One Edu Company’s Big Day
Those who follow online lead generation, especially those who follow and /or operate in the online education lead generation space quickly circulated the news surrounding Vantage Media. Had you not known of Vantage Media, you probably wouldn’t have guessed that they operate in the online education space, certainly not by their name alone. And, chances are, had someone told you that a four-and-a-half year old 50 person online lead generation company took in some funding you wouldn’t expect that number to equal $70 million. That, however, is just what Vantage Media announced a day ago, Wednesday. Perhaps even more impressive, the company earns all of its revenue from search.
The news of the investment reads similar to almost any infusion of capital. In addition to the money, they named a new CEO, Steve Jillings, the former chief executive of anti-SPAM company Frontbridge Technologies and two new board members Jamie Montgomery, CEO of Montgomery & Co. and Rory O’Driscoll of Scale Venture Partners. Montgomery & Co., which helped sell MySpace to News Corp., led the round joined by Scale Venture Partners, Tudor Ventures and Integral Capital Partners. Of the, About, 50 person greater than $1 million per employee a year company’s future, new CEO Steve Jillings vowed to double headcount this year and was quoted saying they will do "$100 million in revenue, or better" for 2007. I’d hate to see him saying they will do less revenue next year.
The first sentence of the Reuters article on the investment states, "Vantage Media, a top search advertising agency, has named a new chief executive and taken $70 million in private equity funds to expand into Europe and new industry segments." Precedent exists for the naming of new CEO, especially in scenarios such as this where the founder has the domain experience but no investing experience; therefore, no shock in learning of a new CEO’s appointment. Calling the company a "top search advertising agency" might be a slight misnomer, but it’s only because no better term yet exists. When I hear the term search advertising agency I think of a company like Efficient Frontier that manages hundreds of millions of dollars of search spend playing with other people’s money. Additionally, clients of companies like Efficient Frontier tend to only work with one Efficient Frontier. If Best Buy hires a search engine marketing company to manage their spend, they hire only one company. They might have an affiliate program where some affiliates try to do search, but only the search company gets to the distinction of being called a search advertising agency. Many of the companies that Vantage makes money promoting, though, also work with other lead generation companies who too do search. This means that every dollar that Vantage earns comes by out-competing not just other advertisers but others advertising the exact same thing.
Getting back to the first major distinction between Vantage and a typical search advertising agency, Vantage spends their own money. They only make money from form completions, as opposed to charging clients a percentage of what they spend. This means from the outset that Vantage’s goals and the clients’ goal are in complete alignment. If you are reading this and thinking, isn’t that just search engine arbitrage? It is. But, when Vantage started doing this, it wasn’t called anything; it was just affiliate marketing. And, during a time when the top affiliate might do 3,000 leads per month on search, Vantage was doing 30,000. As a result, it was only a matter of time before others started to figure it out; soon others would notice that the same company had found a way to have properties it owns listed multiple times on a particular keyword. (In fact, I remember coming across a certain education related term and seeing six of the ten results being for Vantage sites.) Because of the often secretive nature of affiliate marketing, though, Vantage couldn’t, and didn’t, seek external validation for their model. They didn’t want the attention.
According to their website, Vantage works with 1400 campus and online clients, some of which come through partnerships with companies like High Voltage Media and Plattform Advertising. They provide some other interesting stats, including their 40 million keywords under management, 6 million visitors per month, and 100 search listings viewed every second. Amazingly enough, they operate almost exclusively in online education. Imagine if their technology and process could translate to other verticals. All of the sudden you might have a company worth several hundred million dollars. I can only imagine that is the expectation and plan of those that just took controlling interest in the firm. Being an affiliate can generate cash, but successfully presenting oneself as a search platform generates greater enterprise value. What they are now is still not an easy question to answer. They spend millions monthly on behalf of multiple brands, but in almost all cases they own sites and for non-exclusive brands. I’m not sure what that makes them, but it’s exciting to see one of the innovators of arbitrage come out from hiding and officially throw their hat into the ring. It’s even more exciting to see the continued validation of the new type of search firm, the evolution of the affiliate to world-class search marketer. My only wish, for everyone to have the chance to hear how Mark got into search; it’s inspiring in it being so accidental.
