Russ Mann is Co-Founder and CEO of Covario, an interactive marketing analytics and agency services company.
AdExchanger.com: Please share a bit of background on Covario.
RM: Covario is one of the nation’s largest independent providers of search marketing software and services. We have smart digital marketing investors of whom we are very proud, including Voyager, FTV Capital and Dubilier.
The company as it exists today was founded less than five years ago. It started primarily as an analytics-driven software firm, offering licensable software for paid search (SEM) to Intel and SEO for Procter & Gamble. Over time, our offerings have evolved to encompass both software and agency services, as more of our global enterprise clients are asking us for complete solutions, including both planning and execution for SEO and paid search.
In addition to paid and organic search solutions, we now offer display advertising and social media support as part of integrated digital marketing programs.
Today, we have close to 100 clients, including global marketers and ecommerce clients like P&G, Intel, IBM, Lenovo, RIM, Sony Pictures, Nikon, Ann Taylor, Cabela’s and Williams Sonoma, among others. We have about 125 employees – two-thirds of whom are based in San Diego, where we are based, and the other third are located around the world.
What problem is Covario solving today?
A major issue we are addressing for our large global advertisers is cross-media optimization and attribution modeling for both digital media -- including paid search, SEO, social media and display -- and offline media like broadcast, print and out-of-home advertising. This is why we introduced the CMO (for cross-media optimization) Dashboard last year, not only for the chief marketing officer, but also for the CFO and the CEO, who are equally concerned about the effectiveness and ROI from media spend.
Of course, paid and organic search solutions continue to represent the majority of our business as we address challenges to generate more lift for our clients, both in the U.S. and globally (where we continue to expand).
Do you consider your company an agency, a technology company, hybrid? Who's in the competitive set?
Yes, yes and yes. We are both an agency and a software firm. We also have technology companies and agencies as both partners and competitors. In this world, it’s all about what some call “co-opetition.”
I see the agency of the future not so much as an agency, but as a solutions company. The successful firms, much like Covario, will offer software, services, media buying, marketing strategies, creative, technology-building and analytics – all as part of one end-to-end solution for the clients. Basically, we’ve brought three cultures together – software, interactive services and analytics – so we can provide the best solutions to our clients, whether they are in the form of technology, strategy and/or execution services.
What are you seeing from your clients in terms of search versus display spend? Any trends?
We saw a big move from display toward search in the last three to five years. Then during the recent recession, people were very focused on earned media, including SEO and social. Coming out of the recession, advertisers are spending money again. With the rise of RTB, DSPs and ad exchanges, they are more willing to test targeted, lower CPM display ads.
Now, they are also starting to dip their toes into video. This is going to be a very exciting as video ad networks, targeted video buying and people’s video production capabilities come together to support online short forms and new forms of video, supported by the increasing bandwidth of mobile devices and tablets. As the bandwidth and the speed – 4G, 5G – increases, people can get video in real time. As a result, all of the ad formats are going to explode with opportunity and complexity.
Has "real-time bidding" entered your clients lexicon? How about your company's? Any interests there?
Real-time bidding has not necessarily entered our clients’ lexicon. They really don’t care. They want to know how high the ROI is for their media spend regardless of whether it’s real-time, near real-time, negotiated, or up-front. They’ll talk about it (real-time bidding) some, and we’ll say, “Well, maybe try that.” To which, they’ll say, “Well, what’s the ROI and is it comparable to search or display?” Search is real-time bidding. It has been for years. So, I don’t know if this is a really useful question for end advertisers.
What do you think about ad exchanges and demand-side platforms? Of interest? Does your strategy fit with these models?
As far as ad exchanges and demand side platforms are concerned, we come from the search world where its’ all about real-time bidding. It’s very ROI driven, very fast-paced, and very measurement focused right down to the click. We love it.
Paid search skills are more relevant to ad exchanges and demand-side platforms than possibly the old-school, negotiated ad network-type of buying, which the media agencies used to handle. There is a new breed of search marketers, who have ad exchange, real-time bidding capabilities as well.
We do both and clients are interested. Whoever can show the most competencies and garner the highest, measurable ROI -- across media channels within the context of an overall campaign -- that’s who wins.
Looking at the intersection of paid search and display, are you able to effectively provide cross-channel attribution for your clients such that you can tell a client to spend more in display to drive conversions in search, for example?
When we are talking with clients, it’s less about the individual click or display ad. We can get down to the creative level, but really our clients care most about it over the context of a campaign. A campaign could run a week, a month, three months or six months, where advertisers market a particular product or service, and attempt to create a specific degree of brand awareness. During the course of a campaign, you might see a social media flare-up and sometimes advertisers will take advantage of it, or perhaps they’ll dial something down in the creative on their display. Or then again, maybe they’ll see a lot of awareness being generated by their display ad, so they will target some more search ads to take care of the bottom of the funnel. It’s not necessarily about search VERSUS display or search VERSUS social. It’s about search AND display AND social AND email (by the way). What is the appropriate media to use at what stage of the campaign and in what balance? You are always using them all.
The question in the acquisition funnel is how are you weighting all these media channels at different times in the campaign to generate awareness, interest, consideration and purchase? And then in the loyalty funnel, how do you generate retention, up-sell, cross-sell, and -- with net promoter -- current customers referring new customers? Everyone talks about the acquisition funnel. But not many people talk about the retention or loyalty funnel, which we have also worked into our lexicon at Covario.
How does Covario address creative especially as it relates to display? Do you need an in-house creative agency?
We are more of what was traditionally called a “media” firm. However, we are getting more into creative with display ads and landing page optimization. It is something we are continuing to grow.
Where is the company today in profitability and funding? Will you need more funds to grow?
In less than five years, the company has broken into the black and is now profitable. We have raised all the funds we need from the savvy investors I mentioned. We don’t need any more funding unless we decide to go buy somebody else like we did last year (with Netconcepts) when we made our first acquisition.
A year from now, what are some of the milestones you'd like Covario to achieve?
Over the course of the year, I expect there to be continued high, double-digit growth as a result of expanding our search business (both SEM and SEO) on a global scale. In fact, we just announced further investment in our international leadership team and expansion of our footprint in China. I am also anticipating an increase in integrated digital marketing programs like those we discussed earlier for more of our clients, where we fully leverage search, social and display.
In addition, we intend to make major strides in the area of attribution analysis, media mix modeling and cross-media buying. The entire space is still in the very early stages, and we are one of the leaders and innovators. People are targeting this in a variety of ways, some from the bottom up, some from the top down.
My goal would be that we continue our rise as THE high-integrity, high-transparency, high-analytics thought leaders -- not just in search, but beyond. (We’ve won numerous awards in search and have been hailed by the analysts.) Where I would like to see us hailed in the next year is by the cross-media folks, as we start to unwind and penetrate this problem for enterprise-class marketers around the world.