How to build a marketplace for publishers and advertisers?
Todd Garland is the founder of BuySellAds, the marketplace for online advertisers. Todd was an early employee at Hubspot.
As a one man show, Todd grew BuySellAds to $1.5 million in 11-months. He did it without spending zero dollars on sales and marketing.
Listen to the following interview to find out what it takes to build a successful marketplace.
Say hi to Todd at buysellads.com.
Read Raw Transcript Now:
Success Harbor: Hi everyone, this is George Meszaros with Success Harbor, and I have Todd Garland with me. Todd is the founder and CEO of BuySellAds. BuySellAds is a marketplace for buying and selling ads. Todd also writes at his blog at toddgarland.com. Welcome.
Todd Garland: Thank you, George, and hello to everybody at Success Harbor.
Success Harbor: Thank you for being here, Todd. Would you please give our audience an example of how a company would use BuySellAds, and maybe how it’s different from AdSense or something like that? The name sort of gives it away, but most people haven’t used it, so if you can give an example that would be great.
Todd Garland: So we serve 2 different types of customers. One is what we call a publisher, someone who owns a website and is selling advertising on their website or blog, and what we help them do is sell ads directly to advertisers. It’s much different from Google AdSense in that with AdSense you install a code and you’re magically making money as it’s on your site, but you tend not to make the kind of money you could make if you were selling directly to the right kinds of advertisers. What we do is help the publishers automate the process of selling directly to higher-end advertisers.
Success Harbor: And you have more control than with AdSense as well, right? In terms of what’s showing.
Todd Garland: You do. You get to approve every ad before it shows on your site, so there’s a great deal of control.
Success Harbor: You started BuySellAds in 2008. What were you doing prior to starting it?
Todd Garland: Well, rewinding the tape a bit, I was working at an interactive agency, so building websites for people and extricating marketing plans for other people and other businesses. After that I joined a local company here in Boston called HubSpot, which pioneered the inbound marketing movement. I launched BuySellAds a little bit before and a little bit during my time at HubSpot.
Success Harbor: So how did you get the idea? What clicked that told you, “Yeah, this makes sense”?
Todd Garland: Well, I’m a web developer and web designer by trade, and I had a few blogs that were both geared toward programming, stuff like CSS. Advertisers would reach out to me wanting to advertise on my sidebar, and I thought it was great to make a little extra money in addition to my fulltime job. The problem was that each advertiser wanted to work with me a little bit differently. Some would negotiate and some would pay what I said and some would pay differently, so I had to go through that every month and there was a lot of maintenance to make money. It seemed a little silly to be going through all of that for a couple thousand dollars extra per month; I wasn’t getting compensated for all the extra time involved. I wanted to automate that and respond to an advertiser’s email and say, “Here’s a link where you can go buy it,” and let them buy it or not buy it, or just put a link on the site where you could see all the sizes available, and if you really want it, you click “Buy Now” and upload your creative, and you’re off. I wanted something that simple.
Success Harbor: So it was kind of a scratch-your-own-itch evolution, so to speak.
Todd Garland: Yeah. I consume a lot of content online, and anything that can help content creators make money and do what they love is a great thing for the web. It’s really about letting people share things, and allowing them to continue to share things and make content that people can consume is very fulfilling.
Success Harbor: When you put BuySellAds on the web, was it more automatic and software-driven on the back end, or was it more manual on the backend and automatic on the front end? How did it work at first?
Todd Garland: The core problem we were solving, which was making a transaction as seamless as possible, was all automatic. The other things that go into running a service like BuySellAds that weren’t absolutely necessary to the transaction weren’t automated at first. So for example, if someone wanted to cancel their ad, they would have to email me, which is crazy. People also had to email me to withdraw money. There are a lot of things that we’ve built up since the launch to make the service what it’s turned into today.
Success Harbor: So how soon into starting BuySellAds did you feel that there was traction and that people were using it and that it was taking off? How long into the whole process did it take?
Todd Garland: I’ve gone through different phases where I felt like it was taking off. The first one was within the first 3 months, because as soon as a started emailing people and telling them about it and putting boots on the ground, people were responding. That was the first big sign from publishers especially that there was a need there. That was followed by advertisers buying those spaces from the publishers, so those 2 sides of validation really happened within the first 3 months. Like any business, there are ups and downs, and I’ve definitely felt different ebbs and flows of momentum.
Success Harbor: Yeah. What were some of the early challenges of BuySellAds?
Todd Garland: Well, the first big challenge was that I still had a fulltime job and I was in the middle of buying a condo and getting married, so it was a really busy time personally. And I had the limitation of not being able to work between 8am and 6pm because I was working at another company, and I took my work there very seriously. I don’t want to pretend it was this heroic thing about getting up early to work and going to bed late to work some more; it was more this feeling of, “Oh my gosh, people actually like what I’m building, I need to work on it some more.” Interestingly enough, initially the more difficult part was the publishers. Imagine you’re making a couple thousand dollars a month advertising on your site; are you going to want to turn it over to this person you don’t know and give them a 25% cut? For them it was really a leap of faith that I was going to do what I said I was going to do. Publishers look around to see what other people are doing, so every large publisher I successfully recruited made it easier to get other large publishers. The other thing was me working really hard for these people. For the first 12 months it was just me alone building this thing, and I still have really great relationships with those first publishers who were on the system. It was about building relationships, and I think what further convinced them we were a good solution was that ultimately we would help bring them more money. People started to see the value of a functioning marketplace that has liquidity.
Success Harbor: So you proved to them that they can actually make more money with your platform?
Todd Garland: Yes. Publishers would come in and sign up and have 3 or 4 advertisers, and within a couple weeks we’d bring them a few more advertisers, so they’d see that benefit right away.
Success Harbor: So when you were trying to get other publishers, you would just show them the numbers of these other publishers that were already using your service?
Todd Garland: In many cases, we didn’t even have to show people numbers; they would see their competitors with more advertisers than they had, and that’s what would convince them to sign up.
Success Harbor: What about challenges around technology? Did you encounter any of that?
Todd Garland: Yeah. I’m more of a front-end developer than a back-end developer, and the first version of BuySellAds that I wrote by myself was trash. About a year after I launched, around the time of my first hire, we actually rewrote the whole BuySellAds program from scratch, so we had a better foundation to build the rest of the business.
Success Harbor: What were some of the most eye-opening things that you learned from your first customers, especially on the publishing side?
Todd Garland: Well, for a lot of these people, this is their livelihood and I think it was really important for me to be so connected with them and for me to be their support. It was cool to get every single support request and to see how passionate they are about sharing content and making money through ads so they can continue sharing that content. There are a lot of people out there doing really neat work.
Success Harbor: How did they shape what BuySellAds is in terms of the features on the site and functionalities? Did you learn a lot from the customers, especially the first year or two?
Todd Garland: Yes, definitely. Even 6 and a half years later, I’m still seeing a ton of iteration. So yes, those initial folks definitely helped shape the product going forward.
Success Harbor: When you hear things from customers, how can you tell whether it’s just noise or whether it’s something you need to react to with some kind of adjustment?
Todd Garland: That’s a great question. Over the years we’ve used intuition, which is almost never the best way to go, but we also will hear things from people over and over again, and these themes will evolve. We have a system we use to track things, so we can tell how many people have talked about something, and once it gets to a certain point we know it’s time to get something done.
Success Harbor: Is there anything that was surprising for you on the other side of the marketplace, with the advertisers?
Todd Garland: The craziest thing is that for the first year and a half, as an advertiser, we didn’t actually provide you with any statistics for your ads. Picture spending $5000 or $10000 as an advertiser, and all you get is a receipt that says, “Thank you!” Truthfully, them not requiring stats for so long was very helpful to us, because it’s a huge technical thing. And things have really changed since 2008, so while we used to see some folks who focused on brand and not tracking, that’s completely changed now and everything’s focused on ROI and performance.
Success Harbor: Building a marketplace business is difficult, because you’re dealing with a balance of supply and demand. What were some of the challenges in bringing the buyers and sellers together,, and we need some kind of a balance. Have you struggled with maintaining that balance from the beginning?
Todd Garland: We’ve always struggled with that and we continue to struggle with it today. It’s always tricky, especially in a business like online advertising that’s continuing to evolve today. The temptation for publishers to create endless inventory is really high, especially because of products like Google AdSense that you put on your site and start instantly making money. There are challenges with keeping the balance. One is that we only accept about 3–5% of the publishers who apply to work with us, so we can usually find enough advertisers to keep them happy. That doesn’t mean every single publisher we accept immediately starts doing well and making money. But it means for publishers who are creating good content, there are advertisers who want to be associated with that content. That’s what we’re really good at matching: the quality content creators with quality advertisers.
Success Harbor: Can you share some of your processes for selecting the right publishers for BuySellAds? You mentioned it’s a crucial part of your business; do you have a system for the things that matter to you?
Todd Garland: The most important thing is quality content. We understand that quality content is mostly a subjective thing, but we’ve found that what matters isn’t so much the amount of traffic somebody has, but more the quality of their content. So let’s say there’s a blog about VMWare and one about Android phones. You might have a blog about VMWare with 20,000 visitors a month and we could make you a couple thousand dollars a month because the focus of that site and the demographic is so targeted, whereas you might have a blog about Android phones with 500,000 visitors a month and we might not be able to make you any money. The number of people talking about it and the demographics might be very different, so we try to look for publishers who will bring good value to advertisers because they have good content and audiences to publish towards. Traffic isn’t the main thing, but we do look for sites that have a decent amount of traffic. The more traffic you have and the better your content and the more focused it is, the better the cahnces we can sell advertising for you.
Success Harbor: So this probably isn’t an easy question to answer, but if you’re a publisher, what’s an easier path: B to C, or B to B?
Todd Garland: I think the vast majority of people on the web are consumers, and whether they’re consuming from a business perspective or not, I can’t say one wins out over the other. So let’s use a different example: a site about horoscopes versus a site about freelancing. When you’re talking to freelancers, you’re usually talking to a very specific group: they’re work-from-home professionals or they have a small office, and there’s a very specific toolset that they need to run their business. But look at a person who’s going to a site about horoscopes. It could be my grandmother, it could be a 12-year-old kid, it could be me—it’s such a broader, less defined, less passionate demographic. That’s a great way to think about being a publisher. You’re already passionate about something and you can write great content about it, so you think, “Who would perfect advertisers be for me?” If you’re running the horoscope site and you think “Car insurance would be the perfect advertiser for me”—anyone who’s buying car insurance ads is doing that through an agency that doesn’t care about your site with 500,000 impressions a month. But if you have the freelancing site, you can think, “Accounting software,” so there’s Intuit, which might be a little too big, but then there’s Freshbooks. That’s like online invoicing for freelancers—perfect. You can think through this ahead of time before you get into building your audience.
Success Harbor: Yeah, that makes perfect sense. What are some of the best marketing channels for BuySellAds?
Todd Garland: Well, ironically enough, it’s not buying ads—it’s word of mouth. Our sweet spot for a buyer is someone spending between $5000 and $50,000 a month, and our sweet spot for a publisher is someone making between $1500 and $50,000 a month. Those ranges might seem large, but they really fit in nicely for us, and it’s just word of mouth.
Success Harbor: You can’t beat word of mouth. How many publisher sand advertisers are using BuySellAds?
Todd Garland: Well, I can give you a ballpark, but it’s not necessarily something we keep track of. If you look at other ad networks, they’ll say, “We have 30,000 publishers,” and crazy things like that, and it’s like, “Well, how many of them are making more than $100 a month?” On the publisher side, we have around 1,800 publishers, and on the advertiser side, I believe we have around 3,000 active.
Success Harbor: When someone wants to become a publisher, how much traffic do they need for this? I’m sure it’s not an easy number to give, but what’s the bare minimum for them to even be considered?
Todd Garland: It depends on the site, but we start looking at sites with more than 50,000 page views per month. But the best sign that they’re ready to start selling advertising on their site is if advertisers are already reaching out to them directly.
Success Harbor: So your revenue model is 25% commission, right?
Todd Garland: We have products that range anywhere from 10% up to 25%.
Success Harbor: So how do you set that commission, and do you get pressured to change it at all?
Todd Garland: Our commission has always been 25%. We have some other products that are cheaper, around 10%, but the core has stayed at 25%, and I’d say we’ve gotten equal pressure that it’s too low and too high.
Success Harbor: As the CEO, what do you do to make sure you have great customer service? It’s a very hard thing to do, so as you grow BuySellAds, how do you make sure you have outstanding customer service?
Todd Garland: We treat folks equally: if you’re making $100 a month or $10,000 a month, we’re going to treat you the same way. We respond to people, on average, within 4 hours, which is good because some things take us awhile to look into. A lot of the folks who work at BuySellAds are publishers themselves, so we know what’s going on with them and it’s easier for us to empathize with them.
Success Harbor: If you could go back to 2008 and talk to yourself about your business, what would you tell yourself to do differently?
Todd Garland: One thing about starting a business is that it’s okay to be naïve. A lot of people think, “I don’t know enough about the industry or XYZ,” and that’s great. The less you know, the better. But honestly, I would tell myself to stick to the business. Anytime we weren’t doing as well, it’s been because we were distracted by some shiny new business model or something, so I’d say, “Focus on the mission.”
Success Harbor: With the experience that you have now, how do you know which shiny objects to ignore? Can you ever really learn that?
Todd Garland: It’s a really hard lesson to learn, and I learn it time and time again—I have a little side project I tinker with right now, at night. But anything that’s not centered around the core thing you’re trying to do with your business is a waste of time.
Success Harbor: And the last question: If a friend or family member comes to you and sees your success as an entrepreneur and says, “Help me; teach me,” what is the one thing you would tell them to set them on the course to building a successful business?
Todd Garland: I think the hardest thing is getting over the initial hump. A lot of us are scared to start, and ultimately you just have to try. There’s a great quote that was always hanging on my dad’s bed growing up: “He who is afraid of making mistakes is afraid to succeed.” It’s true: if you’re afraid of making mistakes, you won’t succeed, because you’re going to make mistakes in order to succeed.
Success Harbor: Todd, thank you for coming on Success Harbor to share the story of BuySellAds. How can people connect with you or find out more about you?
Todd Garland: You can reach me on Twitter at @toddo, or you can email me at email@example.com, but I’ll warn you, I’m kind of boring.
Success Harbor: Thank you very much, Todd, and everybody out there, check out buysellads.com or toddo on Twitter. Thank you very much for coming on to share your entrepreneurial story; we really appreciate it.
Todd Garland: Thanks, George; thanks, everybody at Success Harbor. Take care.
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