Peter Bordes Leads the IndustryWritten by Pace Lattin
September 12, 2011 # 9:14 am # CEO Interviews, Specials # 13 Comments
Peter Bordes is not shy for words. He’s become one of the most outspoken members of the Performance Marketing Industry, and has made it clear to anyone who is listening that he wants to clean up the industry. As the CEO of MediaTrust, he’s taken the industry to new levels, and has introduced the first performance marketing exchange of its kind. Most recently he was elected as the new President of the Performance Marketing Association and plans to use the PMA to make changes in the industry, make it more professional and help combat fraud.
First of all, how did you get into this interesting industry?
I was running Empire Media in NYC, post Internet bubble. We were incubating and acquiring assets from companies that survived the crash. My two co-founders, Jivan Manhas and Matt Wise, whom were at Azoogle, approached me about incubating an affiliate network. I did some research and was very intrigued with what I found. This emerging industry segment was growing very rapidly and was like the wild-west with a hint of boiler room. It was marked with incredible growth rates with very little technology and business culture; high turn, high volume traffic in, high volume traffic out, and no brands. There were many problems to be solved, big and small. Most importantly, it was a logical place to focus on building a business and brand. The CPM business had just tanked and Adsense and CPC, which was the beginning of performance marketing, were taking off. There was one stop before “free” which was transactional performance driven advertising. This, therefore, seemed like a logical place to invest in building an enterprise. The market would eventually move deeper into performance marketing models.
MediaTrust came out of nowhere after being launched as AdValiant in 2005(?) What was the key to MediaTrust’s success?
MediaTrust’s key to success was its solid foundation. Our brand and business culture’s foundation was built around trusted long-term and deep partnerships, all driven by technology. We found that the industry was so high volume and transactional driven that its culture was built upon an “all for me, more for me” mentality. This created a significant amount of paranoia and lack of trust between affiliates, advertisers and networks. No one was doing any kind of financial modeling or thinking about building long-term enterprise value. It was high- turn “make as much money as fast as you can because who knows what will happen tomorrow” type of mentality that plagued the industry. We felt that there was a need for a brand whose foundation emphasized a proactive collaborative partner-centric organizational culture, supported by great technology. “The better our partners and industry do, the better we do” was, and still is, the base of our core values. That kind of ethics and integrity are what drive trusted and long-term partnerships.
Regarding the transition from AdValiant to MediaTrust, we decided that AdValiant was the name of a network; we felt the future was about platforms. MediaTrust reflected the vision of what we wanted to build and where we thought the industry could head. We were very fortunate to create the brand MediaTrust and that the two words that were not synonymous with each other in digital media and marketing can now stand true.
You’ve been one of the most outspoken members of the community when it comes to compliance: what do you see one of the biggest issues regarding compliance now?
If we wish to become a significant segment of the Internet marketing industry, we have to become more proactive and work together. We have a legacy of always being reactive and moving from one high volume campaign to another, like hamsters on a hamster wheel. This is just not sustainable. In order to gain enough critical mass and create a single unified voice, we have to break this cycle of short-term thinking and move away from being a highly-fragmented black box. This is how industries are made or not. We are so under the radar screen that it makes it next to impossible to have any research or meaningful data about how large performance affiliate marketing really is, and it’s very large. Regulation is inevitable. The FTC has left a 12 lane super highway of grey for marketers to run around in, which is starting to change rapidly. The consumer is now behind the driver’s seat; the consumer is king. Compliance, standards and regulation are critical. We need to take control of our own destiny by proactively driving compliance standards and guidelines. This is the key to our future, and the biggest challenge for affiliate performance marketing. We can either make it happen ourselves and make sure it makes sense, or have someone make it happen for us who doesn’t understand our industry. I personally don’t want to have legislators who don’t understand us do it for us. It can be catastrophic if not done correctly as evidenced by the Nexus Tax, which has proven to be is a serious threat if not managed properly with the right knowledge.
How do you see this industry changing? Is it less about “affiliates” and more about relationships? Do you use the word affiliate marketing, or is it more “performance marketing?”
We think it’s about “performance marketing.”Affiliate marketing is now becoming one of the channels in the “performance marketing industry”. As we move from being network-centric to platforms that are open modular and agnostic, its all about relationships. Understanding and building great relationships are part of the foundation of any great business and industry. The legacy of affiliate marketing is about being advertiser or affiliate centric, and never the consumer. The future is about being agnostic and holistic about triangulating the relationship between consumer, advertiser and publisher/affiliate and creating value by driving quality relationships. That “relationship” between them is the future of ALL Internet marketing. We are in the middle of a significant shift from the age of “MASS marketing & media” to “ME marketing & media”. The consumer no longer sits at the bottom of the pyramid being told what and how they will consume. They are at the top and know what they want, = and how they want to interact. By empowering that relationship with tools and technology, we create a much higher ROI for all 3 constituencies. Web 3.0 is not the semantic web. It’s the relevant web, and relevance is driven by understanding these relationships.
What is your opinion on incentive based marketing? Is there any room for content-portals (ie, places that reward you for filling out forms etc) or is it just a bad idea? “Garbage in … garbage out” that’s my view point of incent paths. Its mass marketing that tricks the consumer into giving up as much info as possible with the promise of getting something “FREE”. Free is the killer of all good marketing and has been beyond abused, as well as used, to destroy great business models like the “continuity” marketing model. Free iPod, free ring tone, free trial, free $1000 Home Depot card. This is just another easy money low hanging fruit channel that basically produces low level data and garbage results for most advertisers. Its noise vs quality, and one of the biggest problems here is that most advertisers don’t measure life-time value. So, they keep buying because they can’t measure how effective this form of marketing really impacts them (this is changing rapidly as advertisers are getting smarter in measuring life-time value). There are other forms of incent marketing such as the portals that offer rebates and shopping points that are valuable assets because they care about building a brand and relationship with the consumer based on value. This is completely different from paths which don’t care about brand and users returning as a destination. These one hit wonders will have to evolve or will become relegated to the low end dregs of the industry. I don’t know of any single shining star example of great success for advertisers in incent path marketing. Its turn and burn.
What is MediaTrust’s main push revenue wise for 2011?
We have moved our entire business model from the MediaTrust performance marketing platform to the PerformanceExchange. The MTPX is the future of performance marketing as we push to innovate into being a highly scalable technology & quality driven company for direct response marketing.
Tell me a bit about the MT Performance Exchange? The PerformanceExchange is the next generation of highly scalable real-time platforms that’s focused on “connecting quality clicks to conversions” for the performance marketing industry. It’s a hybrid CPC bid platform /ad-exchange that empowers direct response marketers, advertiser and publishers with the best tools and technology to maximize their inventory yield and campaign conversion ROI. Similar to the concept of the eBay’s quality clicks program which is still CPA marketing, but paying in a CPC currency based on the quality of the click to conversion and life time value. The MTPX creates tremendous “right price” efficiency by connecting the value chain together from the click to the conversion in real-time (to the minute). All traffic and all clicks are not created equal and have a value when driving conversions. It’s not black and white in that there is only good traffic and bad traffic. The MTPX allows publishers who generate low volume high quality traffic to get the right value for their inventory as well as the high volume lower converting traffic sources. What we have found is that all traffic has a value based on the transactions it drives, and that performance marketing pricing in a pure CPA/CPL model isn’t dynamic enough to be able to give traffic sources the appropriate value based on quality. The MTPX lets partners trade CPC currency (and in the future CPM) in different markets such as email and contentvs lumping all the traffic sources into one single channel. Think of it like a Bloomberg financial markets trading terminal for direct response marketing. Its core tenants solve many small and larger problems in the performance marketing industry by being a transparent environment that drives consistent value based pricing driven by quality. Transparency creates great efficiency that enables our partners by empowering them with knowledge to better understand their markets and get more out of them. Performance marketing has a history of being a black box and we feel that needs to change if we are going to evolve and grow as an industry. Especially with the new compliance and regulation that’s beginning to happen across the entire digital marketing ecosystem.
We have not even gotten started yet and we are already seeing tremendous results due to all the proprietary performance algorithms we have developed into the MTPX with 7to 13.7 % conversion rates in the email channel with little to no fraud. We are launching the “content channel” soon and have a ton of tools and technology in our product pipeline that is game changing for our partners and industry. We have flipped the switch from being 80% service/20% tech (industry standard) to 80% tech/20% service which is the future of all things direct response. We must become a product/tech centric driven industry in order to grow and work with all the brands, agencies and publishers that want to participate in performance driven marketing.
Why is MediaTrust starting to move to a PPC/CPC model, when Google founder of PPC just got into the CPA model?
Instead of opening a new channel, what we have done is merged them together. We are focused more than ever on CPA/CPL marketing. We have only evolved the model and changed the currency to paying in CPC to create greater pricing efficiency based on quality. Think of it as an auto arbitrage exchange platform that is built from the view point of a performance marketer from the back of the conversion funnel out vs from the impression or click back. It’s the same thing. Google is connecting the value chain together into an ecosystem of solutions the same way we are. We are approaching it from different points of view, relative to direct response marketing. The future of all things digital is about platform driven ecosystems that speak to each other and are driven by data.
Some people would say that MediaTrust embracing this model means that you don’t trust the performance model anymore, thoughts?
Absolutely not. We are passionate believers and advocates for the performance model and industry. We think that there is a very large opportunity as more and more brands and agencies move to more accountable metrics driven advertising. The PerformanceExchange is the future of performance marketing as a highly evolved technology driven platform that will allow them to begin to participate in performance marketing. The industry must start delivering more transparency, data and analytics that are required for more sophisticated partners to feel safe and confident that they can hit their metrics and maintain their brand integrity and compliance needs.
Some people accuse you and MediaTrust as being “above” what is really happening in the affiliate community, that you personally aren’t in the “ditches”. What is your response to that?
That’s interesting to hear and something I have not heard. I have actually heard the opposite in that I “personally” am very involved in being present at every trade show, on the floor, in the booth talking to everyone about what’s working or not vs staying in the CEO tower. You can’t innovate and evolve what you don’t understand and embrace. We have always strived to understand the ditches so we can stay on the leading edge of the industry. If we don’t evolve the industry then no one wins and we all stay stagnant or contract. I would say we understand the industry extremely well and that’s what has allowed us to move from a network to a performance platform and now to a performance exchange. We have been pushing for regulation, compliance, technology innovation, helped form the first industry association, and have been very vocal advocates for the growth of performance marketing. You can’t do any of that unless you have a strong fundamental understand of every aspect of the industry.
If you could dictate any changes for the industry to make in 2011, what would it be?
That every person in the industry come together as a unified voice and get behind the Performance Marketing Association so we can become a strong, unified and viable segment of the internet marketing industry. We must evolve in order to move away from the past “red headed step child “ legacy reputation of affiliate marketing. We need to stop being a fragmented black box and move from being reactive and always running to the next fast money thing. To being a unified proactive group that solves problems and takes issues such as standards, compliance and regulation head on. This is how we build industry value and enterprise value for our companies and business partners vs. making another fast buck and moving on. Aren’t people tired of being hamsters on a hamster wheel going in circles by playing a constant game of musical chairs? The FTC and new technologies are not going to allow this behavior to continue. There will be a divide between the compliant and the non-compliant. We are not an industry until we have an Association to represent and help make sure the right laws, taxes and more are created to help us flourish. Not contract. Now we have an association and its essential everyone participate so we can take control in shaping the future of our industry vs running around in the shadows trying not to get caught.
What’s going to happen with email marketing? Are spammers still going to “Control” parts of the industry?
There will always be the dark dirty side of every segment in the market. But it will start to become smaller and less predominant based on better technologies and systems to prevent it. There are very good systems now that create significant transparency in email. Email done right is a very effective channel that can drive meaningful value to the consumer, advertiser and email publisher. In order to do that mailers need to think about how to create better one on one relationship with consumers. We are in a meaningful shift from “mass marketing” to “me marketing”. Mailers who are evolving are seeing tremendous results from their data. That being said there will always be the noise of spam in the inbox. Its just going to become a smaller segment of the consumer experience.
What does MediaTrust look for in (affiliate) partners to work with? We look for publishers who want to build a long term proactive and collaborative partnership who share the same core values that are based on the success of our partners “first”. We want to work with partners who believe that transparency creates greater efficiency in a partnership which creates greater trust. This is how you grow serious long term and stable business partnerships and value.
How do you see the industry contracting in 2011? What type of companies do you see succeeding, and what type of companies do you see disappearing? We are at a critical inflection point in the performance marketing industry. One segment of the industry is already contracting which is the non-compliant companies who keep doing the same next hot thing get rich quick schemes and run around in the shadows. The companies that are embracing regulation and compliance will be the ones who are able to evolve and build significant businesses while the rest cannibalize the lower end of the market with no name fast money low margin business. That’s just not sustainable or scalable. The consumer is becoming so much smarter and companies need to understand its about creating products and campaigns that create value for the consumer. Not trick them into buying something that’s based on a breakage model or misrepresents the word “free”. Those who realize and embrace that concept will thrive.
You’ve been very active in the Performance Marketing Association, what is the reason? Don’t we already have the IAB and the DMA, why have another, less-funded association? Aren’t we just dividing our ability to work together? I would be very curious to know how many of your readers are members of the IAB or DMA. They are not the same and are not associations that have been created to specifically represent the affiliate performance marketing industry. The IAB has a leadgen committee. Do you think that properly represents us? I certainly don’t. As a matter of fact we used to be IAB members and when the tax issue came up I spoke to them about this being a great opportunity to become champions of the industry for affiliates and they said “we have a leadgen committee and we don’t think of affiliates as real publishers”. So in a nut shell they think of affiliate marketing as a dirty illegitimate industry segment. The DMA is primarily representing traditional direct response marketers and also doesn’t understand or represent affiliate performance marketing. The IAB & DMA are very good organizations. But they have not demonstrated that they understand or are champions of our industry. They have literally done literally “0” when it comes to the Nexus Tax or regulation or FTC issues in relation to performance marketing. So do you or anyone else reading this want or consider these organizations people they want representing performance marketing? We are not even considered an industry until we have an association that specifically represents us. For all the reasons I outlined in the other question. We MUST take control of our destiny as a group with a single voice that is proactively taking on issues and stop being a fragmented black box that’s reactive and running to the next best thing. The grey area is going to get smaller and smaller and smaller. Its essential that we all participate and get behind the PMA and help them to help us, and that goes for everyone in every part of the affiliate marketing ecosystem no matter how big or small. We are an enormous segment of the online advertising industry. But no one knows that because there is “0” data or research that’s meaningful enough to show how vast performance marketing is and all the areas of digital marketing we touch. As an example of this when the PMA was fighting the Nexus Tax it became very evident that none of the states had any idea what affiliate marketing was or how big it is. We tried to pull enough information together and found almost nothing. Why? Because there has never been an entity driving the need for this kind of research. We ended up creating a mash up of the LinkShare affiliate base in CA with a Google map and it was incredibly eye opening to all. Affiliate marketing in CA is gigantic, and the state legislators all of a sudden understood what they were dealing with. Colorado was the same thing. I led a panel and the legislator flat out said “we were just following NY State and had no idea how big affiliate marketing was in Colorado”. That says it all. We MUST have proper representation and data in order to be a viable and relevant segment of the online marketing industry. Neither the IAB or DMA stood up or had that info. It was the little old PMA fighting on all our behalf.
If you could pitch Disneyland/Disneyworld on a performance marketing plan, how would you do it? How would you like becoming significantly more efficient with how you spend you advertising budget by only paying for users who sign up for your service or buy your product. If they don’t you don’t pay by leveraging 100% accountable transactional data driven advertising in a transparent trusted environment. Stop flushing you money down the toilet.
What is your dream car? 1987 Aston Martin DB8 Vantage.