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This week, I chat with Todd Garland, founder of BuySellAds. In this episode we talk a whole lot about advertising on the web, the ad industry as a whole, ad blocking, niche ad networks and growing a bootstrapped business!
Josh: Todd, how’s it going, man?
Todd: Pretty good, Josh. How are you?
Josh: Doing well, doing well. Thanks for taking the time to chat.
Todd: Thank you as well.
Josh: Let’s jump in. How’s business at BuySellAds?
Todd: Business is good. I think we’re coming into our tenth year here, and still got some blood flowing through our veins, so life is good.
Josh: That’s great. 10 years is like a century in internet time.
Todd: It sure feels like it.
Josh: What is something that keeps you guys up at night? After you’ve been doing something for 10 years, I think it’s easy to get complacent, so I’m curious how you guys … what are the things that you’re really excited about right now?
Todd: Yeah, sure. A lot of the same values that we initially started the company with, which is trying to remove a lot of the bad things that go on in ad tech. Advertising isn’t the sexiest business in the world, but we feel as though we can truly help publishers and advertisers, bring them closer together, because that’s what we fundamentally believe is the problem in advertising and in ad tech, is that so much confusion and so much margin has been built in the fuzziness that has been pushing the 2 parties away for the last 10 years, and so we seek to bring them closer together.
Josh: You mentioned that the ad tech world can be, I would agree, has a bit of a sleaziness to it from certain sides of things. Has it always been that way, or has it gotten worse as people sort of get more desperate to make more money, or … ?
Todd: Great question. First and foremost, there are great people in ad tech, people working very hard, running honest businesses, all that kind of stuff. However, I believe the fundamental issue in ad tech has been the lack of regulation, which, I never would’ve been able to start BuySellAds if there were some kind of barrier or some kind of larger hurdle, perhaps even regulation that would’ve made it more expensive for me to get started.
I fundamentally believe in the web being open and free, and there not being these huge barriers to entry for new entrants like myself, but at the same time, because of that low barrier to entry, and the amazing profits to be had in ad tech and in advertising on the web, there’s just a lot of bad actors that have proliferated, and, quite frankly, made a ton of money in the process.
I think one of our biggest issues is that we don’t have a central governing organization that helps enforce and vet companies and create standards that are enforced, so I think there’s an enforcement issue. It’s something that I think has to change as time goes on, and it just presents more opportunity for folks like BuySellAds, who have been around forever, who can weather the fraud storm, or the malvertising storm, or whatever you want to call it.
Josh: It’s interesting that you mentioned having this central governing body. I think advertising on the web, namely blocking ads, gets a lot of press, and there’s a lot of conversations that constantly happen around that. As somebody who’s actually in the thick of selling ad space, I’m curious if, from your perspective, is ad blocking really that prevalent, or has it made a big dent for you guys?
Todd: I’d almost argue that the larger dent isn’t necessarily … Ad blocking isn’t the symptom, it’s the ultimate effect of having horrible ads and having ads be like an attack vector for people that like to distribute malware. I think the larger issue is the perception of advertising in general that has allowed the ad block story to rise to the top, being the issue, and not specifically the ad blockers themselves, because all the ad blockers are are somebody representing the consumer side of the marketplace.
For example, in ad tech, we have the advertisers, the publishers, and the consumers, and nobody then representing the consumers except for these ad block companies, so I feel as though consumers deserve a voice at the table, and I think you could argue that ad block, despite it not being the fluffiest thing to talk about or deal with in ad tech, is it’s helping to raise the profile of the consumer, which is required for us to move forward with ad tech on the web.
In terms of actual material impact, I’m sure there’s some. It’s not something we even actively measure. There are entire companies created around trying to bypass ad blockers right now. We don’t believe that’s the right way to focus on the issue, but it’s certainly had an effect.
Josh: You mentioned the right or the voice of the consumer hasn’t really been represented. Totally agree there. How do you change the perception of people just having this large scale, “Hey, all ads are bad,” or wanting to avoid all advertisement? How do you change that to say, “Hey, there are good ads, or ads that aren’t intrusive.” How do you change that conversation?
Todd: Yeah, that’s a great question. I think there are some folks in the camp that, no matter what argument you put forth in favor of advertising, are always going to find an excuse of why advertising is horrible. I’d argue that a lot of these folks just don’t realize when they’re being advertised to. Look at television. Television is basically one big, fabulous ad. It’s not a mistake or a coincidence that somebody’s using a MacBook Pro on whatever TV show they’re on last, like 24 or whatever, I don’t know. Those things are not mistakes, so advertising is all around us. It’s influencing us all the time, and I think the best ads are ads that, you know that they’re ads, but you interact with them because they provide some kind of value to you.
A good example of that is a network that we run that’s called Carbon Ads. The jist of Carbon Ads is that there’s only going to ever be one ad on the page, so we’re not cluttering websites with tons of ads and being intrusive and obstructing content, and your reading flow and stuff like that. The other promise that we make is that the ads that are on the site are going to be from companies who we would also use ourselves. During the sales process for those ads, we do some kind of vetting of the companies and make sure that they’re not trying to huck fraud or products that we don’t believe are worthy of being on the publishers that we represent. In many ways, it becomes more of like us curating a list of companies and brands that the users on the site might actually enjoy interacting with.
I’m sure that sounds all well and good coming out of my mouth, but I think the proof of that being true is in the results that advertisers see from advertising with that network, and it’s why we have such high renewal rates. The interaction that we see from users with the ads is above and beyond anything else we do at BuySellAds. I think the proof is in the results with the advertisers.
Josh: I think the idea of a curated set of ads, or even advertisers, is great, but how do you prevent one other bad advertiser from spoiling the pot for everyone? The example I think of is, I’ve got 3 kids, and I block all ads on browsers, especially that they use. We don’t use cable television. That let’s us control what they’re seeing. They’re not constantly getting bombarded with ads. A lot of that’s because, while I certainly trust some advertisers, it’s the couple of bad apples that, I’m afraid they’re going to squeak through, and then show or advertise my kids something that I’m not cool with, so that results in me just blocking all of it across the board. How do you keep the one bad apple from spoiling the bunch?
Todd: Yeah, sure thing. First of all, congratulations on having 3 children.
Josh: Thank you.
Todd: I have 3 myself, so I know what it’s like to juggle. I think the discussion around children in advertising and the influence that we either knowingly or unknowingly impose on our children through advertising, I think that, in and of itself, is a different discussion. I am of the same mindset, where I want to be in better control until my children are old enough to make decisions for themselves of how they’re being influenced by advertising, because it’s through and through, like, everything that the kids see, most notably YouTube. I think, this day and age, a lot of kids watch YouTube Kids or videos on YouTube. My daughter watching unboxing of presents.
Josh: That’s the thing, man.
Todd: I know. Every time an ad comes up, for example, she’s on a computer at our house that doesn’t have an ad blocker installed, “Daddy, why is this ad doing this to me?” It’s a very raw, natural reaction from somebody who doesn’t actually understand why her experience and her focus is being interrupted by something she doesn’t want.
To speak to the question of how do we prevent that at BuySellAds, it really just comes down to investing in the approval process, and it’s actually not that hard. I think it’s a lot harder for companies like Google and such that have a far greater scale than BuySellAds. How are they going to use humans to manually investigate and approve tens of thousands of new ads submitted per day? That’s hard. I think Facebook tries to do it, but there’s still some really horrible, very misleading, multilevel marketing, and malware distributing sites that they allow to advertise there.
I think it’s really just a product of our scale being smaller, and that we’re still able to put humans against the issue. That doesn’t mean that we get every single bad actor, but we also have publishers that help keep us in check as well. If we make one misstep, we’re risking our business relationship with those folks. What it comes down to for us is just investing in it, and we literally look at everything before it gets out there.
Josh: Yep. That makes sense. It’s funny you mentioned the YouTube unboxing stuff. My 7 year old, she’s huge into Legos, and she knows about every single new Lego set because she watches somebody on YouTube unboxing them. She’s not getting advertised at all in the traditional sense, but somebody who just unboxes and plays with Legos on YouTube, and she’s entranced.
Todd: Yeah. We wrote about this on our blog on Medium last week about Lego, and that speaks of everything around you being an ad, and this constant pressure on you to make decisions and figure out how you want to interpret the world around you, which is getting a little more philosophical than I care to go down right now, but The Lego Movie, that’s not a mistake, that’s an ad.
Josh: It’s one big ad.
Todd: We can’t escape the ads.
Josh: I have this soft spot in my heart for advertising or, specifically, making money off ad sales. Back in 2003 until maybe 2006, that was probably where half of my income came from. It was probably the heyday of display ads. Join a few ad networks, I think like Tribal Fusion, Fastclick, Burst, I think, was one, AdSense, and I think Yahoo even had a display ad network. You throw this code on your page, and money would just pour in. At the height of it, I was doing 2 to $4,000 a month as a college kid. I literally had a site that was called reallydumbstuff.com. I’d make money off that stuff.
Stuff has changed a ton since then, but I guess let’s talk a little bit about the origin of BuySellAds, because you guys would’ve started on the tail end of that, correct?
Todd: Exactly. That’s exactly how I got started. I was running a few websites that were more hobbyist sites, I would characterize them as. One was called CSS Elite, which was back in the day when we were …
Josh: CSS directories were …
Todd: Yeah, exactly. We were learning to go from table-based design to CSS. It was all the rage, so one was that. The other was one called 13 Styles, which provided different navigation style menus for free. I was in the exact same boat, making a couple thousand dollars a month, and I was like, none of these ad networks are what I want on my site. I have advertisers contacting me directly, wanting to advertise on my site, but I’m working so I can’t actually deal with these people, or actively pursue selling ads, because I have other stuff that I want to do. That’s really how BuySellAds became a thing, is that I wanted to solve that problem.
To your point about advertising and its history on the web, it still stands as the greatest business model on the web. I know people will say, “Yeah, but it’s horrible,” all that kind of stuff, but the fact that you can take a snippet of code, put it on your site and instantly make money …
Josh: It’s kind of magical.
Todd: It is magical. I think, also, to put all of this in perspective, we’re less than 2 decades into the thick of real advertising on the web, in the scale that we’re seeing today, so despite the challenges that ad tech has right now and the challenges that I think we’ll continue to see, obviously until we solve them, it’s still really early.
Josh: Yeah. You guys started building based off of really scratching your own itch, in that sense. How do you transform that from this scratching your own itch thing into an actual business?
Todd: Sure. First things first, we’ve remained bootstrap all along. We’ve never raised any money, which isn’t necessarily to say that I think that’s better than raising money, but it’s more to speak to our growth all along has been slow and gradual, and not necessarily according to any sort of plan or something like that, which maybe some folks will hear that and think that’s a bad thing, but I think the way that we built our business was really just by connecting with our customers, making sure that we were servicing them properly, and then earning their recommendation to others. From a business standpoint, we’ve built this the old-fashioned way, slow and steady wins the race kind of thing.
Josh: I think maybe, what was it, 2010, 2011, it felt like there were these new niche ad networks that were popping up every month, and then you guys basically bought all of them. What was the display ad landscape like then when all these were popping up, and what was the benefit of acquiring all these smaller networks?
Todd: Sure thing. This is back when The Deck innovated on the model of one ad per page network, so full credit to Jim Coudal and his team who started with the concept. I think the next one that started was Fusion Ads, and then Carbon Ads, and then Yogurt, and then eventually we started our own, called Ad Packs. I never wanted to start a business that was exactly like someone else’s business that was out there.
I remember I was on a call with Jim, really early. It was probably around 2009, 2010, and I was saying, “Jim, our users are asking us to do this. I just need your blessing, because I don’t want to go out there and release something that’s flat out copying what you’re doing.” I think his response was something along the lines of, “I get it, but don’t be that guy.”
Eventually, it just came to the point where we couldn’t refuse that business model or that style of niche ad network any longer, because we were losing customers over it, so we launched Ad Packs. It was going really well, and we saw an opportunity so we bought Fusion Ads, and then I think a year or so later, we bought Carbon Ads and Yogurt. Now we have since merged them all into a single network, Carbon Ads. It’s been going really well, so I think we’ve probably, in these last 5 or 6 years, probably doubled or tripled the size of what they were when we initially acquired them, altogether.
Josh: Was the benefit of acquiring those just to get access to inventory, basically, or … ? What was the benefit of taking out a bunch of the smaller ones for you guys?
Todd: For us, it was about being able to better service our advertisers. Advertisers were spending on these networks, and placing these buys individually already, and so we saw it as way to just get more of the existing advertiser budgets that are being spent coming through us, which helps us help them, and also we knew that we could bring more efficiency by doing these networks all the same way.
Josh: You mentioned The Deck and then all these others were the same sort of basic single ad, small little rectangle format. Was that, coming about, do you feel it was almost this extreme reaction to the format, to the ads, that were really getting pretty prevalent on the web, or was there something else that led to that?
Todd: Yeah. I think display advertising definitely started to grow out of control around 2009, 2010, where there comes a certain point where a publisher can no longer fight the, well, what’s one more ad mentality. Yeah, I think it’s a direct response to that. I also believe its purpose is for publishers who might not actually be trying to make money from ads. They’re publishing stuff on their blog, and the primary reason wasn’t to make money, but being able to make some money with quality companies you can get behind was like a value that they’re willing to support. In many ways, it’s almost more like a community than an ad network.
Josh: That makes sense. Speaking of ad formats, where do you see things heading as far as the formats of advertising in the next few years?
Todd: Yeah, totally. Obviously, there’s a lot of buzz around “native advertising”. What that means to me is really just something that’s custom for the user experience on the website where it’s being placed. When I think of native advertising, I think of the ad creative that you’re getting from the advertiser as having, let’s say, 10 different pieces of metadata, let’s say an image, a large image, an icon, a title, a short description, a long description, a link, stuff like that. When it’s placed on the publisher website, the publisher can pick and choose from those different elements how to best integrate that into the user experience of their site.
The best examples of native ad networks are Google AdSense and Facebook ads, and Twitter-sponsored tweets. Why those formats work is because they’re not disruptive. It’s not because they’re trying to look like natural content. They’re not trying to trick you. I don’t think advertising is good when it’s trying to trick you, obviously, which isn’t to say that when an ad looks similar to the content and the experience around it that it is trying to trick you. I think what that’s trying to do is provide the user with a better experience in interaction with that site.
That’s really where I see ads going. I think it’s also squishy, because you talk about trying to standardize a native ad format. It’s like, well, then is it no longer native? I think it’s less about standardization, because in order to bring to scale for an advertiser, which they require. These things don’t work as one-offs across the web, across thousands of publishers. They’ve got to standardized in order to be scalable, so that they work for the advertiser. That’s where I see things going.
Josh: Do you guys attempt to stick your toe in the native ad waters in any way?
Todd: We have in a couple different ways. We have a native integration with the largest ad server on the web, which is DoubleClick for Publishers. Publishers today, or as of about a year ago, I think, can build what are called custom templates within DFP, DoubleClick for Publishers. We’re able to support that at BuySellAds, so that a publisher can sell with us through a self-serve platform.
Additionally, we’ve been working on the beginnings of another native ad format at BuySellAds proper. What I mean by that is, instead of us just providing the self-serve software, we’re also working to build the network for advertisers and publishers, much like we have done with Carbon Ads. I think you could even argue that Carbon Ads is an example of how that could work going forward, because Carbon Ads is like a subset of creative metadata from what might be a longer list of metadata that you’d require for a native ad network.
Josh: Got you. You’ve kind of got a lot of things going on from a product standpoint, I guess I would say. You’ve got the network side of things, where you’re … I guess, actually, the marketplace side of things. You’re making all these ads available in one place to purchase, but then you’ve also got tools for managing all those ads, and then I think you’ve also got software for just basically skipping the marketplace completely and just selling them directly, right?
Todd: Yeah, we’re all over the place.
Josh: How do you juggle that much stuff?
Todd: Kind of like having 3 kids, Josh, you know? Very carefully. Part of being a bootstrap business is that sometimes you go into things and you invest in things, kind of waiting and seeing how they’re going to work out before you invest more, and before it becomes “fully staffed”. We’ve had a number of projects over the years that have kind of lingered along that we haven’t quite been ready to cut off yet, but we’ve also had a number of projects that have been a mediocre success, I would say. I feel as though a lot of the challenge for us is trying to figure out how to bundle these things up into a story that’s much more easy to communicate to our customers. I feel like that’s one of our greatest struggles right now in 2016, and something that we’re looking to improve as we continue through Q4 into 2017.
You’re right. We have an ad server, we have self-serve software through BuySellAds.com. We also have self-serve software that you can privately brand as your own. NPR uses our product that does that, along with companies like Stack Exchange, and there’s a whole host of others, so it looks like it’s on their site, but it’s actually our software powering it. We have Carbon Ads, which is an ad network. We acquired LaunchBit, which was an email advertising network, which is kind of serving as a foundation for the native stuff that we’re working on. We just have so many disparate products that we’re slowly but surely working to bring together into a more cohesive story, but it’s all rooted in the idea that we believe that quality in advertising is a sustainable business, and anytime you can bring the advertiser and the publisher closer together, it’s a good thing. It’s all about that.
Josh: All right. That sounds awesome. Okay, I think that does it. Yeah, that’s all I got. How can people get in touch?
Josh: All right, good deal. Well, hey, Todd, thanks for taking the time for chatting.
Todd: Thank you, Josh.
Josh: All right. Have a good one.