Former Quigo Founder Launches DOCLIX

03.18.2009, Tomio Geron, VentureWire

DOCLIX Inc., the new advertising network founded by the man behind online ad company Quigo Technologies Inc., hopes to improve the quality of ads for publishers and improve traffic flowing to advertisers' sites.

DOCLIX was founded by Oded Itzhak, former founder and chief technology officer at Quigo, which raised more than $30 million from investors including Highland Capital Partners, Steamboat Ventures and Institutional Venture Partners before being acquired for about $340 million by AOL LLC in November 2007.

DOCLIX is backed by an unspecified amount of angel financing from former Quigo investors including Jack Lahav, who was chairman at Quigo and is now chairman at DOCLIX. Former Quigo board member John Frankel is also a board member at DOCLIX and an investor through his firm Asset Management LLC, via its Green Private Equity Fund LP.

Itzhak bills DOCLIX as a blend of performance-based advertising and brand advertising.

While DOCLIX provides mostly text-based ads, the sites in the network must have a minimum size and quality, Itzhak said. That is key for brand advertisers, who are typically known for doing display graphical ads with top sites.

"We have very strict guidelines," Itzhak said. "We're not a blind network. You need to have at least 1 million uniques a month and a loyal user base."

But because companies pay only for clicks to their sites—so-called performance-based advertising—there is more direct connection to return on investment than in normal brand advertising, which pays for only views of an ad.

In addition, to increase the conversion rates, small boxes pop up on the screen when a person rolls over a DOCLIX text ad. That prevents accidental clicks and ensures that people who click really are interested in that ad.

This may decrease the amount of clicks, but for top quality sites that is not a problem, Itzhak said. "They want to maintain a loyal user base and not disguise ads as navigation or trick the user into clicking ads," he said.

For publishers, DOCLIX provides text ads as small as 50 characters, which do not require displacing existing ad units, which means newfound revenue.

"The company plans to eventually raise a venture round," Itzhak said.