Larry Organ of ConsumerBase is incredibly interesting to talk with because he understands better than just about anyone else how data can be used effectively. It’s a tricky area with lots of privacy and legal implications, but is extremely powerful and is becoming the basis for many types of targeting online, including behavioural targeting. Some key points of the interview: Learn from an expert in offline/online data sales. Find out how this company uses direct response marketing to work with blue chip customers. Discover how cell phone advertising can be legally done.
Full Interview Audio and Transcript
Adrian Bye: Tell us a little about your personal side first.
Larry Organ: I’m Larry Organ, 47 years old, born in Toronto, Canada; moved to the U.S. 22 years ago to start my own business. I started out in the scholarship search business, business called Student Services. We had a product called Financial Aid Search through the web, which became FastWeb, and was sold to Monster in 1998. I loved the Monster model so much I decided to see if I could improve upon it. I started JobsOnline, which eventually actually grew to a bigger size than Monster from a traffic point of view.
Our strategy was a little different. Whereas Monster charged employers and made it free for the job seeker, we made it free for the job seeker and the employer so more of both would come. The strategy was a back-end data model, where we found companies to go out and buy the data, both from the job seeker and employer side. So every time someone came to the site and entered information it was pre-sold and that was the company’s revenue model.
Adrian Bye: But after you did that, you obviously did drive a lot of traffic and it went pretty well. Did you ever get any kind of backlash from consumers as to having their data sold?
Larry Organ: Absolutely not. I can’t say that I’m a pioneer in selling data, because data has been around for a lot longer than we have; at least the buying and selling and manipulating of it. When someone came in to JobsOnline we would tell them the quid pro quo of using the service is we are going to sell the personal information that you give us. To the extent that someone saw the value in the services we were providing they had no issue with it.
For employers, it was like a bonanza, because Monster typically, especially back in the late ’90s, was used by mid-sized to larger employers. They weren’t really accessible to a smaller company with maybe 50 employees and fewer, because they really couldn’t afford to recruit that way. By making it free, we had local bar owners coming and listing jobs, on JobsOnline. And they knew when they signed up we were selling the information that we were capturing. My biggest client back then was Donnelly who was trying to build a business database, and they told me that the most difficult thing that they had to capture was square footage of plant.
And, so the bar owner would come in and list information about the job that he was trying to fill; we would ask him how many square feet is your bar? And that information was uploaded to Donnelly, who would pay us for that information. The employer got what he wanted, he or she wanted: people applying for their jobs, and it was free. The job seeker got what they wanted: they found employers that they couldn’t otherwise find through Monster. And we got what we wanted, because we were making revenue off of both of them, the job seeker and the employer.
Adrian Bye: Let’s backtrack a little bit. Tell us a more about Larry Organ.
Larry Organ: After we sold JobsOnline to Acxiom, because of all the data we had captured in the database and the sales channels we were selling through, they took the name and sold it to Monster. So if you type in JobsOnline today you’ll get the Monster, but all the data still resides with the folks at Acxiom.
After that, we started a company called Custom Offers and I remember it well. It was April of 2001, and January 2002 sold it to Mosaic. They filled for bankruptcy 11 months later and we the employees bought the company back in 2003 and renamed it ConsumerBase and we’ve been going ever since. So that’s a short history of the past 22 years.
Adrian Bye: And you’re married, kids?
Larry Organ: Married, four kids, age ranging from 8 to 15, and live in a suburb of Chicago called Winnetka.
Adrian Bye: Explain what ConsumerBase is, how big it is, the kind of stuff you’re doing, how many employees.
Larry Organ: ConsumerBase today is a three-channel business. Channel one is the digital agency where we provide online marketing digital agency services to clients like monster.com, military.com and others. We will either do their banner ad buys for them or their search engine buys for them on a cost-plus basis. We have been doing that since 2002 and we are fairly good at it, using all the tools that are commercially available.
The second channel in our business is the website channel. We own and operate about ten different websites, maybe a few more, because they’re different faces to different sites. What they all have in common, is they’re all transactional websites, where they make money by selling like leads, typically. The byproduct of those is data which all goes into our database, which is the third channel in our business. And the real core of our business is in the data business where we are an original data supplier to the folks at infoUSA, Equifax, Experion, R.L. Polk and others. And we also slice and dice the database and sell that direct to companies throughout the country who are interested in one piece of data or another.
As far as the company goes, we are approximately 40 people, based in Chicago. We have and are continuing to set up sales people in different cities throughout the country so we can do a better job at going direct by being a part of local markets.
Adrian Bye: Are you working with an advertiser to buy media for a particular advertiser?
Larry Organ: We’re buying media for our clients. We’re kind of agnostic as to what we buy for our clients. Our goal is really to bring in for the most part, all direct response clients. They understand what their acquisition costs per sale or per re’sume’ or whatever their target is, and it’s up to us to go out and get it. And it is that expertise that lends itself fairly nicely to the website channel of our business, because the same skill set that we use to buy traffic for our clients we also use it to buy for our own proprietary websites as well.
Adrian Bye: If someone who may have offers around how to make money on eBay wants to increase their volume is that something they can bring to you?
Larry Organ: Probably not. I mean it’s a great business; I made money on eBay and I’m going to lose tens of thousands of people out there doing it. But, a typical client for us is someone with a minimum monthly spend of $10,000, number one. Number two, as much as we love branding business, our clients tend to be focused on understanding their metrics and communicating same to us. Then we go out and put together a marketing plan and execute, on a cost-plus basis. Typically we find catalogers understand the metrics very well.
Adrian Bye: Anything else you want to talk about on the media-buying aspect or that side of the business that’s interesting?
Larry Organ: The media-buying side of our business is something I think we do well. But we are a commodity, because we use tools commercially available to everyone. It’s part art, part science. I think that we’re as good as anyone at the art part of it, but to do the science part we have tools to help us be very good. But the more exciting part of our business, frankly, is what happens in channel number three, which is where the data comes from.
Adrian Bye: Are you tracking clinks and doing any kind of behavioral stuff there?
Larry Organ: It really depends on what our client is asking us for. At the end of the day what they care about is acquisition costs per lead or acquisition cost per sale. If we track back to the target acquisition cost per sale made, the number of opens doesn’t really matter. Also the same is true for a number of clicks. The most important metric to a sophisticated buyer is what it is costing them to make a sale.
Adrian Bye: As an example, is a site like email email-lookup.com generating a lot of traffic, or these other sites that you have or is it small targeted traffic that becomes worth a lot?
Larry Organ: Really data sales drive how much traffic we need, and to a certain extent will even drive how we select which websites to promote. For example, InfoUSA was looking for as many people as they could to mark that had an interest in travel. We have a joint venture with Yahoo. Yahoo’s biggest pain, as you can imagine, is competing with Google for clicks, because they both have about the same advertisers and they both get their comps on a per click basis. Google has a lot more natural traffic and Yahoo, to compete, has to find different ways to distribute. So one of the ways they do it is through us, through e-mail deployed under the Reports2007 brand.
Adrian Bye: So have you actually been sending out SMSs on behalf of clients now or yourself?
Larry Organ: Right now we’re building a database and find about 25 percent of the people that use the site give us their cell phone numbers. We’re taking orders, but don’t want to start deploying, however, until probably towards November, when we have a decent saturation of the phone numbers so we can make a campaign worthwhile.
Adrian Bye: How do you think consumers are going to respond to it?
Larry Organ: When people sign up for the dating site we ask, “How do you want to be contacted, by e-mail or by cell phone?” Twenty-five percent of the people say they want to be contacted by text message on their cell phone. We then tell those people that part of signing up is that we are going to send you commercial messages. Next, we send a text message to them, with a code directing them to go back to the site, and enter the code to prove it’s really them.
Then there’s the practical side of it; if we send people five messages a day, if I got five text messages a day from a commercial advertiser, I’d be up in arms, but if we limit it to once every couple of days and it’s useful, you know, if I am a 35-year-old mom and it’s 5:30 and it’s Monday and someone says “Here’s a coupon for Domino’s,” I’d be pretty happy about that, quite frankly.
Adrian Bye: So would it be an accurate statement to make that most of your business is driven around serving the direct response needs of blue chip advertisers using advertisers using clever direct response marketing techniques on the web and offline?
Larry Organ: You’re 100 percent correct. I’d add we consider ourselves to be in the solution-providing business. We went to HSBC; they didn’t come to us, and said “Tell us what your pain is.” They said, “We want every man and woman to have one of our credit cards.” But there is, about 100 million people today on FTC’s do-not-call list and they can’t get through to those people and wanted to know whether we had solutions for them. And we said, “Hey, we do have the solution,” and that’s how we got into the e-mail append business with HSBC.
We’re working now with one of the large car companies here in the U.S. who spends a tremendous amount of money recruiting people to do surveys for them. That’s how they decide what model change they want to make with their cars based on survey data. We’re showing them how they can lower their cost to capture people who will fill out their surveys by acquiring those people online as opposed to doing it through the traditional telephone methods. Again, it’s a solution that we can provide based on the data that we’ve captured.
Adrian Bye: So you built the whole process of driving traffic all the way through to selling the data, or do you prefer to work part way through the process where someone else is driving the traffic and then you’re doing some value add on the data and then working with the client?
Larry Organ: I prefer to just work with the data part of it, because I believe it’s what we’re best at. Any agency will tell you this, we may love the business, but we hate the margins. Typically the agency business is 15 to 20 percent margin and you can’t spend the amount of time you’d like on any one client based on the amount you’re being paid, and if you try to charge more then they’re going to give the business to someone else.
We keep that part of the business going because it’s a necessary spoke in the wheel to drive our entire business model. When we generate data from our own websites, which typically we like to keep at 50 percent margin, the byproduct of those websites is the data that we’re putting into our database, then those sales are 100 percent margin. And it allows us the bandwidth to really dedicate the resources necessary to make sure the solution that we are providing is the best of all.
We also have a competitive advantage over other companies out there who are providing a data solution but don’t own the data because they can’t be as flexible as we can be, and frankly their cost structure is very different.
Adrian Bye: So it makes you more competitive?
Larry Organ: That makes us more competitive and so we feel that on the data side of our business not only do we know what we’re doing, and do it very well, but we have a price advantage based on the fact that we own the data that we’re selling.
Adrian Bye: Any comments you’d like to make or any other things you’d like to tell us.
Larry Organ: No. I think the only thing I’d like to reemphasize is that we’ve talked about, whether you could make more money back five, ten years ago, or can you make more money today, and my answer was there is more money being spent online today.
I do think the next generation, will be advertising through text messaging, and that’s where I plan to bring ConsumerBase so that we’re one of the main players in that market. I think this is going to be the next major shift or change in how technology affects advertising. Offline, and online were two separate and distinct annals before. Now we’re bringing them closer together. Text messaging is not part of that group right now, but I think you’re going to see it brought into that as well. And so all three mediums are going to be working much closer together in the future and that’s the direction of ConsumerBase I would hope.
Adrian Bye: So ConsumerBase could become a company very much focused around just text messaging.
Larry Organ: Not text messaging, but sending out very highly targeted advertising through text messaging. And, again, we can’t do that though if we don’t have the websites capturing the data.
Adrian Bye: So for the publishers listening, if they’re generating signups every day, is this something that you could build into their signup process?
Larry Organ: Absolutely. But built into signup process, I believe the key success and the key to selling to the people they want to be selling to, is capturing them correctly. And there is no legislation out there now that tells you how you need to do it, like CannedSpam does on the e-mail side. Just make sure you have some sort of double oft-in process that you can say this is how we’re doing it.
Adrian Bye: Yes, that logically makes sense. So we talked about a number of different areas. What kinds of people do you want to have contacting you and for what kind of stuff?
Larry Organ: Oh, great question. Anyone in the data sales business right now and looking for new opportunities should definitely contact us, number one. Number two, any company out there with a brand, who has a product to sell, and is interested in testing text messaging should contact us. And anyone interested in generally using our digital agency service should contact us as well.
Adrian Bye: Okay, and then is there anything else you’d like to add in closing?
Larry Organ: No. It’s been fun. Thank you very much. It’s always great talking to you and I hope that you can get something started with a group of us who can get together and share some of our ideas across a table and see what relationships we can form.
Adrian Bye: Cool.