As part of the ReveNews 2010 Affiliate Industry Preview Series, I interviewed industry leaders to get a sense of their plans and goals for 2010. Today’s interview is with Lisa Riolo, co-founder of Impact Radius, who is our “mystery guest” for this series. Together with fellow co-founder and industry veteran Todd Crawford, Lisa spent several years incubating the technology and vision behind their new technology platform. Just don’t call them a network.
How did you and Todd end up on this project and what made you launch Impact Radius?
Todd and I worked together in the past but the thought of just doing the same old thing, like creating yet another affiliate network, was not appealing to us. What we wanted to do was find an opportunity to help the whole industry evolve and really give back to the performance space. We asked ourselves, from the inefficiencies we had seen, how we might do things differently?
We realized that there is a great deal of performance-based advertising opportunity untapped in traditional channels. The traditional space- newspaper, television, radio, etc. is doing performance advertising but doesn’t have the same tools and technology that we’ve become accustomed to in the online space. What excited us was the prospect of creating more efficiency within the traditional space in order to really increase automation.
We then asked ourselves, how do we make a great advertising model even better by creating a single platform that brings everyone together transparently in a way that sparks additional growth in the industry. That’s just what we set out to do.
Those two ideas were our primary objectives in coming together and launching Impact Radius. We felt this was the opportunity to fix some of the fatal flaws we had seen in the current industry and make a great model even better.
Can you give a “for instance” in terms of the offline space because I think a lot of readers understand how the performance based model works online but are maybe not so familiar with offline examples?
If you ever watch infomercials on TV, you’ll see a product being promoted and typically there is a line that says “wait there’s more” or “order now”…those are direct response ads. Currently direct response (DR) ads that are run on a performance basis only represent about 2 or 3 percent of the total ad spend in direct response TV. If you look at the late 90’s, early 2000’s, the metrics in the online space was similar with probably less than 5 percent of all the advertising that was done was on a performance basis. You look at it now and it’s close to 70percent according to the latest Interactive Advertising Bureau (IAB) metrics. We feel there is a similar opportunity for growth offline.
We realized if we could provide the tools and the real-time reporting to an already metric-driven community there a possibility we could double the percentage of performance based ads in a relatively short time period. So one of our goals is to provide the broadcast TV networks and the radio networks the tools necessary to efficiently increase the amount of inventory that they are carrying on a performance basis. Really ratchet up the yield that they get or payouts that they receive so they can push up the rates that they are getting on their regular DR general advertising.
I jokingly mentioned at the start of the interview that many will categorize you as a network for lack of a better term. What do you think of yourselves as?
I think many will miscategorize us as a network but what we really are is a multi-channel performance advertising platform. Other than technical support we don’t have services, we are not an agency and we’re definitely not a network or an affiliate network. We’re really just the tools and technology used to facilitate performance based advertising relationships in a transparent way.
With the recession happening in 2009 it’s a pretty ballsy year to develop a platform and then launch at the beginning of 2010. Are there any concerns about launching in this kind of economy?
We all know there is more resilience in this type of economy for performance-based deals and performance-priced deals and I think this makes it a good time for us to approach both traditional and online marketers and say to them, “Here’s an opportunity to create more efficiency and ultimately more profitability with your current relationships.” That’s what makes working on this type of price model attractive.
Being able to launch with $6 million dollars in venture backing from companies like Redpoint Ventures shows there is a lot of faith in our model. We feel the time is right.
Well it’s obliviously appealing as an advertiser to be able to approach multiple channels at once. What kind of technology hurdles were there in implementing such a solution?
One basic thing is getting all the processes in place that go into supporting customization of ad creative. For example, if you’re an advertiser and you want to work with one of the TV broadcast networks it’s very difficult unless you have that ad creative in place. What we did was build those processes into Impact Radius so that trafficking instructions, dub house instructions, all of those are handled automatically through our platform. We wanted to take what were manual processes and make them systematized and automated.
You mentioned transparency several times and I’ve heard you and Todd talk about your “clear box philosophy”. Can you go into that?
As we built our technology we spent a lot of time trying to address current pain points. One that came up across the board was the lack of access to basic information, like contact information.
Take a look at the current affiliate model on many networks today. Traditionally, our industry has accepted a ‘black box’ approach to conducting business, keeping relationships hidden and key information contained. It doesn’t make any sense. So we designed our product to always facilitate direct relationships, direct negotiations with everyone on the platform.
Also the mode in which an offer is posted on many networks makes no sense. Typically the advertiser’s offer is posted, yet the affiliate or media partner who is generating the result doesn’t really have any say in what the terms and conditions should look like. If you look at all other forms of advertising those terms and conditions are initiated on the media partner’s side, right? The insertion order is based on starting with the media partner but in the affiliate space traditionally it’s always been the advertiser.
I don’t think those are matters of preference, rather, it’s simply a matter of the way the technology was designed. A built-in inefficiency.
We designed our product to always facilitate direct relationships, direct negotiations with everyone on the platform. One of the things we introduced is a “both-way” negotiation tool with the insertion order so a media partner can push the terms and conditions that are optimal for them to the advertisers just as easily. We built a directory on our platform where an advertiser can search for media partners, and vice-versa, even if they’re not already working together. Once they are working together all their contact information is available right in the system.
The reason we’ve designed the product and the features this way is because we’ve learned over time that those direct relationships produce optimal results. It’s our belief that direct negotiations and open communication will only accelerate growth. What we did was step out from in-between and have our clients work together directly as much as possible. Our job is to be the tools and the technology to facilitate the relationship.
How do you feel that will impact things like fraudulent leads?
As an advertiser you work with a media partner and have complete visibility to everything they are doing to promote your campaign. Plus, prior to entering the relationship you have the opportunity to see their business model. For example, you’ll know if a media partner will be doing email drop to promote a product, giving you the ability to better monitor such issues as CAN-SPAM compliance. The whole system is designed to facilitate direct visibility with those relationships. So I think the quality issue is very much addressed because of that increased visibility.
The way you are describing the services it seems like a no brainer, so why hasn’t any of the other networks or someone else created such a model earlier?
We had the huge benefit of not only tremendous experience but the ability to start from scratch. We had a blank canvas, so to speak. We knew what worked and what wasn’t so optimal. We understood these various points and could implement solutions from the bottom up.
Whereas, I think today if you look at most of the networks out there they started around ten years ago, but what they are doing is bolting on another solution to their existing framework. Using that method it is impossible to be flexible and address the many challenges that effect performance-based relationships. We tried to accommodate all the different scenarios in terms of how partners work together as we built our platform rather than building the technology, and then trying to get those relationships to adapt.
With the broad perspective of features you are trying to support how did you avoid “feature creep”?
(laughs) One of our biggest challenges was, if we have such a flexible, robust system, how to keep it simple enough that users don’t get overwhelmed? We spent a great deal of time, once the back-end system was built, working with clients and finding out where they were hitting snags. We tested how long took for an advertiser to go live, and once they were in what does it take for them to get data out of the system.
Our goal was practical flexibility. So it was really a matter do defining the business practices that we need to support and designing the user interface to support those user needs. Even though we are just now launching we’ve actually been in business for quite awhile with clients active on the platform and giving us feedback so that we could continually make improvements.
Let’s take a look at the industry as a whole. One thing that obviously had a big impact in 2009 and the later part of 2008 was the so-called “Amazon Tax”. How do you feel that will play out in 2010?
Todd Crawford was very active in the development of the Performance Marketing Association. He was the first president for the advisory board until they were able to elect an actual board, and we still feel very strongly about supporting the PMA and will continue to work closely with their efforts. I think what is optimal and ideal and what is realistic are certainly two different things. I would love to see some standardization in tax legislation across the states because I do think it could have been acted efficiently. I’m not sure that will happen.
We all understand that the states are desperately looking for revenue but I think enacting legislation that is fair is the issue. With revenue continuing to diminish in various states, legislators across the county are looking for ways to find some new dollars. I think that legislators find our industry, in part because Amazon has such a high profile, a very easy target. This year will be a difficult year on the legislative front so we will work closely with the PMA and any other efforts that are being made.
So let’s talk a little bit about forward-looking technology. What do you feel will be the biggest game-changers in the technology in 2010?
From our point of view everyone is too busy chasing the hottest new consumer facing technology or widget. We feel what is really revolutionary is making all the process that are out there work together.
A good example is having the capability to support commerce tracking through mobile technology but that is not something we’re necessarily showcasing, simply because everyone says mobile is the next big thing. We decided instead to really support what consumers have already adopted today. Consumers can pick up a phone, click on a link to respond to a contextual promotion and, advertisers want to track that seamlessly.
So when people ask basics like can we do video? Yes. Can we do rich media? Yes. But let’s take if offline: What if an advertiser has a promo code they want to place on a billboard to attract consumers who are on the road? Can track and report that and provide the financial clearing house function for the owner of the billboard as a media partner in our system? Yes, we can do that, too.
From our point of view what is key is not the technology but the ability to use it to reach consumers in ways they’ve already adopted to track across channel That is what we designed and built in the components of our system, along with the flexibility for consumers to keep adding as new technology develops.
What are Impact Radius’ goals for 2010?
One of our goals is to encourage adoption of the performance model among traditional media by leveraging our toolset online. It’s an educational goal in saying okay, these are the processes that you follow today and now here’s a new set of tools that you can use. We can show them how it’s going to improve and make their lives easier and more profitable.
The other is to honestly spark innovation within the industry as a whole. We’re not just looking to come out with a better widget. We want to grow the whole industry and bring in players who have never worked together with the opportunity to do so. For the health of the industry it is important for companies to expand their distribution and get involved with partners whom they’ve never really worked with before.
We’re very excited about what we’ve built here. We really feel it will revolutionize the performance space.
That concludes our our 2010 Affiliate Industry Preview Series, I want to thank Lisa Riolo for taking time out during her busy schedule to take part.
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2010 Affiliate Industry Preview Series: Interview with Lisa Riolo of Impact Radius
