Quigo a Go Go

Spent some time on the phone with Michael Yavonditte, the CEO of Quigo yesterday. I’ve been getting smart on many of the new innovators in the advertising space, both for my book, as well as for my other role as band manager of Boing Boing and whatever might come next. Man, there’s a lot going on in the online marketing space right now – a lot of innnovation, a lot of cool new shit, and a lot of potential.

According to Yavonditte, Quigo has perfected a relevancy algorithm that does AdSense one better – far better, to paraphrase his words. Quigo is focusing on picking off the high-brand-value publishers who use AdSense but are looking for a network solution that pays them more for what they believe is significantly better inventory than the lowest common denominator AdSense approach. Great quote: “Advertisers are saying to me ‘I don’t want the Guadalupe Times, I want ESPN!'” He’s already stolen some business – he’s got USA Today, National Geographic, the New York Post, and several others signed up, and reportedly has some major equity-for-distribution deals in the works, akin to what Google and Yahoo did in their early days.

While I am sure his algorithms are good, in essence, Yavonditte’s secret sauce is vertical categorization. He’s come up with a handful of major categories – Travel, Health, etc. – that advertisers self select into. Then he applies his contextual algorithm within that category, yielding what he claims are major improvements in CTR and PPC.

I’ve always suspected that Google will build vertical categories into AdSense, so I asked Yavonditte, given how exciting his claims seem to be, why Google won’t simply swoop in and verticalize AdSense. “I’m trying to build a $200 million business,” he responded. “Google needs to focus on finding the next billion dollar one.”

Yes, but…$200 million is a hell of a lot more revenue than, say, Orkut is providing at the moment…

Yavonditte is limiting his company’s focus to big and/or high quality publishers and big categories, for now, but he didn’t rule out scaling the business to AdSense like proportions. He’s also got a killer product in the works that – without tipping his hand too much – uses his algorithm to aid marketers make decisions about the right keywords to use for any given URL. Cool.

Quigo is nearly breakeven and has 70 employees, most of them in New York. They are backed by Bob Davis, of Lycos fame, among many others.

Marketing Vox interview with Michael here.