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Master Bootstrapper with a Billion Plus in Exits: Bhavin Turakhia, CEO of Directi and Flock (Part 4)

Posted on Thursday, Apr 27th 2017

Sramana Mitra: In parallel, you started other businesses. At what point did you start the next line of business besides web presence? What was the thinking behind that? What were the circumstances?

Bhavin Turakhia: In 2007, we started dabbling in the online advertising business using a brand called Scenzo. My brother started operating that business. We grew that to a certain size.

Sramana Mitra: What was the thesis of that business?

Bhavin Turakhia: This business targeted publishers who own domains or websites. if they wanted to put up ads on their sites, we had a technology that would figure out the best ads that would make the maximum money for them. That was the basic premise.

Sramana Mitra: How is that different from the various kinds of ad networks that you can plug in to a website?

Bhavin Turakhia: Back then, Scenzo was in a niche, which is called domain parking. It’s largely specialized for those domain names that are extremely generic in nature. Powering their advertising required specific software. It was a niche market but a big market. Globally, it was a $600 million market overall. That was the initial business. Then he subsequently started a business called media.net in 2010. That was the real contextual advertising business where we, since then till now, grew that business with clients like Forbes, New York Times, MSN, and Reuters—pretty much, the who’s who of the publishing world.

What we were offering is a product that directly competes with Google AdSense for publishers. What that does is, if you run Forbes, they have a bunch of ads. We power some of those bots that use contextual advertising technology. What that means is when you read an article on Forbes concerning sports cars, our technology, within less than 10 milliseconds will figure out what you’re reading and what the context of that is, and then display ads for car insurance or car mortgage.

There were very few companies across the globe that were into contextual advertising. You’ll find a lot of ad tech players who are in the display space. Contextual advertising is where you figure out the context of the content that the user is reading in a very small window of time. It show ads that are related to that content and requires crazy amount of mathematic calculations and a fairly scalable infrastructure to do it in real-time.

Sramana Mitra: What percentage of the Forbes ad inventory is using your technology versus another ad network?

Bhavin Turakhia: I wouldn’t know the percentage but in most cases, most of these large sites typically will have four to five big outlets for their ad inventory. The first one will be their own sales staff. Then you have your contextual bucket which contains media.net, Google, and Microsoft. Then you’ve got display buckets where you have exchanges and various sets of networks where they source all that. There’re multiple different buckets. At any point in time, the bucket that they use will be some double-digit percentage.

Sramana Mitra: How do your CPMs compare to other buckets?

Bhavin Turakhia: In general, contextual advertising CPM is anywhere from three to five times all the way to 20 times more effective than display or some of the other buckets. I’m not talking about direct sales because direct sales deals sometimes can be pretty exorbitant. Other than that, contextual will beat display by a magnitude.

Sramana Mitra: You started this in 2007?

Bhavin Turakhia: 2010 was when we laid the grassroots for this and started actively selling. We exited that business last year in 2016.

Sramana Mitra: How many publishers did you bring in?

Bhavin Turakhia: Number-wise, there were hundreds of thousands. More than 95% of our business was from the United States.

Sramana Mitra: What percentage of that 95% was from the large publishers versus a whole bunch of little ones?

Bhavin Turakhia: It followed a typical 80/20 rule. About 80% of revenue would come from the top 20%.

This segment is part 4 in the series : Master Bootstrapper with a Billion Plus in Exits: Bhavin Turakhia, CEO of Directi and Flock
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