Capital Efficient Customer Acquisition, Company Building: ReTargeter CEO Arjun Dev Arora (Part 4)

Sramana: What is the technology behind ReTargeter that enables your clients advertisements to show up on the New York Times website?

Arjun Dev Arora: The foundation of the technology is based on real time bidding. We buy an impression in real time on sites like the New York Times. When a visitor to an online shoe store comes to their site a cookie is dropped on their browser. What that user later visits the New York Times that cookie is available to use in real time through our partners. When we see that cookie we essentially bid for that impression. We may pay a 3 dollar CPM for that ad. We buy that ad in real time just like the stock exchange.

Sramana: If you have to purchase the impressions what is the impact of that on your margins?

Arjun Dev Arora: That is confidential. The margins allow us to be profitable and scale.

Sramana: A 2.50 or 3 dollar impression is not the price level you would expect to get into the New York Times.

Arjun Dev Arora: That is true, however they do have ad remnants available. There are times when their sales force is not able to sell their entire inventory. If they see a large spike in traffic because of a particularly interesting article then they will have excess inventory, even on premium pages of the site. Rather than letting that inventory go to zero they put that inventory up on exchanges where at least they get something for it.

Sramana: What is the reach of your technology? Are you able to reach pretty much any site you want to?

Arjun Dev Arora: We are only able to buy ads on sites with whom we have relationships. We have a very large partnership group that encompasses most major sites. We just look for the cookies in real time across our partner networks. We have access to billions of impressions daily.

Sramana: You described a one month ROI duration. How does that affect your customers spend with you? Does their spend ramp higher after they have been with you for a month?

Arjun Dev Arora: Our pricing is built off of the number of unique users. We are not able to scale or grow accounts unless they are seeing more traffic. In certain cases clients will have a huge amount of traffic and will only re-target a certain part of their site. In some cases it is just not possible to grow the account from a re-targeting perspective. About a year ago we started doing direct ad buys to drive initial traffic. In that case we were able to grow an account.

Sramana: What is the minimum traffic threshold?

Arjun Dev Arora: Usually it is a couple of thousand unique users per month. Our 500 dollar package covers between 0 and 10,000 unique users per month.