Don Mathis is CEO of Epic Advertising, an online performance marketing company
AdExchanger.com: How has Epic Advertising fared during the economic downturn? Please share any strengths or weaknesses you're seeing. What types of client campaigns are thriving - or not? How is creative evolving?
DM: Epic Advertising has fared well due to our fundamental performance-based economic model, which centers specifically on CPA, or "cost per action". Our clients only pay us when a desired action, such as a sale or a subscription, takes place. This is clearly a more desirable way for advertisers to market their products and services during a downturn, as they avoid upfront costs. Specifically, Epic is seeing strength in our Health & Beauty, Casual Gaming and Entertainment categories at present. The Entertainment category, for instance, is up 20% year over year, and Casual Gaming and Health & Beauty are up astronomically. Over the last 12 months, our creative team has expanded their scope with multivariate testing, new advertising formats, and new custom applications. The landscape is more dynamic, and is continuing to grow in this direction.
With performance marketing as its focus, does this hurt the ability of Epic to expand into the brand awareness budgets? How can brand awareness marketers use Epic today? Any real world examples?
Epic Advertising doesn't believe there has to be a split between performance-based and brand-based marketing online. Brand-based advertisers are beginning to understand that having more data at their fingertips and a better ability to target their audience actually helps drive brand awareness better and more effectively, while realizing stronger ROI. We work with many more traditional "brand" marketers now than we did a year ago. In this scenario, Epic is delivering branding through our massive reach and network of 40,000 publishers, in addition to ROI due to our performance model.
Given all the talk of current and future regulation, is the lead generation business dead? Valueclick recently reported a decline in its lead generation business and an uptick in display in Q1 2009. Does this mean there is opportunity ahead for display?
There definitely are opportunities for display now and into the foreseeable future, with the key drivers being better technology, targeting and data. Lead generation is a lot more strategic than it used to be and is still a very effective practice for many advertisers and networks. Thankfully, Lead generation is no longer synonymous with the "win a free iPod" days, and a properly-executed campaign can still be very effective.
Will real-time bidding (RTB) offer strong improvements in ROI or is it all hype in your estimation? Will Epic build RTB capabilities or work with partners?
Epic is familiar with RTB and some of the companies who have made strategic decisions to invest in it. We don't believe it's all hype, and in fact the byproducts of these enhanced capabilities are a faster and more efficient marketplace for online media buyers. This is positive for the entire online advertising ecosystem. Epic is currently evaluating the "build" or "partner" question.
Azoogle is your well-known affiliate business. Are ad exchanges "good" for the affiliate business? Why? Any challenges?
We don't view ad exchanges as competitive to our efforts or inhibiting us relative to our publishers. It is another tool for affiliates and networks to use in order to obtain inventory. The volume of networks and exchanges speaks to the tremendous amount of web inventory and the potential to tap into the inventory in a wide variety of ways and techniques. We're somewhat agnostic in terms of how we get inventory for our advertising clients and exchanges are certainly one aspect. There are many industry related challenges. There is confusion among advertisers and agencies trying to decipher differences between networks and exchanges. There needs to be a great deal more education.
Do you think ad networks and online marketing companies such as Epic have the potential to disintermediate media agencies? Is Epic working with direct advertisers today? If so, which ones?
We don't believe companies like ours will replace or sidestep media agencies. At Epic, we in fact work collaboratively with agencies as well as directly with advertisers. Clearly, there are a lot of advertisers who are clients of major agencies, and are expanding further in the online medium. We want to be there to help agencies handle those requests from their clients. For advertisers not represented yet, yes, we work quite effectively with them too. A few of our clients we work direct with include Netflix, IAC, Real, and Match.com just to name a few of the hundreds.
Are view-through conversions applicable in Epic's business? Or is the last click still the only click that matters? How is Epic solving attribution for its clients?
Epic has invested quite a bit in this area. Late last year, we announced our own patent-pending solution called pCPM, which means performance CPM. Our competitors call this "view-through" or "engagement mapping". We're focusing on this because attribution for advertisers is increasingly complicated yet important. What we aim to do with pCPM is to score any and all factors surrounding an online ad campaign beyond impressions, clicks or actions. Epic will continue to hone these technologies on behalf of our clients as the demand for clearer attribution increases.
Many publishers feel ad networks and exchanges create channel conflict and diminish the value of their inventory. In your estimation, beyond hiring a yield optimizer, what can publishers do today to improve their yield - i.e. revenue potential?
It has been documented that a handful of publishers feel this way,and feel that networks and exchanges are the cause of the diminishing value of their inventory. The right way to look at it, though, is if a publisher has excess inventory or inventory that simply can't be sold, which today is largely the case. In this scenario, they probably had 1) an inflated view of the value of their inventory to begin with or 2) improper means or resources to sell it. Simple supply and demand economics is starting to bring inventory values into line. Networks and exchanges fill a necessary, and growing, void in the marketplace. At Epic, we feel it would be wise for publishers to work closely with networks to improve ROI, as networks have more advanced optimization technology and a wider array of advertisers and advertisements for publishers to choose from. Overall, networks can often offer etter and faster analysis and measurement.
Is placement and context still important? Or is it all about audience in online media buying and selling?
This is the crux of what differentiates online marketing from other traditional ad platforms. Epic is beginning to see an online shift, with advertisers now taking a more audience-centric approach versus a site-or ad placement-approach. We firmly firmly believe in the importance of reaching the right audience for advertisers first and foremost -- in the most efficient and economical way, supporting advertisers' sales and branding goals.