The State Of Turn: CEO Demas On Demand-Side Platform Momentum And The IPO End Game

The State Of TurnBill Demas is CEO of Turn, a data and media management platform.

In the first of a series of articles with industry executives, sat down with Demas to discuss his company, his views on the space and the state of Turn today. What are Turn’s priorities for addressing each of the digital channels?

BD: We are committed to a full cross‑channel or multi‑channel integration. Today, we are primarily doing display. We will be shortly announcing video. After that, we will be announcing mobile. We think that there are going to be other channels that you are going to hear about in 2012 from Turn, too.

We don’t see a world where someone says, “Here is my display DSP, and my video DSP, and my mobile DSP and my email DSP.” It is simply going to be what the marketing Holy Grail is, “Where do I spend my marketing dollars? And what channels, sources and providers within those channels are most valuable to me?”

That’s really the “uber” problem that Turn is solving. You want to have a single source that can integrate all of these different channels, because ultimately, what you want is a holistic view of the customer.

So, where is the momentum for the demand-side platform (DSP) right now?

I think the momentum, to be honest with you, is everywhere. I think Turn is in a situation right now where we’re inundated as we have consistently more than doubled our revenue year over year since 2008. And it’s continuing on that pace in 2011.

In Europe, we just opened for business this spring and hired our managing director in June. Two of our largest 15 accounts in the world are based in Europe today. We also expect a lot to happen in Asia, down the road. I’ve spent time in that market recently.

The phenomenon of real‑time bidding, the ability to assimilate data from many different sources in an efficient, transparent and trusting manner is something that is really going to be global. I don’t think the US is ahead today.

But I feel like from a new way of buying media and transacting media online perspective, a new way of audience targeting, a new way of getting insight into your customer, that we’re very early in a long‑term game. It’s not just a multi‑billion dollar market, but it’s obviously going to be in the tens of billions.

How do you frame Turn’s competitive set today?

I will answer that in two ways. The first thing is as a business, because I do want to make this clear, we are maniacally focused on satisfying our customer base and converting forward thinking prospects into clients. We don’t really worry too much about the outside. But I think, if you are thinking about who that is going to be, clearly, Google is a company that is focused on this space. Some folks really like them. Some folks literally don’t want to work with them at all, which has actually created more opportunities, not less for us as a business.

Then, from a media buying standpoint, the classic ad network model is in our competitive set. And what I’m talking about is really the non‑valued arbitrage‑based ad networks that are going to go away. Those ad neworks still have billions of dollars running through it today. We think more and more that the DSP or real‑time ad platform-type phenomenon is going to grow and is the successor to what I would call non‑value-added ad networks.

Also, since we are in two businesses (media and audience data), with the audience platform element, we think that’s a brand‑new market. We are in the top half of the first inning if you will in a nine-inning game. It’s too new to sort out where the competitive set is going to be.

What about the idea of Turn as an agency in that you’re providing agency services and going direct to the marketer in some cases?

We don’t look at ourselves as an agency at all. To answer your question, we are very focused on being a strategic technology partner to advertising agencies, to direct brands and to other parties that are like that. The way to think about Turn, first and foremost, is as a strategic technology partner or provider. When we talk about services, it’s about how we support and partner with those agency or direct brand clients.

OK, but you have direct brand clients. That’s like an agency.

I guess the way that I think about it is, we absolutely do have brand clients. And that part of our business is actually growing even more rapidly. If we’re talking about consistent 100 percent‑plus growth, the direct ones, as a matter of fact, are representing a higher number than that.

I think it’s all about perspective. We’re doing a lot of managed service business, which an agency might do or frankly some DSPs – or who are claiming to be DSPs – are really focusing on. Obviously, the answer is we’re really about providing technology. But any technology provider, whether it is Oracle, whether it is Intuit, whether it’s anyone like this does have services that come with supporting, in our case, cloud‑based computing.

So our goal, as we work with client and want to provide full, self‑service software-as-a-service. Our training is free. Everything we do is about getting the client up and running, but we might provide some hand‑holding if clients want that.

Switching over to the subject of the busy ad tech ecosystem, do you think there’s a “bubble” right now in ad technology investment?

So let me answer the question more broadly and then talk about ad technology.

I don’t think we’re in the classic bubble. The classic bubble was investment with no understanding of the market need and no real regard to the profitability or cash flow of a company, using Webvan as a classic example from the 2000 or late ’90s era.

As we talk about it today, I think everyone understands that at the end of the day there’s got to be positive cash flow. There will have to be profitability. There will need to be investment, innovation and the right strategies in place. That’s how we’re going ahead and running Turn.

So, I don’t think we have a bubble today, but there may be many companies that just provide a feature as opposed to full product or platform companies. I think some companies are going to have problems creating that exit, because they’re more of a feature as opposed to a full‑fledged company.

I do think there’s going to be some sort of industry shakeout, and there’s going to be winners and losers. What’s exciting is that it’s dynamic, and it’s going to look different quarter over quarter and year over year.

So that brings us to investment that Turn has received over its lifetime. There have been many rounds of investment to a point where it may make one wonder, what is the end game for Turn? I mean, is an exit possible? How do you respond?

Well, first thing I would respond to is, it’s all about the value that you’re creating. So at the end of the day, what’s the value you’re creating in innovation? Are you meeting customer needs? And how fast is your business growing? Turn is hitting it out of the park in all three of those areas. I think, if you look at Turn, what we’ve created is, by far, the leading independent DSP in the market today, and arguably tied for number one with Google, depending on what you look at. So from a DSP (demand-side platform) perspective, we’re the largest independent by two or 3X from what we’re hearing in the marketplace.

Largest DSP by what metric – revenue?

What we’re hearing is, we’re well over 2X greater than the other leading independents out there.

And then, on the DMP side, which is, granted, a small but fast growing and strategic market, we’re off to a really phenomenal start too. We’re global as a company in Europe today and we’ll be expanding to other markets.

Some months we’re profitable, some months we’re break even, some months we’re a little bit in the red. But as a company we’re extremely, I think, well-managed financially. We don’t need to raise any money any time in the near future. And we think we’ve done a terrific job in investing our capital.

We do think Turn will be a large and successful organization with a larger cap. And that really leads to what you’re inferring with your question which is where does this go? Ultimately, it’s two things – and we will be independent for a while either way. It will either be that it ultimately leads to an IPO, which we think is possible, and which many investment bankers who’ve come visited us think is possible. Or, there will be some other liquidity event down the road. But, none of that’s going to happen in the near term.

Any timing you can provide?

No. Our focus everyday is how we’re creating value in the company and how we’re really satisfying our clients.

Can you talk a little bit about the challenges of hiring in general, being an ad tech company? And in particular with Turn, which like any company has experienced some turnover?

Sure. I think we started the year at roughly 70 employees, and as of the end of August, we were about 125 or so. Turn, as an organization, is growing very rapidly and organically. That’s point number one.

I think our biggest battle actually is in engineering. We go after the same developers that Google, Facebook, Twitter and others go after. We’re going for the best of the best, and we have the advantage of being based in Silicon Valley where we’re able to get both engineering and product talent. That’s where the biggest war is fought right now.

We have added a tremendous amount of talent, doubled the size of our sales team over the course of the last six months. We’re finding great people there.

I think one of the things that a lot of folks will ask me is, “What are the challenges in growing Turn as a business?” One of the things that we’re really driving towards is to provide enterprise‑level capabilities as a cloud‑based offering. We’re software-as-a-service. Our largest clients -we deal a lot with the Fortune 50, a lot with the Fortune 200, we’ve targeted the Global 2000. That really forces us to up our game.

Part of growing a company is sometimes you will see that people who are great just on the media side but may not be able to evolve as we move more toward an enterprise‑oriented organization. Sometimes, as part of that growth, we’ve added a lot of people yet we’ve had to let some people go. That’s all really in the nature of what it takes to transform an organization.

You’ll also have examples sometimes where you have a manager who is really good in having just a few employees, but not so good at having more employees. Or somebody who was really good when we were $10 million, versus when we are significantly today way above $100 million in terms of revenue run rate.

Part of that is, as you evolve, you sometimes need to bring in new talent, new people, new blood, because of the nature of what Turn is. As we’re developing as a culture, as our customers get more sophisticated, we need to be able to have that right talent and skill set in the organization.

The next question is about Facebook. What’s Turn doing about Facebook?

When you run a larger company, you can’t do everything and you have to do certain things well. Our focus right now is on obviously continuing to grow. We have really four main, major growth engines that we’re focused on today. When I say major growth, meaning doubling or tripling or revenues, that kind of growth driver.

So in no particular order, one is the Turn Audience Platform. That started at zero and is off to a terrific start. Two is Europe. I think we mentioned earlier that two of our top 15 clients already are in Europe, and we expect that number to grow. Third is our entrance into video, and fourth will be our entrance into mobile. That’s plenty for a 130‑person organization to deal with.

Obviously, when we talk to CMOs, we know that social is very, very important to them. We do have plans in the medium term, not short term, and we really want to get social right. You’ll see that as a focus of the company in 2012. It is not a major focus of what we’re doing today, because we’re focused on these other initiatives.

That doesn’t dismiss social’s importance in any way. We also have some social data partners as well – so we get that. In terms of a high‑quality user experience type of offering to the market, it is on our product road map, but not in the short term.

Finally, what shifts are you seeing in Madison Avenue most recently?

Our leading clients today are those that are a little bit more what I would call forward thinking, especially in their use of technology and data.

I believe it is inevitable that all brands will have to do that. So I think those that are a little bit more technology-oriented in their culture are getting a head start. Frankly, their businesses are seeing pretty vast improvements in their ROI.

It’s inevitable in a world where everything digitally can be measured and then fixed. You can’t do that in any other market. Here you can micro‑target, you can measure it, you can make adjustments on the fly. I think it’s a very, very important component in marketing.

It does not mean that there are CMOs who operate with more of a gut feel or who are more instinctive. I think that also plays a part in it. It is getting the right combination of art and science. But I think the leaders are going to absolutely incorporate a strong science component in what they do, because there’s data out there to give them the answer.

By John Ebbert

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