Amiad Solomon, CEO of Peer39, inspired by the business model of San Francisco’s Pier39.No cookies, no keywords, no invasion of privacy. A new advanced semantic technology for on-line advertising promises to “to bring the right offer to the right customer, in the right mindset, and the right environment.”

That’s quite a boast, but Amiad Solomon, CEO of Peer39, is not afraid to stand by it. “We want a better connected Internet, between supply and demand,” he tells ISRAEL21c, speaking from the company’s headquarters in New York.

He’s not alone in thinking big. The two and a half year old company was just chosen by the MIT Technology Review July/August, as one of the “10 Web startups to watch in 2008.” Quite a coup for a company that no one had even heard of before now.

Semantic analysis is a big concept in information analysis today. Unlike contextual analysis that picks up keywords, or behavioral analysis that forms a profile of the user by looking at the 20 different sites he or she browsed on the Net, Peer39’s SemanticMatch understands the meaning of a page and then targets advertising to that page from the company’s ad inventory in real time.

“SemanticMatch algorithms read a page and understand the content meaning and sentiment,” explains Solomon.

Picking up sentiment

Launched in July this year, the technology is segmented into at least 1,000 advertising categories, providing a very granular selection. It can also adapt to new categories on the fly. If an article is about transportation, and discusses cars that do not spew excess carbon dioxide into the environment, hybrid auto ads will be targeted. Furthermore, depending on the information mined from page content, ads can feature models (two-door, four-door, sedan, etc.) from different manufacturers. The system actually optimizes over time, as it automatically updates and learns from experience.

“Our algorithms also pick up sentiment,” says Solomon. “That means the system will not show a particular brand name if the page content expresses a negative attitude towards that brand.”

It took Peer39 two and a half years to develop its product in stealth, according to its CEO. All of the technology was developed in Israel at Peer39 Labs, the company’s R&D facility located in Petah Tikvah, just outside Tel Aviv. The 40-person technology team, including computer scientists from the Institute of Advanced Studies at Princeton, the Technion-Israel Institute of Technology, and the Israel Army, has expertise in semantic technology, natural language processing and machine learning. The company holds numerous patents.

“Everything is measurable,” says Solomon. “SemanticMatch measures the reach to new people, increased awareness of a brand, conversions (i.e. how many ask to go for a test drive), sales, etc. We see a much higher click through rate and conversions than other web advertising systems. Advertisers using the system get ongoing reports and a whole set of tools to evaluate an advertising campaign. For all these reasons, our advertisers are very happy.”

By the end of 2008, the company is on target to reach 1 billion impressions, according to Solomon.

The press-shy company began working with potential clients – publishers and advertisers – over a year ago. True to form, it does not reveal the names of individual companies. “We are working with one of the biggest consumer electronics companies,” Solomon admits.

The advantage of being headquartered in New York, the hub of advertising, is that it is near all the ad agencies that represent major pharmaceutical companies, the automobile industry, health, technology, and other big consumer products.

“We have grown from a one man show, so to speak, to a company with 65 people, and will have close to 100 by the end of the year,” says Solomon. The company’s board of advisers includes Eytan Elbaz, co-founder of Applied Semantics, bought by Google, and Daniel Jaye, former President of Tacoda.

Leading a revolution

Peer39 is named after San Francisco’s famous Pier39, one of the biggest tourist attractions in the Californian city. Solomon was in town for a meeting with investors a couple of years ago and decided to adopt the pier’s business model for his own company. “It is a festive marketplace which offers all kinds of merchandise,” he explains. “Hundreds of millions of people visit it every year. We want to build a business of that kind of magnitude.”

The company has held two rounds of financing, pulling in $12 million from Canaan Venture Partners, Dawntreader Ventures, and JP Morgan. Two savvy high tech investors in Israel, Jon Medved and Daniel Ciporin, gave Peer39 its initial boost with seed money.

Is Solomon worried about competition? “We have a strong advantage: we are leaders in semantic advertising for the web. And, because our business model is scaleable, we can work with advertisers for the lifecycle of a campaign, whether it is $50,000 or over $1 million,” he says.

“We feel that the company is leading a revolution. That means lots of sleepless nights. But of course, we have to keep on our toes to stay up there,” he adds.

Launching its product after it has already built up a vast pool of advertising inventory and acquired happy clients, Peer39 is not only revolutionizing advertising on the Web, it has also created a new paradigm for start-up success.

No doubt, Google is watching.