SaaS Interviews with CEOs, Startups, Founders
1015 How He's Using $10m In AdSpend to Power New SaaS Offering
05 May 2018
Chapter 1: What is the main topic discussed in this episode?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple of hundred thousand dollars to 2.7 million. I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode.
Chapter 2: How did Chris Treadaway transition from Microsoft to Polygraph Media?
Hello everybody, my guest today is Chris Treadway. He's the CEO of a company called Polygraph Media and founder. He's a Facebook marketing partner in ad technology and he was previously group product manager at Web Strategy at Microsoft in Redmond and was also a co-founder of Stratfor. He now lives in Austin with his wife, Kim, and daughter, Margaret.
Okay, Chris, are you ready to take us to the top? Absolutely. Okay, good. So tell us about Polygraph. You go from Microsoft to Polygraph. What's the difference and what are you working on today? Okay. Yeah, so we actually started as an analytics business, big data analytics around social data about six years ago or so.
And we built this fantastic, I think, analytics system that mined tons and tons of data out of the social graph, took it out to clients, and they told us it was nice. But what they really wanted us to do with that is give them things that could help them optimize their advertising with it and really boost what they were doing with their ad spending.
And so we took all those assets, built some ad technology around it, and now we're a very happy Facebook ad tech partner. And we've serviced a lot of large companies, helping them with local advertising campaigns at scale. And is your revenue model, is it a SaaS model or a percentage of spend model? What do you like to focus on?
Yeah, it's percentage of spend right now simply because that's how we make the most money. But we are moving to a SaaS model right now with a lot of what we've learned. So We've run probably about, I would say, in excess of 40,000 individual ad campaigns. There are smaller campaigns, but we've learned a ton from that, learned a ton from the data.
And so we've sort of been in the labs figuring out what the right product is to build out of that, and that's what's coming out here at the end of January. Why build a product at all? Why not keep doing just the percentage of spend model? I think that there are some weird incentives between when you're an ad tech company and you're between brands and agencies.
I think some things can be unnecessarily difficult. And then the other side of this, too, is just there are so many agencies out there and so many software companies out there that I think that we just think that we want to service the types of clients that want to handle some of their own problems a little more than just always have to be completely involved in it. Awesome.
I mean, is that also a trend? You're seeing folks moving stuff in-house and you're going, man, to stay relevant, we better systematize what we've learned and package that in a SaaS product. Absolutely. I mean, I think, you know, agencies are very much under fire right now. Brands are getting smarter.
The reality is everybody needs to squeeze as much profit as they can out of the deal, you know, out of their businesses. And so they're looking for inefficiencies. And I think some, you know, A lot of the agency world has not exactly moved forward as quickly as some of the brands have and MarTech companies have.
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Chapter 3: What was the initial focus of Polygraph Media?
Because you can't ā I think in this, platforms are nice to build. They're nice to talk about. There's a lot of theoretical stuff. potential in them. But I think that you really have to find the thing that you do better than everybody else and just go all in there. And that's really what that pivot, what meant for us back at that time.
So you went away from SaaS then, but now you have a renewed confidence in SaaS because you're moving back to that. Why? Yeah. I just think we can service a lot of people with a very specific set of problems. So where are we focused? We are as you mentioned earlier, Facebook ad tech partners, but we're focused on local at scale.
And so when companies want to run $300 a month campaigns across say a thousand locations or 500 locations, it's too complicated to actually engage in that. There's a lot of problems with it. The native tools don't support it very well. So that's a real niche and a real opportunity. That's a very specific problem with a very specific set of customers.
And then there's needs there that are unserved currently. And so a lot of brands right now just do an antiseptic campaign nationwide or internationally. They don't take advantage of what people in a local market might care about or might think about. And so we've built a scale platform for that lifecycle. And so what we really kind of did is went back to the drawing board.
worked very closely with a lot of customers and found a niche that we think we can own that we also think is defensible. And so that's why we're sort of going back towards the SaaS side.
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Chapter 4: How does Polygraph Media optimize ad spending for clients?
And over the past 12 months, what kind of total volume have you processed across these campaigns? I guess they call it TPV in your space. Yeah, I mean, I would say we've done 15,000 individual executions in the last 12 months. What does that mean, though? So it's maybe what would be termed a micro campaign. So we'll spend as little as $150 at a time on a campaign all the way up.
I mean, we have some clients that spend $10,000, $15,000 on a very specific localized campaign, depending on the radius and all the things they're trying to do and duration and all the time and what we're testing. We can test creative and interests and all the different types of targeting criteria Facebook allows. And so, but So 15,000 individual micro campaigns across our clients.
And when we see the data on our side, we're able to put that in business intelligence, and we do tagging around it and so on. We can see a lot of really interesting things in the data about how the spend is trending, what's working, what's not working. We sort of have what we term an unfair advantage powered by data analytics when we see it happening.
And again, across those 15,000 things over the past year, what was that representative of in terms of total volume, dollar-wise? I don't know. I would say in the ballpark of $10 million in ad spend, something to that effect. Okay, that makes sense. And 15,000 campaigns represent, how many clients is that across? You're working with 10 folks, 100 folks, 1,000 folks?
Yeah, we have about a dozen clients and sometimes they'll turn off for three weeks and turn back on. That's another thing about the SaaS side of this is that because it's a percentage of ad spend, sometimes things can be a little seasonal. Like right now over the holidays, oddly our advertisers, most of which are retailers. They're doing local things.
They're starting to peel back now because they don't want to compete with e-comm.
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Chapter 5: What is the current revenue model for Polygraph Media?
They don't want to compete with other types of advertisers that go in really hard during the holiday season. They'll turn back on first week of January. I think we have one that we work with that's a local
personal fitness uh it's a personal fitness franchise and so they're a big advertiser they kick off really hard december 26 well why is that you know it's resolutions we want a six-pack baby that's right all right you know so so it's it's seasonal and so with sass obviously you can make it a little less seasonal CRMs might be the tool that I fight with the most.
I just haven't found one that I really liked. I don't know if you guys are the same way, but they're just so tricky. And a while ago, I had a guy named John Lee on my show. He's the CEO of ProsperWorks. And he told me they just passed 40,000 customers and 24 million in annual revenue. So they're doing about $286,000 in in revenue per employee. And I said, wow, why is this working?
And I said, you know what? I'm going to try it. So I went to prosperworks.com forward slash love your CRM signed up and it immediately became clear why it worked. Those of you that love growth hacking, you should go to that link just to see how they do the onboarding. That's prosperworks.com forward slash love your CRM. In short, it's like magic.
You know, I'm not the guy that, you know, finishes the sales call and then takes the time to actually put data into the CRM.
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Chapter 6: Why is Polygraph Media moving towards a SaaS model?
They have this magical way of just doing it. And it's a beautiful thing. So every morning when I wake up, I just go, okay, what leads are prosper works telling me to reach out to because they're most likely to close and it works so well. And you guys know, I love money and I love only focusing on the leads that are going to close. So I encourage you to try prosper works or sponsoring the show.
Check them out at prosperworks.com forward slash love your CRM folks. That's again, prosperworks.com forward slash love your CRM. What's your model? I mean, everyone kind of has, you know, some people call it the ad tech tax, and sometimes it's as high as 75 cents on the dollar in terms of, you know, percent of expense. Sometimes it's as low as under a percent.
We had Bill Wise on with MediaOcean recently, and it was really low because they're doing billions in volume. What are you at? Yeah, so we're about a 10%. It varies based on client and if we're getting more involved in some other ways. Now, on the Google side, the numbers are lower, right?
Facebook, because Facebook's so complicated, there's thousands and thousands of targeting permutations available, millions of targeting permutations available. So there's a lot more complexity with that than Google. Google's also a little more mature. So what you see is over time, the fee drops because there's more entrance in the market and people solve some of the basic problems.
And so we anticipate that with Facebook also. But right now we're about 10%. But when we release SaaS, it won't be 10%. It'll be less than that because we'll have less touch. Yeah. So with the SaaS, though, I mean, it'll be a fixed rate, not a percentage of spend model, right? Yeah, it should be. It'll be metered in some way to accommodate how much volume we're doing.
If you're spending $0 to $10,000 a month, it's $30 a month, whatever. That's right. Got it. So it's fair to say that over the past 12 months, if you've processed about $10 million in spend and you're around 10%, it's fair to say you've done about $1 million in revenue over the past year? Uh, it's a little different. It's, it's, it's in the ballpark.
I mean, it, it, there's, there's some things on the strategy side that we will do that might bump that up a little bit, but more high touch kind of professional consulting stuff. Yeah. And, and that's just it. Like, you know, If you're building attribution models, if you're proving revenue, if you're proving lift for these clients, it takes a little more.
So sometimes we'll get involved in the data science side. We'll pull in their revenue when it's a good trust relationship. We'll pull in revenue, store traffic. We'll pull in numbers from them. And then line it up with all the different things they're doing on the advertising side or demand generation side. And then build out a model where we can prove some percentage of revenue.
And so we can prove about half of the revenue that a lot of our clients get when we have that level of data. How do you resist the urge to go in and build your own business in that space? You have the channel, basically. You know the spend. Just go make the product and do it yourself. Yeah. Well, that's definitely occurred to us, right?
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Chapter 7: What challenges do brands face with local advertising?
A lot of different ad sets, low spend, but a lot of variability because it's all over the place. That's the value he's bringing in. And he takes about 10% of spend, so about a million bucks in revenue. Actually, a little more than that because he does professional consulting. really to help drive attribution so his clients know he's helping them make money. They're looking at the SaaS model.
They're going to power that SaaS model with data they know works from all the spend they're doing. And that'll be available. I imagine there'll be a self-serve model there. So look out for that. Chris, thank you so much for taking us to the top. Thank you, Nathan.