Victor Wong is CEO of PaperG, a local, online advertising technology company.
Wong discussed his company's growth and offering with AdExchanger including trends he's seeing in the local advertising marketplace.
AdExchanger.com: What are some of the trends you're seeing today which you didn't expect when you started the company?
When we first started the company, the company was founded to figure out local, online advertising. What that landscape looked like three years ago is very different from today. A few different trends, in particular, have formed our product roadmap over that time.
One is real‑time bidding (RTB) which didn't even exist when we first started the company. For small advertisers, RTB is huge because it allows cheaper and more efficient ad buying at smaller increments. That's something that we couldn't have imagined when we first started.
Another thing that didn't exist - which we ended up building out - was dynamic creative optimization. When we first started the company, it was problematic enough having to require advertisers to have an ad created, let alone try and make multiple versions in order to find out which was the best performing.
Mobile is another big trend that we didn't imagine when we first started the company. It has enabled more, highly targetable inventory similar to retargeting which has become a more integral piece of our strategy in terms of enabling websites and for search retargeting, which obviously has a high degree of efficiency - especially for smaller advertisers.
The combination of those different trends within display has been something that has not only shifted the company's product, but has also made local display possible this year, if not last year.
So how do you position PaperG today?
PaperG is an end‑to‑end solution for local display advertising. One of our core differentiators has been what we call a Creative Management Platform. If you want to slap another acronym into the industry, it would be a CMP. But, we specifically focused on this piece for local display advertising because we believe creative is one of the biggest challenges for small advertisers. We put all of our resources behind building the simplest way to generate custom ad creatives for local advertisers - and optimize them, and then provide reporting.
Why is ad creative challenging for the local advertiser?
Small advertisers don't have in‑house design teams to produce their creative so they have to locate a designer or an agency that's selling them advertising – such as AT&T, the Yellow Pages, Newspapers – anyone already selling them local display advertising. For the most part, though, the small guy is thinking: "How do I even buy an ad, let alone, design the ad?"
How do you get rich media, specifically video, into local advertising? Is it possible?
It's possible. Video has been something that a lot of people have been pursuing for a while. From a small business's perspective, most have started off with search engine marketing because it is the easiest way in which to produce ad creative - and the efficacy of local search is certainly high. Video has been a big leap for a lot of them because you have extraordinarily high production cost and logistical challenges. And, there are even greater challenges in distribution.
Display is a happy middle ground where some of the recent trends that I touched on earlier have enabled display to work for the local guys. With our Creative Management Platform, the costs are trivial in producing the creative. When we think of local advertisers, we think the adoption of local display is certainly ahead of options like video and rich media.
Let's discuss newspaper publishers that you work with. What are you seeing there?
So, right now we work with over 100 publisher partners and are powering about 20,000 advertisers through those partnerships.
For all of these guys, there's a spectrum of how they use our technology, but we can build dynamic creative instantly for any advertiser, which mean for publisher sales calls, we can actually build an ad for a prospective advertiser before asking them to make an immediate purchase. It's one of the radical changes that we've introduced to this space, particularly for the smaller guys.
We're trying to sell time and space. It is a difficult proposition to small advertisers, because people used to say, "Hey, buy an ad from me. You don't know where or when it's going to run, and you don't know what it's going to look like. But give me money, and we'll make it happen." That's how it used to be sold. Now you can build ad creatives instantly and customize for local businesses through our platform. We have partners that have been able to double their sales close rates.
For the publishers, particularly around pre‑sales, we've been able to help them by enabling this kind of "spec" ad creation capability. Then, certainly on a post‑sales basis, we fulfill the campaign through building out the creative to the final version, or optimizing the performance of the campaign by modifying the creative. Those are the things that we provide our publisher partners.
And on the publisher side, how do you qualify you target market?
We focus on local media. That could be anyone from a Yellow Page publisher that has its own website or sales teams, to large newspapers. Right now, we are rolled out here in the United States and as well as Canada. Those are our primary markets.
What are you thinking about Facebook for your platform?
Fundamentally, we believe that ad creatives matter in terms of being able to produce it. Secondly, keeping the creatives fresh and updated is a big challenge, particularly if you are constantly running your advertisement to ensure efficiency. With Facebook, we haven't announced any plans yet for our product roadmap, but we have many requests to expand our platform into Facebook display ads. Our engine could support it, and we have thought about it. I think the problem we would be solving is how to produce the initial set of creatives for an advertiser, since we still need to keep that creative engaging and fresh. That's challenging when you start thinking about the scale of local advertisers.
Why is real-time bidding important to small advertisers?
Being able to bid on an RTB basis makes it feasible to do media buying. It makes it feasible for a budget that is small, such as $500 a month.
That's for retargeting, right? It's a cookie pool they already own, and it's a small group so it's not that much money, but it's intenders?
You can combine that with intenders, but we have actually successfully done campaigns of that size using things other than explicit intent data such as geo-targeting plus contextual targeting. Ad exchanges are getting effective cost-per-clicks for these advertisers. One of the things we're going to see for display advertising is an influx of performance dollars coming into local display from search. There are huge buckets of spend going on in local search that are not getting fulfilled because the cost-per-click (CPC) is getting driven too high or there's not enough volume for that specific local query. Display has the promise of fulfilling it, and we're beginning to see it now with real-time bidding (RTB) . If you had to go out on a per‑advertiser basis and put in a media order directly with a publisher or an ad network, the spend required would be astronomical, relative to what any local advertiser could afford, or even experiment with. RTB has really changed how local display can work for the small guys.
What's on the product roadmap in the year or two ahead?
When we think of display advertising, there are three major pain points, particularly for local. There's the ad creation piece, ad targeting piece, and the ad reporting piece. We have plans on the roadmap to conveniently solve the problems for all three of them. Right now we have the ad creation and dynamic creative optimization piece, packaged within the creative management platform I discussed.
Also, we are constantly investing in more ad designs and support for new media like mobile and HTML5. Those are pieces that we're already addressing, but we're continuing to invest more into it and the dynamic creative optimization (DCO) piece for smaller advertisers. We're already doing DCO for campaigns as small as $500 a month, which was just unheard of before.
As for ad targeting on our roadmap, it's about improving and making it even better, i.e. the website and search for targeting. We want to attain more data on local search queries, as well as get broader distribution on SMB websites for retargeting. Cross‑platform, including local targeting as a seamless component, is another piece ahead.
Display should eventually become one thing. You build this ad campaign and you shouldn't be thinking, "Mobile versus Online." It should be one. Right now it's not, but that's what we hope to enable. It should just get it to where it's working, and to the right audience. The last thing for ad targeting that we see ourselves incorporating in the year ahead, is "Zip+4" targeting down to a household level. There are a few different emerging data providers in that space and we're really excited about it. As you can imagine, getting targeting at 100 percent accuracy down to a household level drastically increases performance for local advertisements, whether it is for someone as small as the local plumber or even someone as large as an actual brand retailer who's used to this sort of granular targeting in traditional media channels like direct mail.
How are you on revenues and profitability?
We had a record year. As a private company, we don't disclose exact figures but we are not currently looking for more funding and we're happy with our current rate of growth.
Based in San Francisco, we have a little over 15 guys. We're ramping up hiring this month, on the business side. Historically, the company has been a very product engineering‑centric company - everyone can code, for example, but we're now expanding the business side to non‑coders in order to staff up in account management, sales and support.
Looking ahead on the customer front, we're beginning to work with what we call "national local" customers - national brands that target locally. We're also doing some interesting experiments looking at how we drive offline traffic from online advertising. Hopefully, we'll have some things to share with you in the coming months around that.
By John Ebbert