses. Mr. Nukala has also held management positions at Composite Software and Sand Hill Group, where he guided the firm’s technology research agendas and investments.

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