Questions for QuadrantOne CEO Andy Ellenthal

Andyellenthal_quadrantonesmall.jpgOnline newspaper advertising had its first ever contraction in Q2 of this year, but Andy Ellenthal, new CEO of online newspaper ad network quadrantOne, is confident the firm can help make the difference for newspaper publishers — with national ad dollars.

The company has sold to national advertisers including Lowe’s, Outback Steakhouse, McDonald’s, and GM. It’s also prepping new ad offerings, like a full-page expandable unit featuring content gleaned from publisher affiliates, and a “Storefront” format that includes dynamic mapping.

“We’re just trying to come up with good, creative ways to leverage the assets that we have,” Ellenthal told ClickZ News yesterday.

We discussed the young company’s recent growth, challenges it’s up against, and how having Gannett, Hearst Corp., Tribune Co., and The New York Times Co. as owners has benefited the startup.

Q: Recently the Newspaper Association of America put out its Q2 numbers, saying that for the first time since it’s tracked online advertising, the newspaper industry experienced negative growth. That’s a huge challenge for you guys selling online newspaper advertising.

A: Yes and no. I saw the NAA numbers. I saw the articles written about it — more doom and gloom for the newspaper industry. But in a lot of ways I’m really separate from that. Not that what goes on in the newspaper industry doesn’t affect me, but…the online advertising that gets tracked by the NAA is predominately local, and that’s not the sandbox we play in.

Q: But certainly they’re talking to their membership and asking them how much ad revenue they earned this quarter. Right? So you don’t think that that includes national?

A: I think that’s a part of it but it’s a relatively small part of it. This is really why we exist in a lot of ways, to bring national advertisers to these high quality sites with great audiences that typically haven’t been able to pursue these types of advertisers in the past.

I’m not a bellwether for the entire newspaper industry, but my business is growing month-over-month.

Q: Can you give a sense of what that growth has been?

A: It’s small numbers instead of large numbers. When the company launched in February, it was kind of live, and all the sites were tagged in June, July. Now we have 350+ sites; we’re bringing more on. But for me at this point, this is about 2009. We expect to have a big, big year.

The growth has been 50 percent a month. A couple months back it was relatively small…. It will really matter when I can say we grew the business 300, 400, 500 percent next year.

We have about 43 million uniques right now.

Q: In the couple months that you’ve been with quadrantOne, are there things that have surprised you — challenges or positive things?

A: The surprises for the most part have been pleasant and they range from the quality of the people in the organization, and I’m really impressed with the four owner affiliates of the New York Times Co, Gannett, Hearst and Tribune. This is a really well set up organization…. They’ve been incredibly supportive of quadrantOne as a means to recognize national advertising revenue.

Hiring in the online ad market has been the biggest challenge for me and my contemporaries. High quality salespeople are still in tremendous demand. At some point you scratch your head and remember what you were making at 23 and wonder, how does this work? But, somebody with a couple years of experience, they have very high expectations. So the real challenge and where I’ve spent the bulk of my time is on team building. I probably interview five to ten people a week and have been since we started.

Q: How many salespeople do you have now and where are they?

A: We have 12 to 13 salespeople right now. We’ll probably exit the year with 14. I think there were four or five when I started… but they’re in New York, L.A., San Francisco, Chicago, and Boston, and I have set my sights on Detroit and Dallas.

So, when it comes to the owners — New York Times, Gannett — how do they interact with you? What sort of an impact do they have on your operation?

They all have a presence on our board — two per owner affiliate. They’re like any other board; they have expectations, and their expectations need to be managed…. They certainly have access to resources I don’t have and won’t have for some time. They have relationships that are interesting to me.

Q: Tell me about how that is benefiting you — the resources and relationships.

A: One of the elements that we want to flesh out [a couple months from now] is mobile…. I went over to Hearst yesterday…and they’ve got something like 800 local mobile Web sites. There’s a local angle, it fits well with our affiliate strategy and our partner strategy. It’s just kind of a no-brainer…. Getting pulled into those kinds of conversations is extraordinarily helpful.

They help me with hiring. When you’re applying for a sales position and you’re 25 years old and you have three different offers out there and the president of Gannett Digital Ventures is picking up the phone and calling you, that resonates with people and it helps. We are a startup but we’re a startup with some really excellent brands behind us. Especially as the economic conditions are, at the very least, tumultuous, it takes a lot of the risk and the fear normally associated with [joining a startup] out.

Q: Speaking of that, over the past few months we’ve seen analyst firms revisiting their 2009 projections, lowering them. 2009 will be a hard year for you to meet those growth projections.

A: It’s not going to be without its challenges…. Where I think it’s going to hit a little harder is there’s been a proliferation of a lot of ad networks in the last year.

Q: You think they’re all just going to die out?

A: I don’t think they’re going to die out, because there’s definitely a value that they bring to the table, but there’s a lot of folks out there that are selling the same inventory with a slightly different spin on it and I think those are the folks that are going to struggle.

Again, yes, I’m a new entity, but I’m a known quantity at the same time. It’s not like I’m pitching new content — a new concept that’s never been heard of. The hardest sell in a tough economic environment where ad budgets are thin is when you don’t fit neatly into one of the boxes. And we fit actually well into a number of the boxes.

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