Serial entrepreneur Gurbaksh Chahal is poised to make a big scene on the online advertising stage following the end of his non-compete contract with Yahoo.  RadiumOne, which launched Monday, is Chahal’s latest endeavor, using social data to take behavioral targeting in display ads to the next step: social interaction.

The ad network uses “social retargeting” algorithms to gauge how users interact with one another on social networks to determine which users identify with a brand’s current customer base, thereby allowing companies to deliver relevant ads to appropriate social groups.  Specifically, the social retargeting technology delivers ads through the following features:

• Social graphing: as social networking site users share information such as blog posts and links, RadiumOne analyzes their interactions and identifies them on a social graph that classifies their behavior.
• Forming “social clusters”: using the data plotted on the social graph, RadiumOne creates “social clusters” of users who know one another and share common interests.  It also builds “lookalikes” of these users through its modeling algorithms.
• Tracking social interactions: RadiumOne tracks anonymized users who share a link with the advertiser’s current customer base and delivers ads to these users.

RadiumOne estimates that its social retargeting technology will improve ad conversion rates by up to 500%.  The company is so confident in its ability to outperform any other ad network that it’s even offering a full refund for ad campaigns that run on the network and do not see results.

Chahal is no stranger to the ins and outs of online advertising.  In 2007, he sold Blue Lithium, a behavioral targeting service, to Yahoo for $300 million. Prior to that, he sold his ad company ClickAgents to ValueClick for $40 million in 2000, at the age of 16. 

This network differs from previous innovations, as Chahal explained to the Wall Street Journal: “The big mega trend that has happened since Blue Lithium was acquired is social has become everything on the Internet.  Sharing is the big phenomenon and no one has tapped into that as an enhancement of data.”

Chahal’s non-compete contract with Yahoo ended last Friday, and he has wasted no time getting back on the bandwagon.

In 2009, Chahal founded gWallet, a social media monetization solutions provider, which will now be housed within the RadiumOne ad network.

The San Francisco, Calif.-based gWallet raised $10 million in December 2009 in a Series A round led by Adams Street Partners and Trinity Ventures.  In sum, the startup has raised $12.5 million, and Chahal told WSJ that the company will consider a $50 million round in the fourth quarter to cover the cost of acquisitions.

Image source: radiumone.com