Personal Info

Hobbies and Interests: Woodworking – he made an armoire, Tennis.

Sports teams: Miami Dolphins.

Favourite Books:

• Good to Great by Jim Collins
• Authentic Happiness by Martin Seligman

Favourite Entrepreneurs: DoubleClick Founders, Jeff Bezos, Warren Buffett.

Company website: http://www.mediawhiz.com

Adrian Bye: Today I am with Jonathan Shapiro, who is the CEO of MediaWhiz. Jonathan, thanks for joining us. Before we start talking about MediaWhiz, can you tell us a little about yourself?

Jonathan Shapiro: Howdy, Adrian. It’s a pleasure to be here. I grew up in Miami, Florida but have been living in New York for the last 22 years. For a short stint, I was in California at Stanford. While I was there at business school, I figured out that media and technology were colliding, and I thought it would be fun to be in the middle of it. After business school, I returned to New York and rejoined MacKenzie and Company. While I was there, I spent a fair bit of time in their media practice, and I figured out that media and technology were going to come together in the internet space.

I joined MediaWhiz in April 2007 because I saw the opportunity to, once again, dive headlong into that internet innovation and create new ways of doing things that were going to be revolutionary at that time but live for many years.

As far as MediaWhiz, it was originally founded by Jason Cohen in 2001. In 2005, Lake Capital, a private equity firm with deep roots in the marketing services organization, invested in MediaWhiz to form the current MediaWhiz Holdings Inc. They wanted to create an organization with a broad suite of online marketing services in order to do a better job at online performance marketing.

At that time, there were three other founding groups along with Jason. By that time, I had been a digital publisher, merchant and advertising services executive with DoubleClick for five years. They thought it would be good to bring in a guy like me with experience in the internet space to help bring the organization together and take us forward.

Adrian Bye: Was the Lake Capital investment done to grow or to stabilize the business?

Jonathan Shapiro: The business was doing fine, and the idea was to really invest in MediaWhiz proper and then build it as a platform. The original thesis that Kevin Rowe and Tony Broglio from Lake Capital had is pretty straightforward. Internet advertising is where the audience is, so it’s where the marketing dollars are going to flow.

If you look at the marketing pie, performance marketing is the most rapidly growing section. We include search, affiliate marketing, data acquisition, our name for co-reg, and any form of media that can be bought on a per-action basis in that performance section. The reason we do that is because the internet’s promise is to be a more targetable and measurable media as CMOs are struggling for funding of their marketing programs.

The idea that you can actually provide demonstrable return on your marketing investment is very attractive. The advantage of online performance marketing is that you can provide not only a historic ROI, but it’s fairly predictable. For example, if you’re targeting a similar audience, the responsiveness of that audience should be about the same. You marketing efforts then should yield a similar ROI to what’s happened in the past. That’s very potent.

Adrian Bye: I’m interested in understanding the acquisitions and the investment side. It’s not something I’ve noticed in the space very much. For a guy like Jason, who founded the company, will he make more money because of the mergers and investments overall compared to if he remained independent and built up a network like most guys tend to do?

Jonathan Shapiro: Well, that’s certainly the goal. The idea is to create value by putting together a suite of services that can provide more value to the customers. If you build a business that’s creating more value, you should be able to extract more profit. It’s basically 1+1=3. That’s my goal.

Adrian Bye: It’s a very New York approach to what isn’t normally done in this space. Would you agree with that?

Jonathan Shapiro: No, I wouldn’t. The foundation in the internet space has happened in a couple of waves, but it definitely continues to spin. The performance marketing skills we provide are not traditionally held in existing agencies, and yet the marketing community is going to increasingly want them. The agencies are going to have the choice to either build or buy those skills. Whenever you have that choice, some people get bought and consolidated and some people build, but there will definitely be more consolidations along these lines so the big holding companies can add these critical capabilities.

Adrian Bye: What are your thoughts on what’s happening in the legal environment? A recent article in the Wall Street Journal talked about the expanded powers of the FTC. You’re in a state with one of the more aggressive Attorney Generals. Where do you see the direction of the space going in the next 6 to 12 months?

Jonathan Shapiro: The regulatory environment is an interesting thing. The lead generation space has its roots in what I would kindly refer to as some very aggressive direct marketing tactics. The best advertisers, such as the Grand Canyon University, the University of Phoenix, the Nielsen’s of the world, the American Laser Centre, or even little companies like Doctor Diabetic Supply, can get pushed out of the marketplace by some of the more notorious advertisers. It hurts the media providers, such as agencies like MediaWhiz. It ultimately hurts the legitimate advertisers because they are having a tough time competing for the time and attention of what could be potential customers. If the regulatory environment sets the rules and everyone understands and plays by those rules, it would be a very good thing for the industry.

Adrian Bye: In the meantime, though, a lot of companies would potentially have a bit of a smack down from the FTC, don’t you think?

Jonathan Shapiro: Well, some will. If I look at our portfolio of advertisers, I’m pretty comfortable that we are working with the right folks so our revenues will be protected. If someone is out there being more aggressive but also has to play by the rules that we already play by, it will be good for us.

Adrian Bye: Yes. Some players may go away too.

Jonathan Shapiro: That wouldn’t be terrible either, especially if they are really not providing value to the consumer or they are competing for attention that could be appropriately paid for and directed at a legitimate advertiser.

Adrian Bye: One of the things that constantly comes up is some of the ethics and problems in the space. What would you change overall to make it better?

Jonathan Shapiro: The challenge in the Lead Gen space is that you can have some very, very aggressive marketing tactics. Unfortunately, there are folks that make quick money by being very aggressive marketers and not serving the consumer or the media publishers well.

If I have one wish for the industry, it would be that we all played by the same ethical rules. An ethical rulebook, if you will. If we follow those rules, then the offer will stand on its own merits. If that were the case, we would have a level playing field. If everyone is playing by the same rule book, the offers, which are pretty cloaked, will get their fair share of attention.

Adrian Bye: The problem is people define ethics differently. Who defines that? Is it the FTC? Is it Obama? Should it be an industry coalition?

Jonathan Shapiro: Well, it would be great if we can get the industry to do it because the regulators are, unfortunately, well intended but often not as well informed as the industry participants. I fear that if the industry can’t get it together and form the standards, they will be formed by the regulators. That may be okay, but it might be a bit too restrictive.

In a perfect world, the industry players would get together and set down the right kind of standards. We are likely to see some combination of industry self-regulation and regulator intervention in trying to get everyone on this same playbook.

Adrian Bye: Right. I wonder if it really does need to be the FTC who comes in and just cleans it up.

Jonathan Shapiro: Well, they will certainly take a stab at it. I hope they are well informed. This is an interesting marketplace because it’s so rapidly evolving. We didn’t talk about social media even a year and a half ago with respect to lead generation. It just wasn’t part of the scene. Now it’s a huge part of the scene. How do you manage that and how do you regulate it? It’s still growing up; it’s in its infancy. Despite that challenge, the regulators will step forward.

Adrian Bye: Have you seen the posts on TechCrunch? Michael Arrington has been getting stuck in a lot of social media topics.

Jonathan Shapiro: Yes. I think it all boils down to the consumer being fully informed. If the consumer is fully informed, then they are making an informed choice. But are they fully informed? For example, whether it’s their cell phone is going to be billed every month, what kind of content they are going to be billed for, or someone signs up online at Netflix and the realization that you are going to be charged every month whether you sign up for the movies or not.

By the way that’s personal experience. We were all excited in my household when we signed up for Netflix. We seemed to have forgotten to add movies to our cue, so we are without movies right now. That’s the choice I made, and I live with that. That’s really what it boils down to; it’s making sure that the consumers are informed so the choices they make are well-reasoned. They may not be the choices I would make, but they are well thought through because they have the information to think it through.

Adrian Bye: Where is MediaWhiz going with its innovation in the future? Are you guys going to IPO? Are you going to be acquired by someone? What do you look like in five years?

Jonathan Shapiro: In five years, hopefully, we are a billion dollar company. Our vision at MediaWhiz is to be considered the online marketing whizzes; we want to be the experts. We want to be the folks that When people say, “We want to do performance marketing online,” we want to be the folks they have to call.

Our mission is to drive results. We want to drive our marketing results with proven demonstrable ROI for advertising. If we could do those two things, we will become that billion dollar company. It is less consequential to us whether we then go public or are part of another organization that recognizes they need these kinds of capabilities. What’s really important is building a great organization that can really drive better results for marketing clients.

Adrian Bye: How do you see you guys fitting in compared to advertising agencies like Ogilvy & Mather and Grey? Is MediaWhiz going to replace those kinds of companies? What do those guys look like in 10 years?

Jonathan Shapiro: We’re going to be partners. That’s how it’s going to shape up. Here’s why. We like to think of ourselves as an exclusive performance partner. In providing that role and serving our customer that way, we can be aligned with their agency or we can work directly with the client. We’re agnostic. We’re not really great at developing one’s brand. I’ll use GEICO as an example; they’re not yet a customer, but I have my eyes on them.

GEICO has done a fabulous job building its brand. The agency that created that brand and all the advertising around it will have a role for many years helping them build and maintain that brand. When GEICO wants to sign up new insurance customers and leverage the online channel, we can work in tandem with their existing agency and help them find the pockets of forward leaning in market for insurance customers that are making a buying decision and help them capture that information.

We will build the marketing portfolio that helps them find the right customers. We can build their creative or we can work with their existing agency to build it, but we help them tweak the creative so that it’s highly responsive. Beautiful and funny may not get the response that they want, but we’ll add the responsive components where we are experts. We’ll then have the tools, the data infrastructure and the technology to help them capture, qualify and convert this customer information into actual sales.

Then, and here’s the lynchpin, we’ll help them optimize the whole thing. We’re good direct marketers. Almost everyone in MediaWhiz has come out of a direct marketing role in the past. What that says is that we’re well versed in applying the math and science to marketing and saying, “It’s these parts of the media portfolio; it’s these creatives. It’s this portion of the sales process that is working really well and driving the return on investment. As a result we want you to spend twice of what you’re spending on these. All this other stuff, we’re going to pull away and stop doing.” MediaWhiz brings to the party that strategy of continuous improvement as opposed to destination. It’s the ability to make good on that strategy that, frankly, the Ogilvy’s of the world don’t yet know how to do.

Adrian Bye: In closing, is there anything you want to add?

Jonathan Shapiro: I would encourage your readers and listeners to try to understand the performance marketing space if they haven’t already done so. I’ve recently penned an article called “The Death of the Marketing Budget.” In a world where you have predictable and demonstrable return on your marketing investment, there should be no marketing budget. You should spend as much as you can as long as you’re getting a positive ROI. Start thinking in those terms. It’s going to be important for your future success in marketing, period.