Jalichandra stepped down as Technorati's CEO in May 2011 to join Austin-based digital startup MapMyFitness. After that change of pace, Jalichandra, who has remained and will continue as Technorati's chairman, decided to return to digital publishing and advertising with isocket, in part, because he said the company's focus on automating direct sales between publishers and ad buyers is in greater demand.
"About 70% of all ad sales are still direct, which means that publishers still do not feel comfortable putting their premium ad inventory on exchanges for real-time bidding," Jalichandra said. "At the same time, publishers and buyers are embracing programmatic as a way of streamlining the deal-making process, which can take as many as 40 steps between coming to an agreement on price and placement and the actual ad delivery. That's the problem isocket solves."
While isocket has been viewed as primarily publisher-facing, it also naturally relies on its ties to agencies and advertisers. Among Jalichandra's priorities as he takes charge of isocket is to strength its buy side relationships.
The first step still involves getting publishers more comfortable with the idea of "programmatic direct." Over the past year, most major publishers, such as the New York Times, Time Inc., Viacom, ESPN, Gannett, Hearst and Condé Nast have embraced programmatic sales methods. The primary vehicle has been through the use of private exchanges (or marketplaces) and Deal IDs, both of which offer direct lines of ad inventory to small selections of buyers and at particular prices.
But they're just small steps on the path to fuller programmatic business models and the value to publishers of these kinds of exchange tools may prove limited, Jalichandra said.
"Private marketplaces provide fine protections to publishers who put a portion of their inventory on exchanges," he said. "But the problem is that private exchanges are still primarily about RTB. It's a complete automated process and the publishers don't want to just put all their inventory in an exchange, even one with certain price floors and related controls, because it still results in CPMs being bidded down."
Instead, isocket promotes its software system as a feature within publishers' and advertisers' dashboards that lets them conduct traditional negotiations. But once the deal is done, buyers and sellers can let the computers make sure that the delivery and invoicing for those ad sales are handled quickly and completely.
"For us, the question is: how do we make it easier for advertisers who are already buying programmatically for RTB to expand their view and purchase more guaranteed, premium inventory through automated channels," Jalichandra said.
Jalichandra met Ramey six months ago during an industry conference in San Francisco. The two discussed strategies for scaling the 20-person isocket's business and Jalichandra had become something of an advisor to the company. As is the case with many startups, the skills and vision of a founder like Ramey often are not enough when an entity matures.
The experience of signing deals and expanding client relationships, not to mention planning for geographical expansion and hiring, all requires something vastly different than the creative spirit that goes into starting a business from scratch. In some cases, a company transitioning from its startup phase faces choices like whether to sell to a larger firm or acquire a new unit of its own; and lately, a lot of ad tech companies are considering the possibility of filing an IPO.
Jalichandra has been an investor in a variety of startups and a past advisor to companies like Fox Interactive, Weather Underground.
Looking ahead, he dismissed talk around acquisitions (either becoming one or doing one) and going public. Instead, the focus is on sharpening the products.
"I'm coming in as the proverbial gray-haired, grizzled executive brought in to scale the business," Jalichandra said. "John [Ramey] is a brilliant, young product visionary. But he and the board recognized isocket has some critical mass and we are at unique moment in history when it comes to the rise of programmatic and its application for automating the direct sales process. Externally, my role is to evangelize for programmatic direct the way some of the early demand side platforms promoted RTB. Internally, I'm going to concentrate on building the team and expanding the product lines and provide support to our publishers and advertisers."
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