Friday, November 21, 2014
How A Pivot Turned Vantage Media Into A $100M Plus Business
Story by Benjamin F. Kuo
How do you take what has been a healthy business--but which has stalled out in growth--and put it back onto the growth curve? Patrick Quigley, the CEO of Los Angeles-based Vantage Media (www.vantagemedia.com), tells the story of how he pivoted the company from what had been an online advertising agency, into an online advertising technology provider--and in the process, helped move the company past the $100M in revenues mark, which is a big milestone for companies in the growth area. We sat down and spoke with Patrick about the business and its pivot.
Tell us about what your business is nowadays?
Patrick Quigley: People often have the wrong perception of Vantage Media. The company started here in 2002, and we were basically an agency. As you might or might not remember, I joined in 2010 with a vision to turn the company into a true technology company, and pivoted the company to ad technology. At the time, when we were an agency, it was quite a crowded market. We started looking to see if we could use technology disrupt the agency business, for companies serving the performance marketing area, the cost-per-sale area. Starting in 2010, we started focusing on that. However, if you talk to a lot of people about who Vantage Media is, a lot of them think we're still an agency, specifically focused on for-profit education marketing. However, that's who we were in 2002, and stopped being in 2010. Who we are today, is an ad technology company. More specifically, we are a real time bidding platform which enables marketplaces to be set up, where an advertiser can bid on consumers who are in the process of buying a particular product.
If you think about the advertising world, and think about the chief marketing officer at a company like Geico, in auto insurance, one of our large verticals, they are spending money on display ads to drive future purchases, search ads to drive people down their sales funnel, since people who are searching for insurance you can assume have purchase intent, although some might be looking to file a claim or complaint. They might be paying performance companies, like Bankrate, who are selling leads. What we focus on is the business at the very bottom of the funnel. What we are doing, is using display-like technology, such as programmatic bidding, and applying that to the bottom of the funnel. That part of the market is primarily driven by companies in what is referred to as lead generation. Real time bidding allows advertisers to bid on users in a particular market, who are likely to be purchasing that company's product.
How did you decide to get involved with the company?
Patrick Quigley: I was approached by the board in 2010, because although they had lots of opportunities in this marketplace, the agency model they were operating had stalled. They had decided to make a change, and had approached me and asked if I would be interested. I was actually happy where I was, but told them I'd be happy to take a look and visit. I saw they had a really interesting technology stack, but they were not using it. I saw that if they would focus on building this out as a technology business, rather than as an agency, there was some real potential. I told them, here are five things you should do, here as some of the people you might want to hire, and good luck. They chased me for a couple of months after I gave them the plan, telling me that they just hadn't found a good candidate to execute, how do we talk you into moving from Silicon Valley and leading this. I liked the vision, and had been working in the industry since the 90's, and the thought of turning this company into a more efficient, technology business was exciting. The trick was if I wanted to move to LA. However, my wife decided she wanted to move down here for personal reasons.
What was it that drove you past the $100M in revenues mark?
Patrick Quigley: From a revenue perspective, I've been very excited about the growth. The technology driven marketplace model is why. That technology underpins marketplaces in auto, health, life insurance, and even education. That business has grown fantastically, over $100M in its own right. In the past, marketers were buying leads in bulk. When consumers expressed interest in a product, companies would buy their contact information to make outbound phone calls. However, those leads were completely untargeted. I think what drove that growth is that we recognized that the techniques being used in search with AdWords, with display ads, had to be applied to this bottom of the funnel, marketing budget. Starting with that vision, we acquired a company that had built the base platform, based in Guatemala. We used that stack and built a real time bidding platform on top of that, which enabled advertisers to bid not only for leads in a specific area like auto insurance, but bid different amounts of leads of different ages, driving history, if they own a home, if they had multiple cars, and very specific driver values. That enables advertisers to understand the long term value of that consumer and bid appropriately for those consumers.
Talk about those operations in Guatemala?
Patrick Quigley: That was interesting, and it was unexpected. You just don't go shopping for Guatemala-based technology companies. What happened, when I came in here, I wanted to go out and execute. It was a question of build versus buy. We had great technology to build from, and started to build our product. I had worked before at BEA Systems, the middleware company which was acquired by Oracle in 2004 or 2005, and we used to joke that the company had been built entirely by acquisitions. Coming from that history, in parallel with building our own technology, we started looking to see if there were any companies that were small that we could acquire to accelerate our growth. While doing that, we found Brokersweb. At the time, we thought they were based in Miami. But, after visiting their headquarters, we figured out they only had three people there, and found out the company really was based in Guatemala. We spent some time with their fifteen person engineering team, and we were really impressed with what they had built, and the passion they had. After the acquisition, we have been investing dramatically in that team. We recently moved into a new office, built a California-like technology company in Guatemala City, and we now have 80 people on our technology team down there. We could not have been happier. In backs my view that Silicon Valley does not have a monopoly on great talent and tech companies. There is tech talent everywhere. Thta's something we've done a great job at with Vantage Media, which has been facilitating the development of people and the company where people want to live. If you think of Guatemala, there has maybe been one article on Guatemala as an upcoming tech hub, maybe. It is a developing economy, and an emerging economy, and the talent is also emerging too. We have invested in our relationship with the universities in the city, and have done lots of training both locally and bringing people here. We've been really, really happy with that particular investment, which is the foundation of our technology platform. Without our headquarters in Los Angeles, Guatemala would have been impossible, because it's super easy to get to Guatemala from Los Angeles.
Why is LA key to that?
Patrick Quigley: I've worked in a lot of technology companies, and lots of them outsource engineering in low cost, far off remote places, like Eastern Europe, Vietnam, and India. Places like India are now expensive, and the big problem is the time change. As people and more and more near shoring their operations, they are starting to put teams in place slike Beunos Aires. The advantage of Guatemala, however, is that there are multiple, direct flights to Guatemala to LA every day. When launching our new platform almost two years ago, on any given day, if we had a particular meeting where we were disappointed, we could hop on a plane and be at our Guatemala offices six hours later. It's faster from LAX to Guatemala than going to even New York or Washington DC or Atlanta. That's game changing. Our tech team is obviously low cost, but they're highly capable at the same time. Plus, they're in the same time zone as Phoenix. That allows us to iterate and make progress without slowing down. If we were in San Francisco, we couldn't get there nearly as fast. We feel very fortunate that we were able to find a great company there, which I don't think we would have been comfortable with if we were in a different location than LA.
What's next for you?
Patrick Quigley: I'm really excited about the technology here. What we've done in the lsat three years has taken us to $100M in those vertical specific marketplaces. That's been a really good business based on this technology platform. However, what we're finding is that technology is so interesting, we're starting to license that technology in places you wouldn't have thought about before. That technology enables consumers who want to buy, and advertisers who want to sell to those consumers, to target consumers by a very specific, defined criteria. For example, if you are looking to reach people shopping for auto insurance, you can bid on whatever attribute, whether that's age, demographics, driver history, and so on. An example of this is if you go to Esurance.com to shop for insurance, you might notice that on their thank you page, they'll also put up an ad for Geico or Progressive or another vendor. What big brands are finding is if a consumer is going to transact on their website, they are going to transact. If they are not going to transact and they are going to leave, you might as well be paid by people for those leads. Another example, is if you're looking to sign up for cable, you might go to Comcast, and find out that they might not provide service in your area--what they should be doing instead is recommend you go to Cox. There is a whole opportunity for brands to monetize consumers they cannot monetize today because they don't have the right product. Our platform enables us to not only serve the verticals we are in, but license our software to companies who want to capture this as a new revenue source, which can be incredibly meaningful. We are investing in this software business in addition to our core business, and you might even see us change our branding strategy to focus on the software business, licensing our software to external users under a new brand. We'll continue to invest in technology to fuel our growth.