Mark Hoffman’s Fourth Run: Enquisite (Part 7)

SM: What is going on in the market that justifies Enquisite coming into it today?

MH: At the highest level, you have people switching off newspapers and magazines. Everyone is under a lot of pressure to deliver revenue. A lot of things are shifting to electronic commerce world and electronic advertising. Search marketing is now becoming the most important component.

Google has done a great job of breaking into the market and has legitimized search marketing. The pay-per-click side of the equation is being addressed very well by their $20 billion business. Websites are now becoming key components in this marketing niche. People used to build a website and not change it for a year or two. Sites are now dynamic marketplaces. If you make a change to your website, within 48 hours Goolge is indexing it and reflecting it into their pay-per-click results.

SM: Especially if people are doing e-business online. That is a continually refreshed industry of products to sell online.

MH: A lot of those guys have good mass. A change to their site is reflected in very short time. You have to pay attention to it continuously. Because the website has been the domain of the organic search, you have the SEO process, which now becomes critical. It gets you new referrals.

SM: Isn’t organic traffic is much larger than paid search traffic anyways?

MH: Yes. When people do a Google search, 88% of them do their click in the organic search listings.

SM: All the advertising agencies think of online marketing as part PPC allocation, part display allocation, and part classified ad allocation. Organic search does not feature as one of the buckets. Why is that the case?

MH: The amount of advertising spent on pay-per-click is huge, and it is still growing. On the organic side there has not been a way to monetize it and make it easy. That usually comes out of an operating budget and they are treated as a one-time optimization of the website. Looking at that in dollar terms, about $1.5 billion gets spent on the organic equation for optimization. On the pay-per-click side, if you combine services and what is paid on pay-per-click, you are talking a $40 billion budget. That is a 97% to 3% ratio.

SM: Your position is that you would like to reconcile this anomaly?

MH: Yes. We want to do for organic what Google did for pay-per-click. We want to legitimize it and make it a viable advertising expense as well as a huge revenue generation engine for the advertisers.

SM: Speaking of which, there is a genre, a cottage industry, that the world of SEO has grown up in. There are thousands of consultants, and it is a bit difficult to tell what they are going to do or what you will get at the end of the process. How does Enquisite address that ‘black magic’ feeling?

MH: It has been an art. What it really needs is to be turned into a science. A lot of people have said it cannot be turned into a science, but we are proving them wrong. What is very important is identifying how to measure what you have accomplished. To date, the industry has not been accountable and measurable. If you have that, the CFO just won’t support it in the budget.

SM: It is also hard for service providers to justify getting business. If you can’t show what you are doing, how are you going to get business?

MH: Today people often use their own numbers to justify what they have done. There is no third-party reconciliation. What we have done is turn that into a science. We built an economic business model around it which offers high incentives to the advertiser to spend more on a campaign if it is hugely successful, and for the agency to work as hard as it can because it will be measured based on the success of that campaign.

SM: It is a pay-for-performance model? That is not common in the industry at all.

MH: Yes. It is different from what Google has done, which is also interesting. Where they take 90% of the pay-per-click side of the equation, our model is designed to help agencies grow their revenue as well. We take a little bit of pay for performance, but the agency can take the bulk. Everybody wins with our model.

SM: The difference between you and Google is that they have acted as a monopoly and you are willing to spread the wealth around a bit more.

MH: It is very important for us to open up this model and gain transparency across it all. It is really about building a model from which agencies can generate additional revenue.

SM: You are trying to help the advertisers get the right traffic and more of it.

MH: It is a huge segment of the marketplace at 88%. That is what gets me going in the morning.

SM: Sounds like a noble mission! Good luck as you move forward with your fourth venture.

This segment is part 7 in the series : Mark Hoffman’s Fourth Run: Enquisite
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