The death of advertising has been greatly exaggerated. Digital spends continue to increase year-over-year and new technologies are improving the return on every dollar spent. Programmatic trading has dominated the landscape and MediaAlpha is the programmatic advertising platform that provides a full suite of tools to drive response based on intent-driven vertical search. Delivering the right ad, at the right time to highly targeted and interested customers is critical, especially for high value conversions like those found in the insurance, travel, personal finance, education, and home services sectors where a single conversion results in real, tangible revenue.
The company’s real time bidding marketplace delivers value to advertisers in a transparent and efficient manner. Named one of the 500 fastest growing companies, MediaAlpha is already powering over 25M transasctions annually that present over over a quarter billion in media spend a year. Yes that’s BILLION.
LATechWatch chatted with cofounder and CEO Steve Yi and discussed what direction adtech is moving in.
Tell us about the MediaAlpha.
MediaAlpha innovates at the intersection of programmatic advertising technologies and vertical search media. Vertical search media is performance-based advertising that targets in-market consumers at or near the point of purchase across a number of high-consideration product and service categories. For example, vertical search media enables advertisers to reach consumers when they are searching for airfare or hotel rates (travel search), comparing mortgage rates (mortgage search), looking for homes or apartments (real estate search) or getting an auto insurance quote (insurance search). Such vertically-specific, transactional-intent searches occur on a myriad of comparison sites (e.g., Kayak, Bankrate), lead generation sites (e.g., Zillow, LendingTree) and brand sites (e.g., Esurance, Progressive, Expedia).
MediaAlpha is the industry’s only technology platform enabling vertical search advertisers and publishers to transact through fully-transparent, programmatic, real-time bidding-enabled marketplaces.
How is it MediaAlpha different?
MediaAlpha is the only programmatic technology platform designed and built specifically for vertical search media. We offer our clients a full suite of programmatic tools to plan, execute, optimize and report on all facets of their vertical search campaigns and inventory with full self-service control, source transparency and granular bidding options.
All of our competitors operate through a traditional ad network model, which is neither transparent nor programmatic, where the true value of media being purchased or sold is hidden from both advertisers and publishers to maximize the network’s profit.
We estimate that the size of the existing and untapped vertical search media market across categories such as travel, personal finance, insurance, automotive, home services and real estate represents a $3 to 5 billion opportunity.
What is the business model?
Our programmatic technology is used by both advertisers and publishers to manage and optimize how they buy and sell vertical search media. We support both media-based and platform fee-based business models with our partners.
Would you mind telling us about the experience of building an adtech company in LA versus another market? What does the future of adtech in LA hold?
Our company is truly a product of LA and couldn’t have been built anywhere else. The online advertising industry in LA has its roots in performance-based marketing, with companies like Overture and Demand Media. LA has more recently become a hub for adtech with companies like The Trade Desk, OpenX, and Rubicon Project. This made it very natural for us to focus on bringing the promise of programmatic advertising technologies to performance marketing, and enabled us to recruit deeply-experienced, like-minded team members.
With a few notable exceptions, “adtech” has not produced many billion dollar plus exits, which is why Silicon Valley has soured on this sector. But, industries that lack the obvious, exponential growth opportunities required for unicorns are typically fertile ground for profitable companies requiring minimal capital. The technology ecosystem in LA has never been about pouring tens of millions into potentially transformative startups and far more about building profitable companies in a capital-efficient way. From this perspective, I think LA will only continue to grow as a hub for adtech.
Tell us a little about your background and what inspired the business?
My co-founders and I worked at various performance-based advertising companies before starting MediaAlpha so we understood first-hand how the traditional ad network model worked. The simplicity of a negotiated, aggregated media buying model may have served a purpose when brands lacked deep online advertising expertise and the technology to buy media directly. But, with the growth of programmatic technologies in other sectors (display, video, social, etc.), it was obvious that this was the direction in which the vertical search and the broader performance-based advertising sector needed to go.
Tell us what building your company in LA has been like?
LA has always been an entrepreneurial city, and with the growing number of technology companies, it’s a lot easier to build a startup here now than it was 5-7 years ago. And, I’ve always appreciated the diversity of industries that are well-represented here. So, while the technology startup ecosystem has become more robust, it’s far from being the dominant industry here, which I see as a great combination. I love what I do and my industry, but the last thing I want when I’m having breakfast or at a party is to be surrounded by people talking about the latest hot startup.
What are the milestones that you plan to achieve within six months?
We’ve achieved a dominant, $100M+ position in both the auto insurance and health and life insurance verticals. We expect to bring a similar level of disruption and scale the travel search advertising segment in 2018.
If you could be put in touch with one investor in the community who would it be and why?
We’re profitable and have a great financial partnership with White Mountains (NYSE: WTM), who acquired a majority stake in our company in 2013. But, it would be great to meet and talk to Mark Suster. I follow his blog and have always appreciated his insights.
What does being “Made in LA” mean to you and your company?
For me, being a technology company that’s “Made in LA” means that we’re outside the Silicon Valley bubble and all that this implies. Don’t get me wrong, we’d love to be a billion dollar plus company. But, this isn’t our goal nor something we think too much about. We’re just focused on building a great business, profitably, with people we love working with, and having fun along the way. It’s one thing to take your work seriously and strive to be the best, but it’s another to take yourself too seriously, which I think can happen at a lot of Silicon Valley startups.
What else can be done to promote early stage entrepreneurship in Los Angeles?
For all you hear about the important role that Stanford plays in Silicon Valley’s ecosystem, I don’t see our world class universities (UCLA, USC, CalTech) putting as much of a priority on fostering technology-based entrepreneurship here in LA.
What is your favorite restaurant in LA?
LA is such a great food town; it’s impossible to pick just one. The tsukemen at Tsujita LA and the fried chicken sandwich at Son of a Gun come to mind as two of my favorite dishes.