SM: What is your business model? RF: It is always based on some metric based on throughput and performance. We have folks working with us who, although we love them as customers, they are very small businesses who are going to run $20,000 a month in media. We also have folks with us who are going to do $10M a month in media.
Our business model is generally based on a percentage of revenue. The reason is that we do not like charging startup cost or setup costs because we have such a wide array of customers that it doesn’t really make sense.
Our work is also a percentage of revenue because not only do we offer all of the servicing and technology, but we do customer service and back office, so we will pay thousands and thousands of publishers on behalf of their networks this month. Network operators maintain full control over what share of revenue they keep versus their partners.
SM: Do you have technology in your system to be able to deal with multi-tier networks? The Washington Post Blogroll program has a whole bunch of blogs which are a part of their network, so they are multi-tier networks with revenue sharing. RF: Yes, that is exactly what we do. We manage that network with all of those blogs. They want to bring larger, quality reach to their advertisor base than what you can find on WashingtonPost.com. They want to grow their total availability, and that is what they use Adify for.
SM: They do the selling of the ads, and you are the service provider? RF: Correct, we do everything else other than selling the ads.
SM: The commission percentage of the revenue is individually negotiated with your clients? RF: It ranges anywhere from 20% for entrepreneurial clients, and gets lower from there, based on volume.
SM: So, in effect, you are enabling your publisher clients who have strng ad sales forces, build up ad networks that could become meaningful alternatives in specific verticals to Google AdSense and Yahoo Publisher Network. You are introducing competition to that duopoly situation, but instead of directly competing with Google and Yahoo in the Direct Response Advertising space, where the die is kind of already cast, you are going after the brand advertising space, where the field is still quite open.