Earlier this month, online advertising technology company AdKeeper announced new investment in the company totaling $35 million and led by Oak Investment Partners. From the release, "The funding will be used to grow one of the strongest online media startups in history, with the largest group of charter advertisers ever assembled by a new company and a dream team of executive talent." Read more.
CEO Scott Kurnit spoke to AdExchanger.com about his company and the digital advertising landscape. Click a section below or continue to scroll...
- The Strongest Online Media Startup...
- AdKeeper's Clients
- AdKeeper Use Cases
- On New Kinds of Advertising
- Online Behavioral Advertising, The "I" and The "Keep"
- Product Roll-Out
- Kurnit's About.com Experience
AdExchanger.com: A recent AdKeeper press release about your funding stated, “The funding will be used to grow one of the strongest online media startups in history.” Can you drill down on why you see the company in a unique position of strength historically speaking?
SK: If you look at the building blocks and the foundation in terms of team, research, idea, financing, support from advertisers - if you add those things up in our short, ten‑month history, I can't think of any other advertising‑based business that has come close. We’ve signed up more, bigger, better advertisers for the launch of a new media property than anyone in history.
We have to execute brilliantly to get from here to there, there's no question about it. And one of the reasons to raise this much money is to make sure we do that right. I think at its core, this is a true platform. And I define platforms as things that others can build on and many can benefit from.
There are platforms like Facebook, where a vendor can build on it; and Windows and even Word, where I can create the great American novel. These are true blank canvasses that are incredibly ubiquitous, and I think we have one of those.
But, don't you think that you need the product in market for a while before you can determine that you're in this excellent position, if you will?
Sure. The short answer, of course. The long answer, we know we’re onto something. While there are naysayers about anything new and different or anything to do with consumer interest in advertising… and I love hearing the comments, they are either not the market, don’t really understand consumer diversity or can’t think beyond their own use cases. Fortunately we’re way closer to all these issues… have been working it for thousands of hours… and for me – over 15 years since I first thought of the need even before starting About. And in all my years running About and my involvement on a dozen boards since has only reinforced the need and the ways to execute. Getting the friction out of this on both the consumer side and distribution side took some hard thinking and a whole bunch of messy white boards.
Research minus friction minus execution flaws does a very good job of telling you where you’re going to come out. So when I see that 56% of Internet users want to do this in a Nielsen study of 1,600 people, I say, OK, now the job for us is to execute. We need lots of buttons on ads; a great, useful, fun, engaging product; great marketing of our own; convincing the industry that this is a real advertiser/publisher initiative for the good of all. I get it that this is a tall order… but totally doable. There’s a fascinating group of about 10% - and ironically this includes a bunch of industry pundits and jaded guys who work at ad agencies – who can’t see doing it themselves, and for some reason can’t step outside of their own experience and get that there are a ton of people who love the idea.
Marshall Cohen, who runs research for us, who ran research at AOL and MTV says, "You can do better than 56%." Now I don't expect that we will. If we do half of 56% and half of that again this is still a great business. I don’t expect everyone to use it and I expect people to use if very differently – and that’s what makes a platform. People forget that only 8% of Internet uses use Twitter. Twitter is awesome and has a huge impact on so many of us… but its direct reach is quite small.
Aside from the research, there are a bunch of other reasons why this works. People don’t dislike ads. They dislike the wrong ad at the wrong time… annoying, useless ads presented in annoying, interruptive ways. But when ads are properly targeted and presented at the right time or place, people actually like advertising. One, it’s an offer and they can save money. Two, it’s a brand they like. Three, it’s entertaining and they want to share it with their friends or look at it again. Four, product research, I need to know more information before I make a decision. Considered purchases take time. Five, I can take the ad with me to the store. Every single ad on the Internet is better if you can keep it for later. And any ad that requires more than a couple of seconds of your time, has to be Keepable.
Ads are a secondary activity. Content is primary. We’re making ads primary… later, with almost zero effort to keep them for later… and a ubiquitous system for getting back to your Keeper. Every ad has a button that takes you to your personal Keeper.
Let me bring you back to that roster of clients that you've got signed up for this. I'm curious how you're selling AdKeeper. Is it something that you're intending to sell directly to marketers and have them maybe push down to their agencies? Or do you partner with agencies who then sell to marketers? Or is there even maybe a reseller plan?
I believe it will sell itself. It's a true friction‑free platform. Much less friction than even Google AdSense… a business I know well since we created it at About in Sprinks which Google purchased in 2003.
Are you saying it's self‑service, then?
Absolutely. The first wave was meetings with brands and agencies… but the next wave will be largely self-serve.
AdKeeper is free to the consumer. The Keep Button and the Keep action are free for Advertisers. We only charge advertisers when the consumer comes to the Keeper and engages with the ad. We will charge on some combination of CPM, CPC and CPA. As a brand new medium we’re going to let the market tell us how we should charge and let the service be free for the first six months. Like Google and Twitter before us, we don’t want money getting in the way of making a great, lasting service. That's number one.
Number two is, because this is a real platform and a ubiquity play, our intent is to charge so relatively little, that money is not the issue. If you think about the negotiations that take place between media and publishers, it's all because there's this fine line trying to squeeze out that last dollar… and of course, “buy me, not him.” We plan to take our first mover advantage and low pricing to make sure there’s no reason to buy “the other guy.” Leaving some money on the table to remove a ton of friction makes total sense to me.
Sure. I sat down with our sales chief MaryAnn Bekkedahl, and we said, OK, we've got to figure out how to do this. So we went to agencies and we went to clients. This was almost entirely a client sale. Big, new innovative things have to happen at the client these days. Short of Craig Atkinson at OMD Chicago – the financial model of agencies has agencies following their clients. Sad but true. The media shops are all about doing whatever they did yesterday a little more efficiently tomorrow. Follow the money. Innovation takes vision and vision may take more than this quarter. That works for great CMOs but not at all for agencies. Clients also get to say yes. Agencies can at best say… let me take you to my client to see if they say yes. Once a new medium is rolling, the agency is the place. To get it rolling, it’s all client.
You have mentioned previously about new kinds of advertising that could crop up because of AdKeeper - if I have paraphrased that correctly. What might some of those new types of digital advertising look like?
After 15 years of just IMPESSIONS and CLICKS we think making creative for the KEEP is huge opportunity. Between banner blindness and non-existent clicks the creative side of the agency business is primed for something entirely new. We’re building a tool-kit for advertisers with a range of very cool features. Imagine making advertising fun with game mechanics. Imagine the power of group buying fundamentally built into the platform. Imagine robust sharing – when the user has the time to engage with it. Let me leave it there for now but simply we’ll build the tools and APIs and unleash a wave of creativity the industry hasn’t seen in a long time.
Have you considered selling an analytics tool to creative agencies so they can improve their clients' creative? Is that maybe literally one way you're thinking about this product going forward?
This business turns out a ton of data. Where is the ad kept from, what happens to it once it’s kept, what else is in their Keeper that people are thinking about, etc.? AdKeeper is an amazingly data-rich platform, but we're not in the data business. AdKeeper is a 100% opt-in, permission-based system that doesn’t require data to be successful. That said, over time, with consumer consent, we will provide data to networks and publishers. We will provide aggregate data to advertisers with no PII (personally identifiable information). In addition to impressions and clicks, we’ll give them a third tool, Keeps, which will tell them how many times an individual ad was Kept and which websites do best at generating Keeps.
This new data set is going to be used by advertisers to shift media spend to publishers with the best engagement, defined by Keeps. So, it’s our intent to give that data for free to our advertising partners, because we want them to be better advertisers, and that makes data a secondary part of our business model.
Our business doesn't need behavioral targeting to be successful. AdKeeper has the ultimate behavioral targeting without any technology, without any consumer issues. The consumer reads the ad, keeps the ad ‑ it's 100% opt‑in, permission-based. Look at the ad later. That's the best behavioral. We’ll sit alongside the “I.” The “I” stands for “How did this advertiser take advantage of my privacy to deliver this ad?” The “K” stands for “This advertiser respects my time and let’s me engage on my schedule with me in charge.” The “I” is important, but the opposite of respect. Any place the “I” appears I think advertisers NEED the “K.”
Is there any chance you could get into the ad verification or the “I” business?
I don't have an interest in those businesses for many reasons. In some ways ad verification comes with the territory of what we do. But, I'm a big believer in focus. We’ll obviously give advertisers the data we have, and if they think that has proper verification for them in some ways, then so be it.
The “I” businesses are tangential. I'm supportive of them and we’ll partner to make the pixel calls and buttons as efficient as possible for the industry.
Sure. We're going to take the password off the beta on Valentines Day. Anyone will be able to start Keeping and using their Keepers. Demand planning for new web services is almost impossible so we’re putting our 12th month hardware estimates in place on day one. The tech team says we’ll bug free on 2/14… but I’m happy to wait a bit to open the floodgates. I also don’t see this as an overnight success. This is a ubiquity play that needs support from the industry. We’ve given a lot of thought to the chicken and eggs in front of us. We’re starting with the most innovative and brilliant marketers in the world. I think we’ll see fast following, but it’s hard to read the minds of what it takes to get followers to step up.
Following is a mindset I personally have trouble getting my hands around. The leaders will have shelf space advantages… maybe forever. A Kept ad creates a position in a Keeper where that ad can be replaced over and over again. The longer it takes a brand to join up, the harder it will be for them to capture the imaginations of our users. Consumers want to buy from and develop relationships with innovators. Brands that allow Keeping are worth Keeping. We can’t do this alone. This is an industry initiative. Those that follow should never be able to benefit like the leaders. I think people are going to get fired for missing the boat.
In many ways, and it’s part of what gave me the confidence to start AdKeeper.
It’s fortunate to be able to borrow from those things that worked and didn't work from the past. First, culture. I’m a culture nut and it was core to About and one of the half dozen reasons About flourishes 15 years later. Culture is critical to business success and so few young companies think about it – they let culture happen by accident… a terrible mistake. To know who you are, what you stand for, and the kind of people you want to bring into the company is amazingly useful. For AdKeeper, the consumer must always come first. That’s the first of our ten cultural imperatives… and it makes every decision that much easier. For us, it’s consumer first, advertiser second, Adkeeper third. Everyone at AdKeeper makes these cultural imperatives the filter through which we make every decision. Some of our other cultural imperatives are to operate with the highest integrity; to be adaptive, flexible and nimble; to encourage teamwork and risk-taking with zero tolerance for politics; to be adoptive, embracing good ideas from all sources; input, not consensus – pick a single decision maker who then craves input; only have the best people who are willing to work harder than the competition. Use the word “employee” rather than “team member” or use the word “consensus”… ever – and it’s 20 bucks to the party fund.
But probably, most interesting, our mission at Mining Co./About was to dig up the gems from the Internet, polish them, organize them, and present them.
Our mission at AdKeeper is to enable consumers to engage with advertising on their own time and terms while improving their overall Internet experience. Thinking about it, it could just as easily be dig up the gems, polish them, organize them and present them.
Advertising is a parallel universe of content. It’s just a different kind of content… and it’s been completely overlooked by the industry. It runs far and wide across the Internet. No one has thought to organize it, sift it, make it useful, help me find it, control it. In a lot of ways, this is a modern version of About.com for ads. Most everyone thought About was a crazy idea and would fail. Audacious, too big, too wide, too all-encompassing, an unproven content system and business model. Well, it had efficient content creation, network effect, virality, no customer concentration, great SEO qualities. AdKeeper has all that and more. AdKeeper has no cost for content just like Facebook and Twitter but with a huge revenue model at its core… and while there are those who think we’re crazy – a lot more thought About was crazy. Very comforting.
By John Ebbert