Here's a great interview with the CEO of DoubleClick, courtesy of the Motley Fool:
fool.com
TMF Interview With DoubleClick CEO and Co-Founder Kevin O'Connor
February 17, 1999
With Yi-Hsin Chang (TMF Puck)
DoubleClick Inc. (Nasdaq: DCLK), which bills itself as "the global Internet Advertising Solutions company," represents about 1,300 websites by selling ads for them and then splitting the revenue. The DoubleClick Network includes such sites as AltaVista, Popular Mechanics, EDGAR Online, U.S. News & World Report, and The History Channel. The company also works with some 2,300 advertisers, 700 of which are international clients based outside of the U.S., and licenses out its ad management technology, DART (dynamic advertising reporting and targeting), which is used to manage and track ads.
TMF: As an Internet advertising company, would you argue that ads on the Internet are more effective than ads in other media such as print or TV or radio?
O'Connor: That's a very general statement. I would say that for a lot of companies, if you just take a look at the fundamentals of the medium, it is by far the most targeted and measurable medium, and it's one of the only mediums where you can actually advertise and transact business in the same medium. So, from that stand point, it's what all the other mediums would like to be, but will never be because they don't have the bi-directional cable tying them -- the advertiser, the publisher and the user -- together.
TMF: Well, are there disadvantages, you think, to advertising online versus those other media?
O'Connor: There are probably two disadvantages to that. One: not everyone is online, so I don't think anyone is going to ever spend 100% of their budget online. I think about 40% of the U.S. population is online right now, and that could be 90% of the disposable income. But that's rapidly changing.
"I think we've done the best job of combining media and technology. If you look at our competition, it either swings heavily on the media side, or it swings heavily on the technology side."
The second disadvantage today is it's not an emotional medium so it's not like TV. If you're trying to develop an image or convey an emotion, a 30-second TV commercial is very difficult to beat. But as bandwidth increases and the Internet becomes a more sophisticated medium, that's going to change. So for certain types of product groups -- you know, detergent -- we can't beat the 30-second commercial.
TMF: Do you think there will ever be those 30-second commercials basically transferred on the Net?
O'Connor: As bandwidth becomes greater you're going to see the 30-second commercials. Now, some companies are waiting for that 30-second commercial and they think that's the solution, and other companies are saying, well, look, this is a real chance. We can engage our consumer for the first time with an application as opposed to just pushing the 30-second branding commercial out to them. So I think two things are happening. One is that bandwidth is going to increase, and we're going to have more emotional commercials. The other one is that these advertisers who really depend on TV are going to really learn how to exercise the uniqueness of this medium.
TMF: What do you see in the future of online advertising? You mentioned the 30-second commercial. What will we be able to do in a year or two that we can't do now?
O'Connor: One area that we are very, very focused on is the closed-loop area -- knowing who saw your commercial, who responded and who actually bought, not just at that moment but over long periods of time. So maybe you see an ad three or four times, and a month later you become a customer. We're really trying to quantify that, make this by far the most measurable medium. The other one is bandwidth and people getting creative. It's not just the 30-second commercial. It can be downloading an application. I think Java's going to become much more important in engaging -- not just pushing a message to your consumer but engaging -- your consumer in some kind of application or utility.
TMF: What sets you apart from your competitors?
O'Connor: I think we've done the best job of combining media and technology. If you look at our competition, it either swings heavily on the media side, or it swings heavily on the technology side. Some people don't fully understand or appreciate the power of technology, so they are thinking of this medium like the old medium. They are bringing in the constraints of the old medium into this new medium, and that's bad. And then you've got the technologists who tend to focus more on just the tact and not taking the time out to understand what media businesses and the agencies and advertisers and publishers really, really need. I think we've done a good job bringing experts in both areas together.
TMF: Do you guys also create ads or just sell them?
O'Connor: We just sell them.
TMF: Do you think you'll move in that direction to be sort of a full-service ad agency, if you will?
O'Connor: Never. It's a conflict of interest. That's why agencies will never move into our business, and we'll never move into their business. The agency's job is to negotiate the lowest possible price for their clients, and our job for the DoubleClick Network is to negotiate the highest possible price for our clients. You can't be on both sides of that.
"Probably what people least understand about us is that they assume that because we are in New York that we're media only... All technologies do not emanate from Silicon Valley."
When we're dealing with national advertisers, we are almost always exclusively going through agencies because agencies are doing their creative and their media campaigns. As you go to smaller and smaller advertisers for DoubleClick Local, there is no agency. There may not even be a marketing person in the company, so you do run into a problem of, how do you get creative, and there I think we will probably depend on other parties or use more stock creative. But you'll never see us become an agency.
TMF: What do you think is the least-known or least-understood aspect of your business?
O'Connor: Probably what people least understand about us is that they assume that because we are in New York that we're media only. I think this has changed quite a bit -- people understand that some of the most complex software systems are built here in New York. All technologies do not emanate from Silicon Valley. So I think that's taken some people some time to understand.
TMF: Is there a particular reason why you started in New York?
O'Connor: We actually moved the company. We were in Atlanta, and we had a choice. It was one of our first tough decisions: do we move to Silicon Valley or New York. The rationale was that we were what I call a vertical technology company as opposed to horizontal technology, and you know Silicon Valley is definitely the home of horizontal technology. But most of our clients -- the publishers and advertisers -- are here in New York. We're a media-tech company not a tech-media company, so it's better to be here where our clients are to really understand their needs, to be totally enmeshed in that society. So we chose to come to New York. I think it was one of our best decisions, quite honestly.
TMF: You recently signed a lease for office space in New York that has a capacity of 1,000 employees. How quickly do you think you'll fill that from the current count of 375 or so who are based there?
O'Connor: We honestly don't know. Over the next six months, it's very clear what we're going to be doing. Over the next year, it's pretty clear, and over the next two or three years, it becomes less and less clear. We know what we're doing now and basically how fast it's going to grow, and we can project that, but we're also working on a lot of new products, and we think there's a tremendous amount of upside.
"We're a media-tech company not a tech-media company, so it's better to be here [in New York] where our clients are to really understand their needs."
Real estate has been a complete nightmare for us here in New York. Believe it or not, it's just been one of our toughest problems. People are kind of split up all over the place right now, and we want to give ourselves enough room to expand. So I don't know how long it's going to take us to fill it up. It could be two years, could be much longer. We'll sublease it in the meantime.
TMF: Would you say that you are hiring at a rapid rate at this point?
O'Connor: We're hiring about a person a day.
TMF: That's pretty rapid.
O'Connor: Yes.
TMF: In light of the recent trend of acquisitions among Internet companies, do you view yourself as an acquirer or an acquiree, or do you want to stay independent and king of your own realm?
O'Connor: I find it best really to never comment on acquisitions. Our company was actually formed on a merger, so philosophically we have no problem with that. And if it's strategically important, if it allows us to continue to lead this market, we are always going to look at acquisitions to do that. I think we are in one of the most exciting areas of the market; we're the leader. I think we've built a great, great, great long-term business. How the market shakes out over the next five years I can only guess.
TMF: Would it be accurate to say that you're not actively seeking to be acquired or to acquire?
O'Connor: I would never comment on that.
TMF: OK. Your service DoubleClick Boomerang, which allows advertisers to send messages to past visitors of a site. Do you think Internet users might find such tactics intrusive and lash back as they have against junk mail?
O'Connor: There's a huge difference between spam and what we are doing. You can think of it this way: When you go to a site, you're going there because it's free. It's being subsidized by advertising, so the consumer's going to see an ad. So the real question comes down to how relevant can we make that ad. The less indiscriminate the advertising, the more relevant that ad, the more that ad becomes information. So we reduce the price of advertising for the advertiser, which reduces the cost of goods for the consumer. The consumer sees more and more relevant advertising, so it works great for everybody.
What's especially important is that Boomerang is completely anonymous, and the advertiser actually never sees the information, so we act as sort of an anonymous matchmaker, and it's really powerful. So we think we've created something that really serves the interests of everyone. At the end of the day, it is essential that we make this medium work for both the publishers and the advertisers, and, of course, the consumers, and I think this is a great step in the right direction.
TMF: Where do you see DoubleClick 12 to 18 months from now?
O'Connor: I think international is going to be it. I think a lot of Internet companies have overlooked international. We've probably made the biggest bets internationally. From an advertising perspective, two-thirds of all advertising dollars come from outside the United States in other mediums. Over half of the people on the Internet today are outside of the U.S., and the growth rates are much higher outside of the U.S. So I think that's going to be a really important source of growth for Internet companies over the next 18 months.
You see the same thing on the local [scene]. Owning a PC and being connected to the Internet have really shifted from being a luxury to a necessity. I think you're going to see pretty much every small business and every local business setting up shop online one way or another.
"From an advertising perspective, two-thirds of all advertising dollars come from outside the United States in other mediums."
The problems we're trying to solve are very, very hard, very complex, and it's going to take us a year, year and a half to crack some of these very complex problems, especially when it comes to data. There's no shortage of data on the Internet. It's how do you make sense of the data. Unless that data has some kind of predictive value, then it's just space being consumed. Our challenge is how do we take this data and help advertisers and publishers and consumers make sure they get the right ad at the right time.
TMF: What percentage of your staff is working on technology and what percentage is working on selling the ads?
O'Connor: I'd say it's probably half the people selling, and 25% on the technology side.
TMF: And the rest?
O'Connor: The rest are marketing support, admin.
TMF: Is there anything else you'd like to add?
O'Connor: I think this is such a massive trend that people tend to overestimate it in the short term but underestimate it over the long term. I think that's what's happening on the Web. Actually I think both is happening. People have actually underestimated in the short term. So I think this trend is actually far bigger than any of the experts or people like us who've committed our lives to this new medium [could have anticipated]. It just astounds me especially as I go all over the world. This thing is just affecting virtually everybody. So we're bullish.
Those were great questions.
TMF: Great. Thank you.
O'Connor: That was very enjoyable.
TMF: Thank you so much for your time.
O'Connor: Great. Have a good day. |
