AdExchanger.com spoke to the Inadco executives yesterday.
AdExchanger.com: Can you talk a little bit about why you’ve decided to become more public about Inadco now?
JAMES WALKER: The problems that we're trying to solve are big problems and it's required a lot of time and energy to figure them out and we've had a lot of technology to build. So we made the decision early on that we were going to focus on ourselves and what we had to do to position ourselves to win at this game. And that meant pouring all of our energies into the business as opposed to being out there marketing it. So, that's really why.
DAVE ZINMAN: I’d also add that when I looked at Inadco as an opportunity and made the decision to join, one of the things that impressed me most was the amount of technology that had been built here. As James said, the problem that we're trying to solve is a very hard one, which is how do you support Cost-Per-Lead (CPL) on display as a horizontal platform? It's really taking everything that was built in the display world around creating ads dynamically, bidding, ad serving - all the ad management that you find in the display world plus layer on top of that all of the CPL “smarts” that go into typical landing‑page optimization, lead handling and verification - and putting it all on one ad server.
Drilling down on the complexity, is the “lead” component what makes this a hard problem to solve as you say?
JAMES WALKER: Yes and no. This isn't hard because of the extra stuff you have to do with leads. What's hard about this is how do you take the complexity of cost-per-lead advertising and how do you simplify it for thousands of advertisers and publishers?
So, figuring out how to do that is what makes this complex and then using technology to do it and to ensure that it's automated and doesn't require human intervention. That's what makes this difficult.
What we're doing is making cost-per-lead advertising look and feel like search or making cost per lead advertising look and feel like keyword cost-per-click advertising. To be able to do that, that's the hard part and we think we've made a lot of progress against that objective.
DAVE ZINMAN: And, the proof is in the pudding too. If you log into any ad server or any ad delivery system for display, you'll see a check box for CPM, CPC or maybe a checkbox for CPA - but you won't see a checkbox for CPL. There are hundreds of categories of advertisers that would rather buy on a CPL basis than on any other basis, but they're completely underserved.
What is the difference between CPL and CPA advertising? Isn't a "Lead" (CPL) an "Acquisition" (CPA)?
JAMES WALKER: CPL is leads (i.e. user fills out a targeted form) and CPA is acquisitions (i.e. user commits to pay something or actually makes a purchase). Inadco's view is that CPL is far more scalable because a lead can be universally defined by all advertisers and, secondly, it can occur online (vs. offline) for all advertisers. Whereas with CPA, different advertisers have different definitions of what an acquisition is – hence, no uniformity - and acquisitions often happen offline for a lot of advertisers, which makes it tougher to measure.
Can you shed more light on the target market? Are you talking about long‑tail advertisers or are you talking about certain verticals of cost per lead advertisers? Is this outside of the usual bucket of cost per lead advertisers? Etc.
JAMES WALKER: I've been in the cost-per-lead, cost-per-acquisition space for 11+ years now and have spent a lot of time thinking about this problem. We see the opportunity as a two- to three-hundred vertical opportunity.
So, if you think of Google as a thousand different verticals or categories - and that's a simplification of Google, but I think it’s one way to think about it - we think somewhere between two- to three-hundred of those categories are ideally suited for cost-per-lead. Put another way, the advertisers in those two- to three-hundred verticals, the way they think about their marketing spend, is “What's my effective cost-per-lead?”
Our view is those advertisers would just as soon pay per lead. The opportunity for Inadco goes well beyond what's historically been defined as the lead gen(eration) market. And what's exciting to us is we're not having to create this market - the market's there. It's just no one has built a platform to take advantage of all that demand. That's what we're focused on.
DAVE ZINMAN: And, another way to think about what's unique here is we're a startup, but we're already in 15 plus verticals and that's extraordinary for a company that might be considered “in” the CPL space. It's because the way the company's approaching the market is unique in building a horizontal platform to enable CPL across display.
Can you share a few verticals that you’re in right now? And what about revenue and profitability today for the company.
JAMES WALKER: We're very active in a lot of finance verticals as well as home improvement and healthcare.
We’re not yet talking about revenue. I didn't hire my first senior salesperson until last September. And, Dave came on board in February. So we're really just getting the sales engine going.
But, what I can tell you is that we've seen significant growth in the last 6‑12 months and we expect that growth to accelerate over the next 12‑24 months. We're becoming a meaningful channel for a lot of branded advertisers that want to buy media on a CPL basis that want access premium display inventory on a CPL basic.
DAVE ZINMAN: James mentioned something important which is that we're focused on branded advertisers. I think that's an important distinction. When a company in the lead generation space collects leads, a common strategy is called a “shared‑lead strategy” where the consumer's data gets sold to multiple advertisers or resold to multiple advertisers and then gets contacted by multiple advertisers offering them the same product. Inadco took the very wise decision early on to focus on branded, exclusive leads which means that when the consumer interacts with our advertising, they see the brand of the advertiser that they're interacting with right at the beginning -and that information that is captured from the consumer is sold to just that advertiser.
One of the things this does is create a much better consumer experience.
First, the consumer isn't hammered by multiple advertisers.
Secondly, it creates a better advertiser experience because the advertiser is not in a situation where they're competing with other advertisers to convert that consumer into a customer. The consumer from the very beginning knows which advertiser they're interacting with, so the intent of the consumer and the likelihood of the consumer to convert is higher.
This kind of decision is meant to build a much healthier platform for CPL.
Would you say you’re replacing the traditional lead gen ad network business by automating it?
JAMES WALKER: I don't know that I'd use the word replace. This is how I've thought about the market from the beginning. 10% of the market is "lead gen." It has been for 10 years now. As the overall market has grown, the lead gen market has grown along with it. We're not really focused on the 10% of the market that is lead gen. We're actually focused on the other 90% that today is CPM or CPC. We think a big chunk of that should be CPL.
DAVE ZINMAN: And, the numbers to which James is referring is the $25 billion in online spend and about $2.5 billion in what would be classified as lead gen.
JAMES WALKER: By the way, we don't think of ourselves as “lead gen.” We think of ourselves as cost-per-lead. It's a slight distinction, but it's an important one. We're not doing things to convince consumers to fill out a lead form. Our advertisers use the platform to build cost-per-lead campaigns and we find targeted placements for the advertisers. But, we're not doing anything to generate the lead. Whereas cost per lead is really a pricing mechanism, it’s a more efficient pricing mechanism for the market.
What would you say are some of the key learnings that you'll be bringing from your Yahoo and Blue Lithium days?
DAVE ZINMAN: At Blue Lithium, I joined around the same stage of company where Inadco is today.
Looking back at the market in 2005, there was a lot of noise - just like there is today. There were a lot of ad networks competing. It was really important to understand what Blue Lithium did that was special and stay focused.
When I got to Yahoo, we had a very different challenge, which was we were the largest display ad network in the world, and we were trying to understand how you grow off such a big base and dealing with questions at scale. How do you make decisions when you’ve got to think about scaling everything that you do?
If you can't meaningfully scale it, you don't do it from the start. So a lot of those lessons apply directly to the challenges here at Inadco.
Is there a story, though, for brand marketers who are driving awareness campaigns or who want to spend on awareness campaigns?
DAVE ZINMAN: There’s a huge potential here for any brand marketer that wants to engage with the consumer in a deeper way. They want to interact with that consumer -collect an email address, sign them up for a program or an activity, an event, sweepstakes. Any kind of interaction that requires deeper engagement than having them receive an impression. There's a great opportunity to leverage a platform that can do the data collection efficiently.
JAMES WALKER: To be clear, we can deliver that brand message or that experience to the consumers and we can add the performance component, which is collecting some sort of information from the user. And we can do it all within the ad unit, which we think is a great consumer experience for brand‑oriented advertisers.
What about funding? Anything pending?
JAMES WALKER: No, I raised some major capital when I got going. Then we raised a Series A from Redpoint - a little over $5 million - over a year ago now. We're just fine on the funding front and driving pretty good revenues.
Regarding the investors, I raised money from Matt Coffin, the founder and CEO of LowerMyBills, Mike Walrath, the founder and CEO of Right Media, Ron Conway and from Redpoint. Chris Moore at Redpoint, who I think is fantastic, has emerged as the ad platform guy online.
A year from now, any milestones that you would like the company to have accomplished in particular?
JAMES WALKER: For us it's about continuing to add capabilities to the platform that enables us to create more value for advertisers and publishers. We've got a whole list of things that we're working on that we think will enable us to create even more value for our customers. Also - just continuing to add categories. We are taking a methodical approach to adding categories and ensuring that when we launch a category, we approach it in a repeatable fashion, and really honing in on that formula.
So we feel that as long as we continue to build technology that differentiates us from the competition and we continue to methodically add categories and prove this out as a horizontal platform, then great things will happen.