Having built one of the early ad servers at Matchlogic, TruEffect CEO Ron Hill and his core team have deep experience in ad tech. Among the fruits of those ad serving days were patents that Hill says have become the backbone of his company’s first-party advertising technology today.
To be clear, TruEffect isn’t a young startup. It was founded by Hill in 2002 but targeted its display advertising future more seriously in 2008 when a direct marketing client requested help with some display campaigns.
AdExchanger spoke to Hill recently about his company and industry trends.
AdExchanger: Should we think of you as a retargeting company in that, after all, first party data is key to retargeting?
RON HILL: We think of ourselves as an ad platform and analytics company. What we do that's different is leverage intelligence that's already out there in the brands - such as CRM data - and add to it. We do this in order to deliver the right ad, to the right person at the right time - and also measure its effectiveness.
While we've got a platform, there are many parts to it such as retargeting and measurement. There's also delivery. It's a combination of all of those things that provides our turnkey solution.
Regarding the patent portfolio, can you tell us a little bit about it?
We have a number of patents around first-party advertising which is where we leverage the brand's first-party data. Any of our customers who have a good segmentation scheme or propensity score model – all the things they have done in the offline world for years and years - can now be done in the online world with display.
But, it starts with measurement. Third-party cookies get deleted regularly as everybody knows. Because of that dilution there's a huge discrepancy in accounting methodology.
In first-party models, cookies do not get deleted nearly as much. In fact, we've got a patent pending around this. We can determine what the first-party discrepancies are compared to third party cookies. We know exactly by client, by vertical, by brand, what the measurement problem is.
Once we've determined that we can also help them know where to buy the particular segments they’re after, across which media buy. If you’re looking for “average” shoppers which are a segment within your portfolio, you'll find out that there are more “average” shoppers on the media buy that went across these properties and this is what you paid for it - and this is what you should have paid for it.
We break it down by audience segment. It's bringing direct marketing into the display world.
Can you be more specific in terms of target market beyond “brands”?
We're hitting retail and communication markets – all the areas which need a cost performance as well as delivery performance.
Regarding the patent portfolio, it would seem that there are other companies out there that may provide a similar service. Do you agree? Do you see competitors out there using basically your patented technology? And, can you see potentially enforcing the patent?
We're a fairly small company in the whole scheme of things. There's no one who we've found who is encroaching on the core of the patent. I find a lot of people speaking the speak, but they're referring to a publisher-side, first-party cookie for one, and/or still leveraging first-party, but into a third-party model.
The advantage we have is that we've got a two-year leap ahead of others. Even if they started to copy the patent technology piece, it's what do you do with that data when you've got it. Our assumption is that people will start to get closer to it. That's why we've built a number of patents around the technology, around the first-party patent itself. We have another half dozen outstanding patents [referencing] how to use the technology.
What are your expectations for the company over the next 12 to 18 months? Any milestones you'd like to hit?
We've had a couple of good years as we've started to grow the company. We had 3x revenue growth last year. We'll probably do very similar this year. Next year, we'll probably do a 2.5x at least. I see our revenue growth going well as we go deep with clients.
We're certainly pushing the revenue button now. It's revenue with margin, it's not just top line revenue. We're not an agency, so to speak. It's good margin business, and it's also good for our clients. We're bringing out some enhanced product lines, too.
We've spent a lot of time making things right, so we haven't had a lot of glitz and glamour on top of our product like nice visualization reporting tools, which we're bringing to market next year.
Also, we've grown the company from ten people a year and a half ago, to just around 60 right now. We'll probably be 120+ next year. That's going along with our revenue growth. We've got a very solid financial strength with an investment group out of Wall Street. We feel very well positioned right now.
We're looking at all these opportunities now from a Board level, so there's every chance that we may take a round of investment next year to realize the growth potential.
An industry-wide question - what’s your view on the ad tech ecosystem these days?
We tend to look at everybody in there as a point solution. If you're looking at a publisher selling inventory out there, they're getting a $1.80 CPM. There is a pretty good crowding up of the stack – and that’s where all that money goes… the difference between the $5 CPM the brand is paying and the $1.80 CPM the publisher is receiving.
We use a data source which is accurate and draws across the baseline of all of those other features of our products. And, we can play with everybody in the landscape. We also have a module that is mobilized data from the offline world [transformed] into online, first party. Most of the CMOs and the marketers we talk to are pretty confused as to what they need. “Why am I using three retargeters?” It's a great question - why are you using three re-targeters?
Privacy is another big one that we play well in because, we're contained within the inside of the domain of the advertiser. The data is never shared with a third-party such as ad networks, or bidding to the highest bidder. The data is protected and maintained, so that's another part of our solution that we felt was important.
What do you see see happening with the service layer today, and how do you see that evolving in the next few years in digital advertising?
We think there is an important service layer today. We work with a lot of the attribution players, where we can feed them accurate data from our first-party model. We work with a lot of the DMPs, or the networks as needed, so we fit across many of them, in any particular way. We can retarget or provide a baseline for the retargeters.
Measurement is the key to everything. Everyone is talking big data. BUT, having a lot of data is one thing. If you can't measure it accurately, and act on it quickly, then it's not much value. We came from a background where we had a lot of data as well - the old profile database days -which still exist. The cost of that performance to go and get any sort of lift was very heavy.
What we've done is instead of taking the data to the ad servers in the field, we're taking the ad platform to the data and letting it be used from its source.
Is the user of your platform in the end with the brands or with the agency?
It will be part of supporting a lot of those players in the end. It's both. We have deals going after direct response, direct marketers as well as brand marketers. Also there are performance agencies that are out there trying to get lift for their clients. They have been very attracted to our solution.
As most people know, 60 to 70% of customer revenue comes from the 20% who have already been customers in the past. If I know where they are and how to find them, and how to talk to them properly using TruEffect, we can show them exactly where and exactly what they should pay for it. That's us in a nutshell.