Sramana: What kind of revenue share do you get? Do you charge on a CPM basis?
Bruce Buchanan: On the advertising side, it is a marketplace. You bid for access to a particular customer segment. The systems offer dynamic optimization. The optimization engineering is some of the best. That is really the secret sauce. You only get the opportunity to present a customer with 3 or 4 messages, so it is critical that they be the right messages.
If HotelClub wants to get access to a particular customer and they know what types of customers convert for them, then we will present to that customer for them at that location. Depending on the bid price and what the engagement is likely to be, we will create a quality score for the expected engagement. The bid price from the advertisers gets ranked and the top advertisers are the ones that appear first. Internal offers are presented the same way. An internal value is presented.
On the partner side, it is a straight revenue share. Our partners get 50%. It costs us about 42 cents on a dollar to run the platform. It is all effectively ad funded and we make the remaining 7 cents as revenue.
Sramana: This was a bootstrapped company, correct?
Bruce Buchanan: Yes, when I joined it was a bootstrapped company. I have put some funding into the business and bought a third of the business with two other gentlemen. We continued to bootstrap the business for another 12 months and then last November we completed a funding round.
Sramana: How many individual investors do you have in this round?
Bruce Buchanan: We have 5 major investors and another 5 that are smaller. We have a non-traditional VC fund that represents high net worth families in Australia. We wanted people in the round who could help us deliver on the growth potential. We looked at the business and thought that the critical driver of this business as a B2B play was building relationships with partners. The more our network can expand then the easier it will be for us to build the trust required for our business to expand. We will look to expand into China and Japan, but our primary expansion focus is on the US.
Sramana: Do you have any US deals yet?
Bruce Buchanan: We have a few partners up and running. We have some smaller partnerships up and running and eBay will be going live soon. We are close to executing with a few major airlines. We have a good start. It typically takes us about 9 months to seed a market and get a platform working.
Sramana: Are you planning on raising money in the US?
Bruce Buchanan: We will probably do that at one point to accelerate the rollout. There is no need for us to do that right now.