This article was originally published in The Business Journal on July 1, 2005.
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By Adrian Rodriguez
Staff Writer
adrian@thebusinessjournal.com
A Porterville entrepreneur launched an advertising portal this week he says will give both Internet publishers and online advertisers the tools needed to run more effective advertising campaigns--and Central Valley businesses have a chance to get in on the ground floor.
Hyperbidder, Inc. went live on Wednesday and is now deploying a sales team from the Central Valley to the coast to sign businesses up for the service at hyperbidder.com, which intermediates the ad-selling process.
"It's a self-serve advertising portal where all the advertising media buyers and sellers come together," said Galip Talegon, the company's president. "The publishers create their own campaigns, and advertisers come and find the targeted publishers and join the campaigns."
It's a solution Talegon hopes will help alleviate a problem plaguing advertisers around the world since the dawn of the Internet; selling and buying ads when there is no uniform market.
And the problem is worst at the local level, said Tyler Lee, new media director for Jeffrey/Scott Advertising, based in Fresno.
"It's not the lack of space--it's the lack of organized space," Lee said.
The three most important factors for online advertising--focusing on the target audience, delivering meaningful and effective content and choosing the right format--are challenged when so many Web sites appeal to so many cross-sections of audience, Lee said.
"There is a big need for a universal way of targeting regions and locales," he said, "This company [Hyperbidder] has ahead of them, not just the task of building a channel, but getting all the advertisers and industries to use it and pay for it."
The portal works like an electronic auction site for banner ads. Publishers with ad space set up a campaign for the period of time the space will be available. An advertiser who already has set up an advertising budget then "hyperbids" on that space. A ranking is calculated for that bidder that can be viewed during the course of that auction.
But instead of a winner-take-all auction, each bidder's rank at the end of the auction determines how often their ad appears when the page is loaded. The higher the rank, the more frequent the ad will appear.
During the campaign, advertisers pay for impressions and click-throughs--when users actually click on the ad.
That way, advertisers are only paying for results based on the price they agreed on, Talegon said.
The site, which offers membership for free, functions similarly to the keyword-based advertising model used by Google, which places ads based on the content of the publisher's site. Advertisers pay a premium to have their ads display prominently when those words are used in a site.
But Hyperbidder's model differs because it allows the advertiser to set the price and choose the site. Publishers, in turn, are allowed to reject any ads competing for its space.
"We're trying to be as fair as possible on both sides," he said. "It's safer for them [advertisers], because we're in control of making sure the images and banners are displayed on the publisher's page, and we're making sure the funds are actually transferred," Talegon said.
Hyperbidder accomplishes this by using PayPal, a money-transferring Web site used for thousands of eBay transactions.
When a campaign is over, the publishers can be paid by check or can transfer the funds into a Hyperbidder advertising account. Hyperbidder's revenue comes from a 10 percent portion of those earnings.
Hyperbidder is entering a rapidly growing and changing market in the United States. Revenues in interactive advertising in the United States totaled more than $9.6 billion in 2004, according to a report released in April by the New Media Group of PricewaterhouseCoopers.
But not all Internet advertising is equal. Jim Mueller, vice president and creative director at Thielen Partners in Fresno, said interactive ads, e-mail campaigns and search word-based advertising have diminished the effectiveness of banner ads altogether.
Banner ads were hugely successful five years ago, he said, but within two years the number of people who actually click through had diminished substantially, Mueller said.
"While we do have clients that have banner ads, it's an insignificant part of their budget," he said. "I probably would not direct any client to do banner ads."
Talegon said the reason advertisers have shied away from banner ads is because the normal rates for banner advertisements are too high. The baseline cost for banner ads is $10 per thousand impressions, while Hyperbidder sets the minimum at $2 per thousand impressions, he said.
"Our solution we think we will be able to banner ads once again affordable and effective," he said.
He said he believes there is room for exponential growth in banner ads.
"We want to give [advertisers] another option. Especially local businesses are going to benefit from this a lot," he said. "With this, the advertisers are the market makers. They determine the ad value. That's the biggest thing we have."