Canadian-made technology could emerge as "holy grail" for social media advertising

SME Profile

By Debbie Lawes

A re-branded Toronto-based company is seeking $5-7 million in second round financing for a new made-in-Canada technology that can increase ad hits on Facebook and other social media sites by more than 400%. Peerset Inc. – which just recently changed its name from Ontogenix – is live beta testing a patent-pending software platform that data-mines the interest profiles of millions of social networking users to identify where advertisers can get the biggest bang.

The technology was developed by co-founder Amit Kanigsberg, along with childhood friends Josh Mozersky, a philosophy professor and Canada Research Chair at Queen's Univ, and Daniel Veidlinger, a linguistics professor at California State Univ.

"The holy grail of the Internet over the past year or so has been the monetization of social media phenomena with hundreds of millions of unique visitors a month. The big problem is that advertisers are throwing billions of dollars at online advertising but not realizing the benefit they would like. It's an even bigger problem with social media advertising," says Chetan Mathur, a serial tech entrepreneur who chairs Peerset and is acting CEO.

Peerset has created what it calls a "neuromat" — a large database of correlation indexes drawn from millions of records and pages on publicly available sources, including social networks, blogs and video sharing sites. This information forms the basis for a predictive engine that can tell advertisers which ads will have high relevance to different types of users.

New media, animation and games were recently identified as sub-priority research areas for Canada by the Science, Technology and Innovation Council. Despite this recognition, research funding for digital media companies is limited. The federal government has said it will not be renewing the New Media Research and Development Initiative, that ended in March 2008, or the New Media Research Networks Fund (NMRNF), which sunsets in March 2009. The Canadian Heritage-managed NMFNF is the single largest research fund dedicated to digital media, having awarded more than $17.5 million to primarily academic-based projects over the past five years.

"It's anywhere people have expressed interest about themselves. On a wine connoisseurs' blog, for example, we would try to extract out other interests such as fine dining and cigars. On another site you may find that women who like the show Sex in the City, also indicate an interest in sushi and massages – things that aren't part of a normal ontology," explains Mathur, who stresses that the technology does not collect personal information about individuals – only their interests.

Social media advertising has yet to hit its stride, with click rates well below advertiser expectations. The top 25 social media networks delivered over 155 million unique visitors in February 2008 with 70% coming from MySpace, Facebook and Classmates.com. YouTube and Flickr contributed another 60 million. Peerset says it can boost these numbers by at least 400%, with beta trials showing increases of between 200-900%.

"There are other companies in this space, mostly start-ups still in the technology development phase, whereas Peerset is live and in production and in pilots," he adds. "The technology is working and proving to yield some fantastic returns."

Mathur, who is also CEO of IP convergence company Next Pathway Inc., got involved with Ontogenix in March 2007 as an angel investor. Since then, the three-year-old company has managed to secure $900,000 in venture capital from Growthworks and $550,000 from Pareto Corp, a Toronto-based marketing services company. Peerset is currently looking to secure an additional $5-7 million to boost sales and marketing.

It expects to have a permanent CEO in place by early December, and begin generating revenue before the end of the year.

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