The Download: For Resonate Networks, a shifting client base of campaigns and corporations

February 26, 2012

As we barrel toward the presidential election in November, it would be easy for the online advertising mavens at Resonate Networks to develop tunnel vision. For a firm with roots in politics and advocacy, this is the big time.

But while the slugfest is expected to be a boon for the Reston company, chief executive Bryan Gernert said that Resonate’s biggest opportunities lie in the commercial sector.

That’s the impetus behind a $20 million investment in the company that local investment house Revolution led last week. The money will help the company add staff, expand geographically and attract more commercial clients, all with a goal of reaching profitability.

“When we had these conversations, we obviously thought that 2012 was a big year for us, but it was really driven from a longer-term perspective,” Gernert said.

“A lot of what we had built was adequate for brand customers, but we didn’t have the wherewithal to really invest in going after major brands like McDonald’s and Toyota and Coca-Cola,” he said.

Resonate pairs Web users’ online habits with demographic data and opinion surveys to determine their interests and motivations. For example, mothers might value automobile safety and visit education Web sites.

Gernert said big brands are spending nearly four times more money on online advertising alone than political and advocacy groups spend in total advertising. That creates a huge market without the ebb and flow caused by election cycles.

The company began to build a sales force and market to commercial clients last year. They now comprise about 40 percent of its customer base. Gernert said the private company’s revenue tallies north of $10 million.

The investment is the second from a $450 million venture fund that Revolution announced at the end of 2011.

“They’re in a really hot space as more and more branding and corporate ad dollars move online,” said business mogul Ted Leonsis, a partner in the fund.

The firm got its start in 2008 but wasn’t fully operational until after the election. The 2010 mid-term election is its biggest political event to date.

“We think it will be by far the biggest online media spend in any political election cycle,” Gernert said. “In previous election cycles, the question was: If [we spend], how much? Now it’s ... literally, not if so, but how much do we need to spend?”

Steven Overly is a national reporter covering federal technology and energy policy with a focus on Capitol Hill. He previously covered the business of technology, biotechnology and venture capital.
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