Ad It Up. Part 2

Right ad, right time
Jim Jorgensen is AllAdvantage’s co-founder and CEO. This former accountant has been around the startup block a few times. In 1989, Jorgensen co-founded the Discovery Zone indoor-playground chain. Within five years the company, sitting on a market valuation of $1.4 billion, was snapped up by Viacom. From there, he launched a 24/7 help-desk operation for home PC users, a company that failed miserably. More recently, Jorgensen helped start Challenger Sports, a sports training program for youth. He still serves on the board of the moderately successful venture.

None of these experiences, whether good, bad, or ugly, prepared Jorgensen for the wild ride AllAdvantage has become. A quick scan of the company’s development over the last year suggests that its trajectory is lofty even by Internet standards.

Internet standards

It remains to be seen whether AllAdvantage will continue to outpace Hotmail, the company commonly referred to as “the fastest-growing startup in history.” Launched in 1996, Hotmail leveraged viral marketing to good effect. At four months, it had half a million members, reached 1 million in its sixth month, and at nine months boasted 3 million members. Between that time and when it was bought by Microsoft in 1998, it was growing at more than 1 million members per month, but soon settled down to a sedate 150,000 new members per month.

The quick growth that the refer-a-friend business model has enabled has some critics calling AllAdvantage a “pyramid scheme,” a charge that Jorgensen and his team are weary of fending off. Indeed, to depict AllAdvantage as such obscures the company’s core business proposition. AllAdvantage’s actual goal is to deliver effective one-on-one marketing to privacy-conscious consumers. AllAdvantage monetizes customer interests, brokers that value to advertisers, takes a modest agent fee, then places funds in member accounts. Jorgensen likens his company to running an online bank: “The bulk of our revenue goes back to our principals, who are our members.”

The data AllAdvantage collects on it members while monitoring their surfing habits is far superior to profiles that rely on individuals filling out forms. “Our idea is to have people give us the personal information they want to share, so that we can manage it on their behalf,” says Jorgensen. “The payoff: We deliver very directed ads that hit a consumer when they are most interested in receiving it.”

Sammy Rhein, business development director at JobsOnline, says that is why advertising with AllAdvantage is so attractive. Rhein sees value not only in terms of ad-placement relevance, but also timing — the users need the information when they are visiting a site, not in response to a survey filled out three months ago. In other words, AllAdvantage capitalizes on the Net’s potential for impulse responses. All the better if that ad appears when the user is looking at a competitor’s site, says Rhein: “That’s the most valuable commodity an advertiser can get: access to its competitor’s real estate.”

AllAdvantage asks new members for minimal personal data when registering: name, email, location, and age (minors must send in the approval of a guardian to participate). Because members are paid by check for their surfing activity, the company can confirm that the demographic data gathered is accurate. AllAdvantage therefore can offer retailers the option to run ads that tap only those users they want to reach.

John Anderson, who owns five car dealerships in Silicon Valley, uses AllAdvantage to more intelligently target prospective buyers. Ads for Hondas and Chevy Suburbans are sent to Web surfers from upscale ZIP codes such as Palo Alto, Calif., while pickup truck ads are directed to users living in more rural regions such as Morgan Hill, Calif. The ads can also feature the dealership that lies in closest proximity to the recipient. Anderson, whose dealerships collectively sell more than 1,200 vehicles per month — 20 percent of which are sold via the Web — says his online sales have risen nearly 30 percent in the three months since he began advertising with AllAdvantage. “I haven’t changed my newspaper or radio advertising; the only new thing I added was AllAdvantage, and I’m seeing dramatic results,” says Anderson.

Traditional media build target audiences by creating distinct content and then solicit advertisers that want to reach that market. Alex Gourevitch, AllAdvantage’s PR director, says the company practices “flip demographics.” “Advertisers often ask us to define the demographics we have. We turn the question around: ‘What demographics do you need?’” explains Gourevitch.

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