Michael Katz is President and Founder of InterClick.
AdExchanger.com: Is it more difficult being a public company than private in the advertising industry? Does this give an advantage to your competitors?
Good question, I get asked this a lot. There have been many advantages and disadvantages to being public. I think being public has provided us with credibility among advertisers and publishers. Relationships are still a key driver in this industry, being public has given us a sense of credibility and in turn allowed us to build trust with our partners. In addition, being public has required us to focus on continuous operational improvement. Sometimes you need to be backed into a corner to really excel and being a public company has required us to be focused on revenue growth, margin improvement and operational efficiency via better supply chain management. Obviously the capital markets could be a little better than they are right now but that’s not anything we can control so its not something we tend to worry too much about.
Can you give us a sense of revenue and product momentum for InterClick? Any observations on the online ad industry you’re seeing as a whole right now?
2008 was a tremendous year for interCLICK, we made great strides in terms of our building out our technology, growing our salesforce around the country, and improving our operational performance. Revenue growth has been directly correlated to providing consistent results for our largest advertisers via targeting and transparency. 2009 has been tremendous for us so far. Due to the economic downturn, advertisers are looking to maximize the value of their ad budgets via more effective and more granular targeting. Our platform has proven to provide advertisers with the ability to run highly effective and efficient campaigns at great scale.
InterClick has changed its focus from contextual targeting to behavioral targeting. Why?
“Behavioral targeting” is a bit of a catch all. We partner with 3rd party data providers to determine the most relevant ad to show to the consumer. Some of our partners provide us with purchase intent data, others with demographic, social data, or even contextual consumption data. The shift has been to allow for a more all encompassing approach rather than focus on data mining.
Is online display advertising dying?
Ha. No, its evolving and those who aren’t evolving are dying. Currently, with the economic downturn there is a paradigm shift occurring at the advertiser level. Advertisers are no longer consuming media as a proxy to reach consumers; they are buying very targeted audiences with a higher propensity to complete a desired action. Whether that action is a purchase, a click, if its something that occurs high up in the funnel or at the bottom, advertisers are looking to maximize their ROI at all costs. Companies like interCLICK and some of our competitors who are able to meet clients’ demands are thriving, while others are being left behind.
You suggested to AdExchanger.com that advertising players were jockeying for position. What do you mean?
There are a lot of changes occurring right now in the industry. The big topic these days is disintermediation and at what level it will occur. Will it be networks, agencies, both, neither? The end game is to provide the advertiser with the most efficient and scalable solution. Historically, the ecosystem consisted of advertisers (agencies), networks, and publishers. Guys like B3 and MediaMath are attempting to wedge themselves in between agencies and networks, I have heard them referred to as “Meta networks”. The “optimizer” guys like Pubmatic, Admeld, and Rubicon have entrenched themselves between the networks and the publishers and will most likely begin to directly compete with networks eventually. If they do, they aren’t much different fundamentally then the “meta networks.” The ultimate question is how do you maximize advertiser value, there are a lot of different approaches right now, which is what I mean when I say there is a lot of jockeying for position.
If you were running a multi-national media buying agency right now, what would you do to prepare for the future?
Buy an ad network with a proprietary technology. Obviously.
How does InterClick ensure brand safety for advertisers? And for publishers?
interCLICK has always been focused on providing brand safety via our commitment to transparency for both the advertiser and publisher. What separates interCLICK from other networks is our notion that transparency shouldn’t end when the campaign begins. Transparent reporting on the inventory and data levels provides advertisers with a safe and trusted brand friendly environment. For publishers, we ensure brand safety by allowing them to see and control which advertiser campaigns are running in the system and providing them with an interface in which they can actively manage which creatives run and which don’t with a click of a button. This helps to eliminate any sales channel conflict as well as preserve user experience on their site.
How is InterClick using the ad exchange model today? And in the future?
interCLICK is not very active on the various ad exchanges at this time. This could change over time but we are very much focused on providing scalable solutions via our own proprietary technology. We aren’t one of those networks that utilize a 3rd party ad server then wraps some front end UI around it and resells it as if it were our own.
Do ad networks “cannibalize” publisher inventory and, consequently, revenue opportunity? How does InterClick prevent cannibalization? Or does it?
Depends who you ask, right? Its obvious there is a lot of friction currently between ad networks and publishers, but at the end of the day we need each other. However, I believe this issue simply an economics 101 lesson, supply and demand. The value of inventory isn’t created on a rate card, Value is a function of the price at the intersection of Supply (traffic provided by the publisher) and Demand (the money being spent by the advertiser). If an advertiser or set of advertisers can derive higher value based on their set of unique objectives from a publishers inventory, they will pay more. If the traffic quality is poor relative to advertisers objectives, then price must be lowered until equilibrium is met. I have no idea why most publishers cant understand this.
How do exchanges move from the current remnant ad inventory model to a remnant and premium future?
I think the shift will occur via increased transparency and control. Look at most of the ads that flow through the exchanges and you will find that primarily they have been the CPA based lead gen offers. Because context is not a primary concern when driving large quantities of leads, these types of advertisers have much looser restrictions on where their ads run. These types of ads generally yield far lower eCPMs which in turn fails satisfy more premium inventory pricing requirements. Premium advertisers have shied away from exchanges because of a lack of control but as exchanges start to offer this level of transparency, rates should rise in the aggregate and there will be a shift from “remnant” to “premium.”
How do you see InterClick evolving in the next 18-24 months?
We have an aggressive product roadmap which should hopefully be completed in the relatively near future. This will allow us to do some very interesting things that haven’t been done yet in the industry. The most I can say is just wait and see.
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