Monday, January 10, 2011/
Julian Tol officially launched Brandscreen with Seth Yates in October 2010. The business operates as a ‘stock market’ for digital advertising inventory, allowing publishers to upload space and advertisers, via their agencies, to buy it.
Despite being relatively young, more than 500,000 websites around the world list their inventory via Brandscreen. The company already has a New York office and has big plans for the future.
Tol speaks to StartupSmart about how the company is faring.
What was your background before starting Brandscreen?
I worked at advertising agencies – firstly Clemenger BBDO and then McCanns and Ogilvy in London, on the account management side. It wasn’t a pure media background, but I fell into data-driven advertising.
I then built a mapping system that showed where planes flew. The airlines knew where their planes flew, obviously, but I created a mapping system that took the flight data and overlapped it. I sold that business to Publicis.
I then ran the first chain of private eye laser hospitals in the Netherlands. I wanted to do something outside advertising at that point. I sold that to Optical Express.
What gave you the idea for Brandscreen?
I came back to Australia in 2005 and did some consultancy and cooled my heels a bit. I then started looking seriously at the supply chains and how electronic trading was changing everything. The old way is just collapsing – just look at GroupOn.
I looked around and in 2007 real time bidding, or RTB, came along. That did for advertising what the stock exchange did for stocks. That was the genesis of Brandscreen.
How does the system work?
Before, media sales were conducted directly between media agencies and media publishers. Brandscreen works in much the same way as a stockbroker. You see the whole market to see its value and then serve ads into the exchange. We then collect invoices from the exchange and send them to agencies.
How did you go about creating the business?
I put together a lot of top guys to define the business properly. I wanted to define what the problem was and what the answer to this is.
I got Nick Jones, CEO of News Digital, Seth Yates, CTO of Fairfax Digital and Michael Gethin, who was working at Fairfax’s Drive. I knew these people through school, university and networks. I gave them a 1% share for a three to six month term to see if there was something in the idea.
The first questions were – if I had an exchange, how would I value it? How could I value a page impression? After that initial validation, which came through experimentation with programs, I went through computer science 1.01 to see if the logic worked in a system.
The next stage was to go to the publishers to ask if they would swell their inventory this way. They said ‘no’ while the agencies said they would buy from it.
I took the bet that the agencies would drive the market, even though the publishers had said no. I knew that the value chain was changing so radically that if publishers didn’t change they would go out of business.
So, how did the situation change?
Google got on board and that forced their hand. Google picked out seven companies in the world in March to act as ad exchange distribution networks.
They chose us because we understood the problem, we had engineering skills and we were coherent. They were followed by Rubicon, Admeld and Pubmatic, who we partner with to handle inventory to the exchange. Publishers have to go through one of them to get on the exchange.
One key question was what would happen if none of the big publishers got on board but non-Fairfax and News Ltd sites aggregate 70% of the inventory ecosystem. We can see that they are trialling it at the moment though.
Doesn’t the business model commoditise advertising space?
Quite the opposite, in fact. It’s now not about how good your sales rep is, it’s about how good your data is. If you can show a buyer the users who are happy to buy a car, how valuable is that? We can find out who these people are and serve them ads.
How did you fund the business?
I funded it myself for $250,000 and then a further $150,000. Three high net worth individuals then put in $1.6 million. They backed the team, myself and Seth.
We now have five people in Sydney and New York. Seth is the principal software architect. We own just over 50% of the business between us now.
What were the main challenges in starting it up?
We faced difficulties in engineering into a blank space. The supply side wasn’t interested in cooperating and the demand side didn’t know what they wanted.
It needed a clear model and it’s easy to drift off course as there was nothing to anchor our thoughts – you see a new piece of technology and say ‘I have to do that’.
What does the future hold for the business?
We have a partner in Japan with a joint venture and we plan to be profitable in the second year.
There is room for no more than five players in the world and we want to be one of them. It’s not about fist-shaking global dominance, but we want to be one of the major guys. Digital advertising will be worth $110 billion in five years and 10% of that will go to companies like us, so we are competing over an $11 billion market.
We need people in the algorithm area and extra infrastructure to do this, which we will get through full partnership or ownership. If we did an exit for $100 million in 12 to 24 months, I’d be happy with that.