Questions for Undertone Networks' Alan Schanzer

In this inclement economic climate, speculation abounds about the future of ad networks and display advertising in general. Recognizing the need for big thinking, Undertone Networks hired Alan Schanzer last month, creating a new chief strategy officer position for the digital ad industry vet.

As a senior exec at Mediaedge:cia, Schanzer formed The Digital Edge in 1999 in an effort to integrate emerging digital platforms into the agency’s client projects. In his new role, Schanzer brings an agency perspective to serving Undertone’s publisher partners, agency clients, and ultimately marketers. The firm has offices in New York, Detroit, Chicago, San Francisco, Los Angeles, and Dallas, and works directly with over 350 publishers.

The premium network isn’t about to take the financial downturn lying down. In fact, Schanzer plans to add to Undertone’s 87-strong staff next year, in addition to focusing more on communicating the network’s hands-on, service-oriented approach. The firm also may consider acquisitions. Last week, the company launched a guarantee program, promising to refund up to $50,000 if a marketer’s ads are found on sites not qualified by the network.

ClickZ News spoke recently with Schanzer about his new strategic role and how he expects to differentiate Undertone from other networks in a cluttered environment.

Q: Tell me about the chief strategy officer position. Why did Undertone find the need to create that role?
A: Undertone is right now a fast growing organization that’s unique in that it serves both publishers and advertisers…Now it’s become much more of a challenge with the economic conditions.

They felt that in terms of helping their focus on their publishers or supply side of the business, that a senior level strategic role would be very important…There’s a growing complexity. Publishers are more challenged to monetize all their inventory, and agencies are more challenged by their clients to reach their clients’ customers and potential consumers, and so we’re at that point where there’s a greater need to think about the business at a higher level.

Businesses that sit between those two sides of the business like Undertone need to play an important role in that relationship.

Recognizing the value of attracting senior talent from the agency side of the business, and the need for greater focus on the publisher (supply) side of the business, Undertone created this position.

Q: You came to Undertone after many years with The Digital Edge, which you cofounded about 10 years ago. What’s it like moving from a media-buying to a media-selling role? Is that how you see it?
A: I don’t see it that way at all actually…In the end everyone serves the marketer. We all have the same client in mind. My role is to understand how the marketers can achieve business success.

It’s thinking about a client strategically and bringing them solutions. That’s what you do on the agency side, and that’s certainly what I’m doing on the Undertone side.

Q: When you started the digital edge, what assumptions did you have that you got wrong? How is that experience informing your work with Undertone?
A: When we started…like many, we assumed the Internet was really an endless game for anyone with a nugget of a business model. It was short-term thinking and clearly wrong.

Today we see the next phase of real economic challenges…Businesses need to be built on focusing on long-term success and that tends to come through service, partnerships, continual improvements in the product, and hiring the best talent available.

Q: Do you have a staff? How do you interact with the rest of the team at Undertone?
A: I do have direct reports on the supply side of the business which represents the publishers…We believe our publisher relationships are so critical they need to be represented on the executive level.

I interact with everyone at Undertone and I spend time with clients directly.

It’s only been a month, so I’m in the early stages of developing my 2009 plan, so my focus now is really on learning. It’s safe to say…anything we do strategy-wise for 2009 will be about differentiating ourselves further.

Q: What initiatives do you have planned or have you put in place at Undertone?
A: I think the marketing side is incredibly important in helping people understand our business model…our ability to only offer premium publisher content. All of us need to do a much better job of helping people understand there are differences and there are choices…When we think about things like marketing and technology, we’re thinking about how we can support both sides of our business.

When you are buying everything through human interaction versus through an exchange, there is a value…and one we’ll be very focused on communicating to the marketplace.

Q: How is Undertone different from other networks?
A: Undertone is a network but certainly different in the sense that we work with a much smaller set of publisher partners that are hand-picked and hand-negotiated.

We are working through humans at all times…Our publisher partner always has someone to go to. So, we spend less time trying to understand where an ad might have run…That makes us more capable of looking more at pure customer services…less problem solving.

Q: What are you doing to help the company deal with the downturn? How has it affected Undertone? Have you considered layoffs?
A: We haven’t considered layoffs.

There will be opportunities out there both from an acquisition and talent perspective and we will consider those carefully and take action if we think it will be good for the long-term health of our business. Marketing, more sales leadership and technology — those are the places we’ll be adding to our staff.

Q: How many people do you plan to hire?
A: It’s not an exact number; we’re working on it right now.

What we’re focused on is where the growth opportunities are. We can’t fix the economy, but we can certainly be a good and stable partner through challenging times.

There is certainly more of a demand of accountability, although there are still a lot of questions about the metrics and the managing of accountability.

On the publisher side, where we have inventory available…selling it into high value advertisers is critically important. They have brands to protect as well.

We’ll focus on what we can really do well…how can we make that as frictionless as possible? We put a lot of emphasis here on service.