For all the attention given to online advertising and shopping, one could forget the vast majority of purchases are made in ‘the real world.’
Datalogix understands that, and the company’s deep knowledge of how to use transaction data is why it closed the $25 million Series B round announced today. Institutional Venture Partners of Menlo Park, CA, was the only investor in the round.
Datalogix, which is based in Westminster, CO, compiles consumer behavior and purchasing data from a wide range of offline sources, including point-of-sale transactions, chief financial officer Tim Connor said.
Datalogix compiles a lot of data, including data about almost every U.S. household and more than 10 billion transactions worth more than $1 trillion. Understanding what that data means tells advertisers far more than whether a potential customer followed a link, Datalogix believes.
“The products we have are data and analytics to help advertisers reach the right audience,” Connor said. “If you’re looking for an audience for advertising, the best indicator for what people are buying and what ads they want to see is purchasing behavior. True ROI is based on changing purchasing behavior, not whether [consumers] click on something.”
Datalogix compiles and analyzes the data and then sells it to brands, advertising companies, or marketing consultants. Buyers use it to find trends and determine where they should be advertising.
Datalogix also can provide analytics that tells clients whether their campaigns are working.
Connor declined to discuss financial information, but said the company grew revenue 50 percent during the past year, added more than 100 employees, and opened offices in Detroit, San Francisco, and London. Datalogix has about 250 employees, with 200 based in Colorado.
The money from IVP will be used to continue developing its technology and build client-facing teams. It should be enough to keep scaling over the next few years.
“We believe this funding should take us to self-sufficiency,” Connor said.
Datalogix claims more than 75 percent of online media companies use it for campaigns. Its best-known partnership is with Facebook.
Datalogix is one of several companies Facebook is using to develop its “Partner Categories” platform. Facebook is using information provided by Datalogix to determine whether ads on the site are affecting consumer’s purchasing decisions in ‘brick and mortar’ stores.
According to media reports, what Datalogix is providing is helping Facebook shift away from relying on a pay-per-click approach to a more conventional brand advertising strategy. It appears to be working, as Facebook has wooed General Motors back as an advertiser after the company famously said Facebook was a poor way to generate sales.
While the Facebook partnership is a good endorsement in Datalogix’s eyes, working with digital media companies is only one of its verticals. Its others are automotive, retail, financial services, and consumer packaged goods.
IVP general partner Sandy Miller will join Datalogix’s board and said Datalogix fills a problematic gap.
“The big picture was obviously that more and more ad spending is moving online, yet people don’t have a good view of the efficiency of [online ads] and the payback,” Miller said.
IVP also was impressed with Datalogix’s ability to provide information advertisers need before running campaigns to target customers and then after to assess results.
“Rarely do people do both….That’s a big differentiating feature,” Miller said.
IVP typically makes investments in late-stage companies heading toward IPOs, but both Miller and Connor said a decision about going public is well down the road.
In 2009 Datalogix raised $15 million from General Catalyst, Costanoa Venture Capital, and Boulder-based Sequel Venture Partners. Before becoming Datalogix CFO, Connor was a Sequel partner and Datalogix board member.
