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Kiran Aditham is a Business Management grad from the University of Central Florida, Aditham earned his stripes as a freelance writer in music/arts publishing.

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ADOTAS Conversations: Erik Matlick, CEO, Industry Brains

Written on
Jul 17, 2006 
Author
Kiran Aditham  |
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ADOTAS Conversations: Erik Matlick, CEO, Industry Brains

A: In 2005, you guys were acquired by Marchex. How did that come about? Is this basically like, you put 2 powers together, how is that going to work for future collaboration?

How it came about was…it’s a relatively small industry and I had met with Russell Horowitz and Pete Christothoulou over the years and they were doing some interesting things. We were just literally having meetings talking to each other about what we were doing and they were doing. It became pretty clear after some time that their strategy was not competitive with ours. They were out there, they had an affiliate network, then they went out there and purchased a significant number of domains, which gave them a lot of proprietary traffic.

Then, they started to verticalize what Marchex was doing and as our conversations progressed, it made perfect sense that what we were doing could work very nicely with the assets that Marchex had built up over time—meaning that we were verticalized as well and we could actually monetize the traffic that Marchex was building and buying. That’s literally how the conversations progressed and ended up acquiring us.

A: What’s the dynamic like? How’s the relationship going?

How is it working today? Basically, there are two main areas that I would focus on for our conversation today. There’s the direct navigation business that Marchex owns and operates, which…maybe Mark can tell you how big that is, how much uniques that is, and what that means.

Mark: You probably know this Kiran, but we own more than 200,000 websites that are primarily generic, commercially-relevant terms and they’re in specific vertical categories, so it ties in very well with what IndustryBrains is doing. These websites attract more than 28 million unique users as of March of this year. That’s the most recent public data that we have. So there’s a significant base of proprietary traffic. One the ways which we’re monetizing that is by working closely with the contextual elements that IndustryBrains brings. That’s still in its early stages, but we’re very pleased to be collaborating on it.

Eric: Additionally, a lot of those sites, you can see that they are being monetized from pay-per-click from other providers and nationally we can, in many cases, monetize big quality traffic at a higher price per click than other companies. So it makes perfect sense to integrate us there.

The second one I’ll mention is Open List which is the most recent acquisition that Marchex made. It was just a couple of months ago and we’ve already talked about and the industry’s already in the process of implementing our product across Open List as well.

A: That also ties into what sets you guys apart from your competitors. The other contextual advertising companies that I talk to like ContextWeb, kind of say this is our patent-pending product. What’s IndustryBrain’s niche in the field?

Eric: What separates us really goes back to what I talked about before: technology, publishers, and advertisers. There certainly are other companies that do have quality publishers and other verticals, but what it comes down to, if you’re a finance advertiser, if you’re saying from the advertiser perspective what makes us different, it’s all about where your listings are going to show up and the quality. We’re not a network, so you’re not paying them one price and showing up everywhere. You can actually pick and choose where you want to show up, which sites you want to be on. The sites themselves that we actually work with are very high quality and very unique. And in certain verticals, there really is nobody else that has those kinds of sites, for example, in the IT or finance space.

A: What about your private label product, and what advantage does it provide?

Eric: Things go back and forth. To give you an example, Bankrate is a publisher where they really have a very good sales force and they focus on branding and direct marketing, so they have a lot of relationships. And after working with us for a while, they realized that they didn’t need us to sell the advertising so much anymore. What they needed was the engine to sell it themselves.

So, we actually built the first private label pay-per-click marketplace that I’m aware of. Bankrate’s been using it for a couple of years now. It’s the entire product inside out, where they have the ability to go out and sell their own advertisers using our system. It’s a self-serve signup for the advertisers. They bid on what they want to pay for Bankrate and only Bankrate’s categories. It’s an auction platform and we take care of the whole back office as well as reporting, analytics for the publisher, invoicing, the whole thing.

A: Aren’t private label systems an emerging trend nowadays?

There are only a few that are doing a private label, and then we have a lot of publishers that are doing more of a hybrid where we sell a lot of the advertisers, but they’ll also sell some advertisers themselves using our system. So we’re both selling into their own site.

I would say almost everyone is doing that now, which is something that publishers weren’t doing a couple of years ago, but now they’re able to carry the trend. They’re out in the field and someone asks them about pay per click, they want to say yes we offer it, here’s how you sign up.
A: In terms of the contextual/interactive advertising field, besides the opportunities that are present, what are the challenges and what are the kinds of trends you see happening?

Eric: I think that the opportunities and challenges are pretty similar. What’s actually happening right now is that advertisers are actually getting smarter, and what I mean by that is that they’re tracking things much more closely now. They’re not all looking for acquisitions; they’re looking for cost-per-view. You know they have their metrics in place, but gone are the days where they can say, “this looks like good traffic, we’ll just spend a bunch of money.” Everybody’s tracking now. And that’s challenging because you have to make sure that your traffic is quality and it’s actually worked to our advantage because we’ve focused on not trying to build the largest network.

We’ve focused on staying premium and relatively small compared to some of the others. Fraud screening and fraudulent clicks have gotten a lot of headlines lately. Fortunately that doesn’t affect us because the sites that we have…if you look at the list of sites that we work with, those kinds of sites are not motivated to make and extra 5 or 10 thousand dollars a month by generating some fraudulent clicks. The other thing we’re concerned with there are spiders and robots indexing those pages and how do we make sure we’re not counting those as valid clicks. But it’s not malicious by any stretch.

That’s certainly a challenge of the industry. The industry is definitely more mature now than it was before, which is a good thing for us because the advertisers that are tracking are now starting to realize, “maybe we should pay a little bit more for a click because not all clicks are created equal and buying 5 or 10 cent clicks maybe is 5 or 10 cents wasted, whereas maybe 6 dollar click looks more expensive before, but it’s a very valuable click.

And that’s where we come in.





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