Adhesive’s Little: Direct Response Led Online Ad Breakthroughs Before, It’ll Do It Again

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Chad Little is on to his fourth act in the digital ad space with a company he launched this fall called adhesive. Online advertising has always been about stickiness, and with adhesive, Little is working on solving the problems with display and direct response advertising he began addressing with his last company FetchBack. That company was acquired by GSI Commerce two years ago. A year later, his new parent was bought by eBay. Before all that, he founded the AdOn Network 14 years ago and sold it in 2007. Previously, he created fantasy sports venture Sandbox Entertainment.

With just about everyone talking so much about bringing the values of traditional “premium advertising” and “brand awareness” to the web, Little hopes to make the case that direct response is not just about cheap, remnant inventory, and that even much maligned cost-per-click ads can have some dignity and class.

AdExchanger: What is adhesive and how does it build on what you've done in the past with FetchBack and during your time at eBay?

CHAD LITTLE: Adhesive’s purpose is to drive conversions for direct marketers via display ads. That’s the simple answer, but it doesn’t get to the core of your question.

When I started FetchBack, the vision was retargeting would become a budget line item for online marketers. The market is well on its way there if it’s not already. That said, marketers struggle daily with investing in media to target consumers who are further down the sales funnel. If I were to distill the FetchBack experience down to one key learning, it would be a painfully obvious one. Direct marketers care most about new customers who have never been to their site. Most will talk a good game about developing repeat sales but their actions say something different. They’re looking for new blood.

Post the acquisition by eBay, another obvious learning appeared. The battle between Amazon and everyone else is growing. Part of this healthy competition is obvious and the rest is behind the scenes. Amazon has access to a tremendous amount of very valuable data. Google makes little to no money on obscure searches. Their bread and butter is the consumer looking for the latest digital camera. Amazon poses a real threat to retail sites as well as Google, eBay and Yahoo.

So how is adhesive different from those companies, particularly Amazon and Google?

Adhesive is different in three ways:

1. Data Co-Op: Adhesive is a technology company. You cannot supply effective ads for direct marketers without good data and the know-how to put it to work. Adhesive advertisers can set their bid prices based on where consumers are in the sales funnel. This includes the ability to reach consumers who sit on top of the funnel and are not actively searching for a product. Acerno, as well as other companies, use the co-op model but not on a cost-per-click. The Holy Grail here is delivering an ad where a consumer discovers a product or vendor they were not aware of.

2. Premium format ads: We’re pushing the ad format envelope. The industry has relied on stale, out-of-date formats for too long. We’re basing our first ad units off of the Interactive Advertising Bureau’s Rising Star formats. Early reviews from brand marketers on these new formats are quite positive. Compared to a standard 300x250 unit, an IAB rising star Portrait ad unit is far superior. The ad unit attracts attention 2x faster and viewers looked at it 4x more often and 4x longer.

The first ad unit we’re producing is the Slider with an “adhesive twist.” We’ve slimmed down the bar to make it less intrusive. The Slider will display dynamic messages and products based on each individual consumer vs. untargeted, run-of-network ads. The consumer can simply slide the page over, browse, complete a purchase, and slide right back to where they left off. Slider Demo. This is a great experience for both the advertiser and the publisher. Publishers now have an easier way to get the consumer back to their website after viewing an ad and retain page views. Publishers are always at odds with ads. They’re necessary but take their viewers away when successful.

Our goal is to return to the days of sustainable click-through rates of 1 percent-plus.

3. Cost-Per-Click: CPC by itself is not a competitive differentiator. It’s the combination of CPC with the other two differentiators.

What is this notion of "Project Devil for Retailers?" How does the reference to AOL's interactive ad units reflect your solution?

AOL has been working on Project Devil for the past few years. The focus of the project has been to redesign publisher webpages by removing some of the clutter, and swapping out the smaller ad units for the larger, more effective Rising Star formats.

The ads have room to integrate widgets or apps that allow users to interact with a map, watch videos, or take a poll. The goal is to drive higher CPM’S and improve the online experience for the consumer.

Publishers have to redesign their pages to create new space for the new ad units. That means getting rid of a number of small ads. It also takes time to sell these new formats. To date, AOL has been focused on selling these ads to brand advertisers and this makes sense. Brand advertisers are also very interested in taking advantage of the additional space for rich media and interactive widgets. The challenge here is the quantity of brand ad campaigns vs. the dollars being spent by direct marketers and retailers. The later spend more online and they spend it more consistently. If they find a channel that works, they will keep their campaigns live indefinitely. This is something we feel is needed in order to reach the fill rate necessary for publishers to dedicate inventory to these new formats.

Adhesive is not focused on brand dollars. We’ve developed a self-service interface for online retailers and direct marketers. This is where you can get scale. Direct response advertisers have led the majority of new innovations on the web – and there’s no reason why they shouldn’t be playing a key role in the push for these new formats.

Is adhesive going to be more product/engineering focused? Or more sales/marketing focused? How do you intend to balance the two disciplines?

This is a good question. We are developing a large direct sales force but adhesive is a product/engineering focused company at heart. This isn’t about developing a sales force and leveraging it by supplying multiple product offerings to advertisers. In my opinion, you can’t have a sustainable business in this industry that will be competitive and meet direct marketers goals without being a technology company.

I believe you balance the two disciplines by choosing and knowing what you are. After that, the key to sustainable success depends on what metrics you choose to focus on. The goals you set at the top of the list will drive behaviors. Many times, company leaders will set goals and objectives without first making a conscious choice as to what kind of company you want to build.

How has the practice of retargeting evolved since FetchBack? What problems have been solved? What are the continuing hurdles?

One of the original problems FetchBack solved was the ability for marketers to reach the majority of their lost prospects. At a high level, the market has now evolved into companies that provide custom retargeting solutions on a CPM or CPA model vs. those that price on CPC.

The CPM/CPA providers are typically very custom solutions and services. Advertisers can sub-segment their lost prospects in just about every way possible using custom dynamic creative. This can be a very effective and is ideal for agencies and large advertisers.

The companies providing CPC retargeting keep the optimization of campaigns behind the curtain and creative is template based. This is a more simplified approach for marketers who are not interested in controlling their campaigns and creative.

The key issue that continues to plague the market is attribution. What’s the real value of a view-through? How many impressions is enough?  Marketers are left with no clear third party option that helps them identify which vendor/solution is best for them.

What are some of the plans for Adhesive between now and the end of the year?

We’ve just completed a Beta release of our offering and we’re now accepting limited number of publishers and advertisers for Q4 holiday season. Our sales team will be approximately 10 individuals throughout Q4 and we plan on expansion in Q1 as we move out of the Beta phase.

Throughout 2013 we will be making advancements into innovative new ad units and an aggressive expansion of our advertiser and publisher sales team.

Any funding or acquisition plans?

We’re self-funded to date.

We have explored a couple of acquisitions since we opened the business. Nothing has appeared as a clear fit at this point but we remain inquisitive with a keen interest in companies or technology that can accelerate our growth.

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