Fast Track Interview

Adrian Bye: We’re here with Scott Tilton, CEO of the Loop’d Network. Scott, thanks for joining us. Can you tell us a little bit about who you are and where you’ve come from?

Scott Tilton: I was born and raised in New York. I am a former competitive action sport athlete. At the age of six, I started racing BMX bicycles. When I was 10, I transitioned into motocross, which I did for about ten years.

I got my Masters Degree in Internet Business Systems and had one job out of school. It was pretty miserable, so I tried to find opportunities to work in the action sports space and combine it with the Internet. Nothing really popped out at the time, so I founded a company called SponsorHouse.

In 2003 I moved to San Diego, in a motor home, with SponsorHouse and my business partner. We didn’t know anyone when we showed up, so we started pushing to grow the company. That year we won a business plan competition, which led to our first angel-round funding.

SponsorHouse was around for about five years and was the prequel to Loop’d Network. We essentially used the same technology, the same investors, the same team, and rebranded under the Loop’d Network to expand the business model.

Loop’d Network is an online action sports network where athletes and enthusiasts can register for a profile, interact with others, and attempt to get sponsored from about 400 brands who are on the network. We charge advertising and e-commerce fees to sports equipment companies and mainstream advertisers who are focused on reaching our demographic of primarily young males, mostly in the 12 to 24 year-old age bracket, which is the sweet spot for action sports.

Adrian Bye: Why change the name to Loop’d?

Scott Tilton: When we first started as SponsorHouse, we were a sponsorship service. Over the years, we found that we were starting to lose some opportunities to work with some key brands and athletes.

Oakley is an example of a company that was hesitant to work with us as SponsorHouse. We had a great relationship with them and knew we were going to work together at some point. It was understood that while we were SponsorHouse, they didn’t want to put the message out that they were sponsoring athletes. As soon as we launched Loop’d, we did a one-year deal with them, and we launched the Oakley Rider Search program. They actually renewed the deal after that first year. It was implied sponsorship, but the word “sponsorship” never showed up anywhere.

When it comes to sports marketing, brands are very specific and particular about how they get involved with things. On the action sports front, it’s a little bit trickier because you’re taking a risk. If the athlete turns out to be a punk or is a bad image for the company, it taints things for the company and the brand. It’s the same way with sponsorship; companies just keep a really tight wrap on who they will associate their brand with in order to protect the identity of the company.

Adrian Bye: Outside of the sponsorship side, what do users actually do with Loop’d?

Scott Tilton: Our members can register on the site, receive a profile and have access to different features such as sponsorship, photos and video applications. We have 400 brands on the network, and we immerse those brands into the experience. With sports, brands are just part of the lifestyle. People in action sports really identify themselves based on the brands: the clothes they wear and the equipment they use, so they don’t view them as advertisers but as active participants in the sport.

The members on the site are looking for sponsors. They’re uploading massive amounts of content, mixing it up, mashing it up and redistributing it to other social networking profiles. They’re getting deals on products and entering contests from the brands to try and get sponsored and win products and incentives. Then they’re using it as a more traditional social network to connect and interact with other members who are into similar sports.

We have a lot of hopefuls on the network who are trying to figure out how to promote themselves, how to get a foot in the door with the different companies for sponsorship and using it as a self-promotion tool to break into the action sports scene.

Adrian Bye: Is that a model that could then be replicated across other verticals where you have a community of people that want to move up, such as actors, writers or people like that?

Scott Tilton: Absolutely. We’ve chosen to focus on sports because it’s really what we know and have been most passionate about. We have been approached by a number of people about everything from music to horseracing, rodeo and actors. The biggest categories that come to us on a regular basis and ask if they can use it are musicians, bands, and gamers.

Adrian Bye: Did you originate your concept or did it come from somewhere else?

Scott Tilton: We were definitely pioneers with the sponsorship model. Prior to SponsorHouse, there really was no solution for up-and-coming and amateur athletes to get sponsored. Back in 1999 – 2000, the traditional process was an amateur athlete would write a resume, post his competition results, and throw some photos into an envelope. If he was lucky enough, he would put a video in there for sponsor reps or team managers to look at. And he would mail them to a company.

Some of the more popular companies like Oakley and Quiksilver would get tens of thousands of applications for sponsorship, and most of them would never get looked at because no one was designated to sift through all this information nor did they have the time to do it.

When we launched SponsorHouse, it was a community site with profiles where team managers could specify the criteria of what types of athletes they’re looking for. For example, “I’m looking for a 14-year old motocross racer from New York.” If you fit that criteria, then you could contact that company.

It’s a way for them to streamline the whole application process. We were the pioneer in developing that type of concept that really brought the world of sponsorship to a much larger audience of athletes from all over the country at multiple levels beyond just professional.

Adrian Bye: Does a company typically say, “We need to find a 14-year-old guy in New York City” and then your system finds a 14-year-old skateboarder in New York City?

Scott Tilton: Correct. It works one of two ways. They can create a sponsorship listing that would enable people to contact them or they could do a search to pull all the people that fit their criteria. They can browse profiles, look at photos and videos, see how many friends they have, what people are saying about them, and what kind of ratings they have. They can get a better gauge of who they’re looking at and what type of person they are based on who they’re friends with. At the end of the day, it’s essentially marrying the effects of social networking with a commercialised process like sponsorship.

Adrian Bye: How does the social networking fit into this then?

Scott Tilton: In addition to trying to get sponsored, the members of the site are also out aggregating networks of friends and fans. For them, the more people they have in their network, the more valuable they are to a sponsor. That way when a brand sponsors a particular member, they now get visibility to all of their friends. It’s a very creative grassroots marketing program where the athletes’ online identity is sometimes as valuable, if not more, than their offline identity.

Adrian Bye: If someone signs up, how are they promoting? What types of different tools do you let your guys use?

Scott Tilton: During the signup process, you have an option to import your address book and see who’s already on the network. You can invite people that are off the network. You can also do the traditional invite-a-friend.

Where we get more viral is on the sharing and inviting. Let’s say I’m a member with 500 friends in the network and 500 people I can communicate with off the network. I can post an update to my profile that says how I placed at a specific event. When I send the update, it will immediately notify all of my friends on the network as well as send an e-mail to all the people off the network. Then they have a link to visit my profile to see the update. They’re basically promoting themselves, which is helping to pull more people back into the network.

We also have a partnership with a company called MixerCast. Their technology is a mash-up type tool where the user can pull in Flickr photos, YouTube videos, UGC content, and music. Then you can create a mash-up, which is just mashing all this stuff together or essentially a timeline video editor.

For us, the application was perfect because now we offer a solution for a 14-year-old skateboarder to upload all his content of him doing tricks, put it together through the timeline editor, add music to it, and post it to his Loop’d profile. Then he can also share it and post it to his MySpace profile, his Facebook profile, or his Bebo. Anyone that wants to interact with that particular video or create their own has to come back to our network.

Overall, we don’t invest in marketing. We do some PR with our partners, but we don’t invest much in paid search at all. We don’t buy traffic or do print or event marketing. For the most part, everything is organic and word-of-mouth, and we get anywhere from 1,000 users and up a day to register.

Adrian Bye: Why don’t you do something like Ning and be the network for connecting brands to communities?

Scott Tilton: Our network does have elements of Ning. For example, if you go to monsterarmy.com, it is the grassroots athlete online community on the Loop’d Network for the energy drink Monster Energy. We went to them two years ago to present the opportunity to build a branded community around the Monster Energy brand and position it as a grassroots community for athletes to connect with the brand. That community works almost identical to Ning where we offer a set of tools to brands to be able to build communities on our network.

Adrian Bye: Why don’t you take that to support any potential vertical and allow all brands to come in?

Scott Tilton: We’ve considered it. From a resource perspective, we’re privately and angel-funded so we’ve been focused on making sure we went to action sports as a vertical first. We have actually been approached by several people. We’re now actually pursuing licensing opportunities to have different business teams that are interested in pursuing other verticals, and we’ll do more of a joint-venture/licensing arrangement with those types of companies.

Adrian Bye: Let’s say you have 500 friends, and Monster Energy is sponsoring you. How is that sponsorship done so it’s not turning off those friends?

Scott Tilton: Immediately upon entering into an agreement with a company, such as Monster Energy, the logo shows on their profile. Monster now has visibility and real estate on their profile as a sponsor.

It’s then tied to everything the member does, so there’s always an insignia that specifies who the brands are that are sponsoring them. Immediately the member can also share with the rest of his friends and networks that he has just been sponsored by Monster. Also every member has an activity feed, and they can see what is happening with the rest of their friends on the network. That sponsorship will show on their activity feed for everyone else in the network to see.

Adrian Bye: How much does a typical sponsorship agreement go for?

Scott Tilton: It really depends on who you are. Typically, the levels start from discounts off retail pricing on the equipment that you need, which ultimately saves a lot of money. That’s where most of the amateur athletes fall. Once you start getting into the very talented, up-and-coming amateur athletes who are on the verge of turning pro, they start getting free products. Then once you turn pro, a lot of those athletes are on straight pay. It’s not a rich man’s sport. Whether it’s surfing, motocross or skateboarding, as a pro you can start out making anywhere from $10,000 up to $10 million depending on who you are.

Adrian Bye: Is the $10 million deal done through your site or do they do that directly?

Scott Tilton: They do those deals directly. The pro athletes who have agents and managers use our network strictly as a way to build fan bases and to promote their sponsors. They’re not doing deals on our network. We never wanted to be in the middle of the sponsorship deal or in competition with the agents or the managers of these professional athletes. We’re just the network where people can connect with each other.

Adrian Bye: Given that you’ve got a monetisation model here, how well is it working?

Scott Tilton: We’ve actually monetised extremely well. Our site is free for members now. For a brand to get onto our network and be able to interact with our members, they have to buy a profile, buy a community, buy display advertising, or set up a storefront or do e-commerce where we get an affiliate fee.

The profile is very similar to a MySpace or a Facebook profile except brands can use our sponsorships services, interact with members and have visibility to a very targeted demographic.

The community is like a sponsored group, such as the Monster Army concept I mentioned. When you buy a community, you have a whole set of tools to take over the look and feel of our pages and add different modules whether it be a contest, a poll, featured members or featured athletes.

Then we have a traditional display advertising model, which has been our least area of focus. The brands also have the ability to link up with their own stores or create their own storefront on our network, and they can sell products with deals to our members.

Adrian Bye: You actually have a couple of business models all rolled into one. Can you tell me page impressions?

Scott Tilton: We view about 12 million to 15 million pages a month and we have 400,000 members right now, most of which are active. In terms of revenue per page, we’re in the $20-plus CPM range for revenue per page which is unheard of when other social networks are in the pennies.

Adrian Bye: The nuances may be different as well because in other areas like in Facebook, advertisers can be often viewed as unwanted intruders whereas in your area, everybody wants the sponsors.

Scott Tilton: Correct. We’ve layered the brands into the experience where they’re not positioned as advertisers. They’re positioned as other participants on the network. We have a brand engagement metric where 85 percent of our 400,000 members have engaged with brands on our network. When they have sent sponsorship applications, they’ve entered a contest, and they’ve become a friend of that brand, they interact with them and have a relationship with that brand so the brand can now talk to them on a regular basis.