ADOTAS Conversations: Erik Matlick, CEO, Industry Brains

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Having remained dormant for the past several weeks, ADOTAS Conversations finally makes its return, once again providing readers with a Q+A-style profile of important companies/executives in the interactive advertising industry. Appropriately enough, we come full-circle back to the contextual targeting realm with Industry Brains.

The four year-old company has specialized in performance marketing strategies for the IT and financial sectors, racking up a client base of publishers that includes BusinessWeek, The Motley Fool, USATODAY.com, IDG’s Infoworld, Computerworld and Macworld, Ziff Davis Media’s PCMag.com and eWeek.

Recently, ADOTAS had the opportunity to pick the Brain of company CEO Erik Matlick (above) as well as VP of Public Relations Mark Petersen. The pair dutifully supplied historical information, keen industry observations, their internal relations with new parent company Marchex, and declarations on what makes Industry Brains’ model so unique.
ADOTAS: Hi Eric, so as per usual, let’s start with the inception of Industry Brains.

Eric: We were founded back in February of 2002. I actually came from a media background working at Ziff Davis, so I was pretty familiar with content publishing and also the value of premium brands since Ziff Davis is a pretty well-known brand.

So we started the company doing search, auctioning off keywords and we were distributing them to very well known content sites and what we quickly figured out was that while there is some search on sites like Ziff Davis or CMP, the majority of the traffic on those sites and the real reason that people go to those sites is to read the content—not to do a search. They only do a search when they can’t find what they’re looking for.

In addition, there’s exponentially more page views out there than there are searches and so we quickly, not changed our business, we still do search, but we quickly realized that the real opportunity for us was to start focusing on the content implementation and instead of auctioning off keywords, we started auctioning off site-specific categories.

A: Tell me a bit more about your “site-specific” approach to contextual targeting.

E: The sites we were working with really lent themselves to be site-specific, more so than you may think because the brands are so well-known that it became very easy to go to an advertiser and say, “You know we have a network of sites but they’re well-known brands when you want to bid on them on a site-specific basis.” Fast forward to today, and we have a network of many, many sites, a number that we say is over 100 very well-known sites. Business finance is one of our largest verticals.

Another one of our large verticals that we focus on is information technology. We’re also in many other verticals like travel, things like human resources, etc. Some of the sites that you’ll definitely recognize, Business Week, Motley Fool, Forbes, those are in the finance category. In the tech category, we’re [working with] Ziff Davis and CMP and IDG Media and many, many other tech sites. Some of the relations that we have are actually exclusive, but we’ve performed so well that the publisher doesn’t even work with anyone else.

A: How you did you guys lock these pacts with very-established online publishers, these brand names so to speak?

I can break that down into four areas, the first being first mover advantage. In February of 2002, we started looking at the space way before anyone else was doing anything like this. So I have to say that being the first one out there, there was no other noise. We went to these publishers and they said, “Gee, we do have some ad inventory available. Why don’t we build you a fixed position on these pages and see how it works.” So that’s definitely part of it.

But what actually happened after that, the other three parts are technology, publisher relationships, and advertisers. Once you get all three of those going at the same time, it makes it very difficult for a new venture to enter the space. I’ll give you an example. On the technology side, we’ve become very sophisticated and we’ve invested a lot into the technology.

And then from the resource perspective, just from experience, knowing what works and what doesn’t work. So we do things like we’re auctioning off categories, but we’re doing yield management in real-time to determine which ads are most effective on which pages. We’re also spidering the pages to determine which categories and which advertisers to even serve in the first place. So doing those kinds of things makes it difficult for others to even enter the space. Then once you have critical mass of publishers in a particular vertical, that gives you critical mass of advertisers.

So the other two [areas] fall into place at the same time and then what actually happens is, why would any publisher want to leave and go with a new network that doesn’t have any advertisers yet? If the new network doesn’t have advertisers, they don’t have publishers. So you kind of need critical mass of publishers for the advertisers to want to join it. It’s very difficult for someone else to say, “we can do what IndustryBrains does, but we don’t have anyone in the finance space yet.” Well, then the publisher would say, “I’m making so much money with IndustryBrains, why would I go back to zero and help you build your business, and how are you going to compensate me for that?”

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