A San Francisco expansion leads to acquisition for one of the first banner ad firms.
Beyond Interactive was born in the college town of Ann Arbor, MA., an unlikely hotbed of eager digital ad talent in the late 1990s. The talent pool included young salesman Matt Day, who joined the online ad agency as partner and director of client services in 1997.
Matt Day (seated left) at his wedding with with agency partners Nick Pahade (center), Darian Heyman and friends (standing), 1999.
The shop's staff didn't have tech chops, but it did have shiny new business degrees from University of Michigan and a willingness to work cheap. They quickly figured out how to place banner ads on search sites for clients that wanted exclusive placement. Within two short years, Day opened an agency office in San Francisco where he and a small team nabbed bigger clients and attracted the attention of execs at Grey Advertising, a traditional agency network with interactive ambitions.
Beyond Interactive's founder Jonn Behrman, Day and the other partners sold their baby to Grey in mid-1999. By then it had $25 million in projected revenue. Day was called back to head client services for the thriving Ann Arbor office, less than an hour from Detroit. It was there he rode the industry rollercoaster, exiting in 2005 to launch his own startup.
But Day, 38, never overcame his fondness for San Francisco. These days he is still tapping his Michigan connections for Silverfox, his seven-year-old San Francisco social media agency.
ClickZ: How did you find this pocket of interactive marketing fans in the Midwest in 1997?
Matt Day: After I graduated from college in Pennsylvania my Dad got me a job selling trucking services to freight managers. My territory was the area around University of Michigan in Ann Arbor, where I started hanging around Jonn Behrman. He and some partners were working on what we now call search engine optimization for services like HotBot, Wired [magazine]'s search engine. Then a realization hit; we could make a business buying banner ads next to search results on behalf of clients. So I left my trucking job and signed on as a partner at this new banner ad agency. My dad reamed me. "What's Internet marketing?" he demanded to know. I was only 22.
Matt Day (right) at a recent Silverfox agency event with sponsor Russell Smithson of Lagunitas Brewery, 2012.
CZ: What kinds of national clients took the chance of buying those first search banner ads?
Day: Small ones. We had a company that sold and shipped fresh seafood, a sunglasses e-commerce site and a firm that fixed computer hard drives. After about a year, we decided if we wanted to get bigger clients we needed to add an office on the West Coast. It worked. We landed a $200,000 assignment from Petstore.com, which more than paid for all our San Francisco expenses.
CZ: You volunteered to open the office in San Francisco in '98. How did that go?
Day: I'd never been west of the Mississippi. Four co-workers came out with me and we set up an office in one bedroom of my two-bedroom apartment in the Fillmore district. Pretty soon we had nine people working at the apartment. In the morning I'd wake up, wander into the kitchen in my boxers to pour a cup of coffee and there would be eight people working there already.
San Francisco was a different world to us. It seemed like everyone was in the same game as we were. In a restaurant, bar or anywhere you went people were involved with the Internet. I could meet a stranger in a bar and we'd spend three hours talking about our online work, sparking idea after idea. I'd go home thinking about a new innovation I wanted to try.
In contrast if I started talking to a stranger in Michigan about Internet ads, they'd look at me like I had three heads.
CZ: Your staff mostly came from the Midwest. How was your shop different from others?
Day:At both offices we drew on the large talent pool of University of Michigan grads - mostly liberal arts and business majors. We didn't really need technical people; at that time you just had to know how to attach a banner to an email and use a fax machine. Remember, we didn't design web sites, only banners.
And we had this [Midwest] work ethic. People worked hard, they were smart, dedicated and we were all willing to do the work. We didn't have people managing from a distance. At the same time you could say our approach didn't have the visionary and iconoclastic traits of the West Coast scene. I think a good agency needs a mix of all of those things.
CZ: What surprised you in the West?
Day: Frankly, the debauchery of the publisher parties. It was insane. When I was 26 and getting ready to get married, I was invited by CBS Marketwatch to go on a wild animal safari that was planned for media buyers. In Africa. With the wedding, I couldn't go to Africa so I gave the tickets to a 22-year-old planner in the Ann Arbor office. He was stoked!
CZ: A major agency bought your company less than a year after you expanded into San Francisco. Was that the plan?
Day: What plan? How it happened was: Darian Heyman, one of our partners, met a woman from BBDO Interactive at a conference. Shortly after she went to work at Grey and told her new bosses about us. At the time we had about 30 people in Ann Arbor and nine in San Francisco, and basically our company was living on the float. We took 15 percent of the fees that our clients paid publishers for the ads. We had just brought in a finance guy who told us that we weren't in as good financial shape as we thought. So the Grey offer came at a good time. Within two weeks they moved us out of the apartment and into their offices on Maiden Lane [near Union Square] in San Francisco.
CZ: Were there any decisions you wish you hadn't made?
Day: One decision sticks out. When I was in my mid-twenties I bought $6,000 in stock in Infospace, an online search company. Within a two-week period it climbed up to $60,000. An older friend - in his 30s - told me to sell. But I waited and it kept going up, to $100,000. At that point I had this passing feeling that I might be getting greedy. After all, a few years before I was earning only $25,000 a year at the trucking company.
But I made the mistake of not listening to that feeling and hung on to the stock so I could make even more money. You can guess what happened. It went down to $10,000 by the time I got rid of it.
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Joan Voight is a Contributing Editor to ClickZ. Based in the San Francisco Bay Area, she has covered online and offline media, marketing and advertising since the mid-1990s for several business publications. She spent nine years at Adweek magazine, where she was San Francisco bureau chief, national senior writer and contributing reporter.
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Wednesday, July 23, 2014