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Q&A With Knowledge Networks CEO

Knowledge Networks Inc., a VC-backed provider of research to media and advertising companies, yesterday announced its acquisition of Dimestore Media, which helps measure the effectiveness of digital advertising through surveys.

Dimestore Media was founded in 2008 by Scott Cohen and David Moore, who previously co-founded online ad network 24/7 Media, which later merged with Real Media. Knowledge Networks has raised an undisclosed amount of funding from Alloy Ventures, Maveron, Meritech Capital Partners, Oak Hill Venture Partners and Oak Investment Partners.

I caught up with Knowledge Networks’ CEO Simon Kooyman to get his take on the Internet advertising market and understand how market research is driving today’s corporate decision-making.

Q: What was the impetus behind your acquisition of Dimestore Media?

A: Our customers are heavily tapping digital marketing and need to understand the effectiveness of their online marketing campaigns.  Now more than ever, they want to measure the return on Internet advertising on its own and in conjunction with traditional media.

With the acquisition of Dimestore Media, we can now offer an online platform that allows marketers to rapidly evaluate the effectiveness of digital campaigns by adding engaging surveys to online creative ads, analyzing which components of the campaign each person was exposed to, and then measuring the resulting improvement in awareness, purchase intent and other key metrics for brand management.

Q: How has market research changed over the years?

A: The biggest shift is that market research has moved away from classic data collection modes such as telephone surveys to an online model.  In 2001, online projects represented about 15% of all U.S. research. That number is now roughly 50 percent.

We like to think we’re at the forefront of this shift with out online research panel–KnowledgePanel.

Q: What’s driving the move to online market research?

A: Customers are attracted by the speed and lower cost of online research, but one thing they’re now realizing is that they can’t have fast, cheap and accurate.  Accuracy has been a challenge for decision-makers using some forms of online market research. Many have launched new products and built ad creative based on flawed results.  Much of our success has come from providing accurate online research. Companies turn to us for market sizing, finding  population segments to pursue, assessing  the competitive landscape, because no one else in the industry has the accuracy of our KnowledgePanel.

Q: The Interactive Advertising Bureau recently announced that online advertising is weathering the economic downturn better than other sectors.  How big is the shift to online advertising from traditional media?

A: Online advertising currently represents about 10% of ad dollars, and that is rising about 1% a year. We believe that economic conditions will likely fuel an expansion in Internet advertising, because marketers are being careful with their advertising dollars but are always eager to invest in less expensive media that can be easily tracked.

We got into this space because of the rapidly growing market trend; the quantity and quality of online video is improving all the time, and online audiences for full-length films and television programs–and the ads that surround them–have traction with Internet users.

Q: What kind of insights are your clients looking for today that’s different than in the past?

A: Today, marketers want consumer-centric insights. They want to understand how consumers are interacting with their brand across different media.  For example, in evaluating a campaign, they’re not just asking: ‘How well did my campaign work?’ but also ‘which parts of my campaign are working? What isn’t working? And why?’

These questions are even more relevant in today’s fragmented media market. Clients are using online surveys to get at such key metrics as awareness, brand affinity and intent. Things that behavioral techniques do not track.