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Bang a Gong
A late '90s Internet vibe rules the day at IntegraClick. But the Gulf Coast-based online advertising firm's funky approach belies its success.
COMPANIES by Mark Gordon | Managing Editor
In his camouflage shorts, knock-off Bentley watch and ratty gym T-shirt, John Lemp could be the most unlikely and unknown $100 million CEO in Corporate America. At 28, he's definitely one of the youngest in the $100 million club.
Lemp's infectious giggles and best-buddy congeniality only further the idea that his forte should be bartending as opposed to tending to one of the largest - and most anonymous - private companies on the Gulf Coast.
The secret, however, is on the verge of coming out: Lemp's company, Sarasota-based IntegraClick, essentially a middleman in the $17 billion global Internet advertising business, says it hit $100 million in sales in 2008 - a number it also says it's poised to double next year. Company executives say revenues grew 150% in 2007 and 60% in 2006, when it was roughly a $15 million company.
Then, says Lemp, there's this: "We are hoping to be a billion-dollar company in the next five years."
At $100 million in annual sales, the company, which was founded in 2002, would be on the verge of cracking into the Gulf Coast's largest 100 companies based on revenue. And at $1 billion, it would break into top-25 territory - top 10 if only counting private firms.
Even more remarkable, IntegraClick is getting it done under supermodel thin employee-per-revenue numbers. At 60 employees in 2008, for example, the company would be at about $1.7 million in revenue-per-employee. Lemp says the company could be hiring as many as 100 people over the next year.
IntegraClick is one several businesses nationwide that capitalize on a model of Web advertising known as cost-per-action, which some consider to be an improvement over pay-per-click, the more established way of online advertising. In cost-per-action, the advertiser only pays an Internet marketing company such as IntegraClick when an 'action' happens, such as a sale. The pay-per-click method charges per click, regardless if the 'clicker' makes a purchase.
"The problem with the old [pay-per-click] model is there is no accountability," says Graham Gochneaur, IntegraClick's chief marketing officer. "It's a roll of the dice. You have no idea what you're going to get."
But Gochneaur and Lemp say at IntegraClick, which has branded its Internet marketing model Clickbooth, the idea is to shrink those odds. The company does that by working with its clients to faciltate actual sales, not just clicks on an online box. "There is no risk in cost-per-action," says Gochneaur, "because you never spend any money until you make money."
Executives and business-related government officials in Greater Sarasota have a combination of two reactions when talking about IntegraClick: Astonishment and disbelief. Several well-connected IT industry executives had never heard of the company; ditto for a few local marketing and advertising executives.
Some go as far as to doubt the company is as big, revenue-wise, as it says it is - concerns Lemp says he's heard before. Lemp wouldn't release specific annual revenues and he declined to elaborate on the company's growth patterns, only to say that if it applied for the Inc. 500, it would make the top three in 2007 and 2008.
But a few others have heard of the company and its eye-popping growth. "I've looked at their business model and it makes a lot of sense," says Sam Stern, co-founder of Cap Creative, a Sarasota-based ad agency and the past president of the Suncoast chapter of the American Advertising Federation. The $100 million in annual sales number, says Stern, "sounds conceivable."
The Economic Development Corp. of Sarasota County agreed, naming IntegraClick its 2008 Technology Company of the Year in September, partially for its revenue growth. IntegraClick is also a nominee for the Tampa Bay Technology Forum's 2008 Emerging Technology Company of the Year.
"It's fairly unusual to have a company like that doing that well here locally," EDC president Kathy Baylis. "But it's not out of the realm of possibility."
A big leap
The possibility to shake up the old method of Internet marketing and advertising is what got Lemp and the company's co-founder, Amanda Huntington, going in the first place. The pair met through a mutual friend while they were both still in college, in Rochester, N.Y.
Lemp, a Long Island, N.Y., native and a graduate of the Rochester Institute of Technology, had been building Web sites since he was a young teenager. Meanwhile Huntington, who graduated from the State University of New York at Geneseo, had worked in copy-editing and online publishing.
Seeking a warmer climate, they each moved to Sarasota after college. They founded the first version of IntegraClick in 2002, in Lemp's cramped one-bedroom apartment. Huntington, now 27, handled the client side of things in the early going, while Lemp stuck to the technology side.
But the company's growth was stagnant after a few years, despite working around the clock some days. Says Huntington: "It took a little while for us to get focused on what we really wanted to do."
Then, in 2004, Lemp and Huntington caught on to the online click-per-action movement. That changed everything.
The cost-per-action model was initially founded as a way of bringing so-called truth to advertising, company executives and others in the marketing industry say. But technically, it even pre-dates the Internet, as some late night TV infomercials have been using this model with local and cable TV stations for years. "We weren't the first people to think of this," concedes Gochneaur.
On the Internet, the business model, also known as affiliate marketing, works by forging a relationship between an advertiser, say Blockbuster, and an Internet publisher or portal, such as Microsoft's msn.com
An Internet marketing company utilizing the cost-per-action model will first work with Blockbuster, fine-tuning its Web ad. Next, the firm would work with Microsoft in the placement and structure of the ad. A cost-per-action firm such as IntegraClick would then take a cut of every sale Blockbuster takes in through the ad.
While Internet giants such as eBay and Google have experimented with a cost-per-action approach, the model has its share of detractors. For instance, some advertisers have complained about loopholes in the process, such as a company charging for ads, or "actions" that really didn't happen.
At IntegraClick, the trick to making the pay-per-action model work is to seamlessly connect advertisers with publishers, says Ravi Ghai, the company's director of corporate development. It's a relationship-first mantra preached from corporate executives on down to every employee. "We want to keep publishers happy," says Ghai, "and we want to keep advertisers happy."
Still, $100 million in annual sales is a big leap from simply keeping customers happy. Ghai, considered IntegraClick's resident adult for his 40-years in the technology and finance industries, says the company hits that sales target through multiple advertising campaigns, of which the company currently runs about 6,200. Clients span all sorts of businesses, from Dish Network to diet pills.
Some campaigns result in only $1 per sale, Ghai says, while others result in commissions of up to $300 per sale/action. The company currently works with more than 27,000 publishers and has more than 250 active advertisers.
Unconventional approach
Past surreal revenue growths and capitalizing on the cost-per-action business model, the story of IntegraClick rests in its quirky combination of old-school business practices with a late 1990's Silicon Valley Internet company vibe.
The company occupies the third floor of an office building near the Fruitville Road exit of Interstate 75, next to a Sam's Club and behind a now-closed Mexican restaurant and sports bar. The staid exterior, however, belies the company's funky insides: Employees coast around in flip-flops, sit in decorated cubicles and take breaks in a room with a ping-pong table, where energy drinks are the beverages of choice.
Even successes get the unconventional touch: Employees are serenaded with a bang of a gong every time a new client is signed up.
But in some ways, IntegraClick's trio of under-30 executives speaks about the business in terms wiser than their years. "We've never been a tomorrow only kind of company," says Gochneaur, 27. "We carry some traditional, long-term business values."
Huntington says that philosophy starts from an employee's first day, where training focuses on thinking long-term and looking for answers to problems with more than just one sale in the balance. "We take it slow," says Huntington, "rather than just jumping in without assessing our risks."
Adds Lemp: "A big part of our business is modesty. We know we don't do everything right."
REVIEW SUMMARY
Businesses. IntegraClick, Sarasota
Industry. Internet marketing, advertising
Key. Company combines traditional business values with an Internet company feel.
The Fantastic Four
Talk about an eclectic group of leaders.
The four principal executives at Sarasota-based online marketing firm IntegraClick might share an office, but their backgrounds are a mark in contrasts. Here's a peek:
The Jock: Graham Gochneaur was the fifth person to join the company, in 2005, when it was still in its infancy. Gochneaur, 27, moved from his native Texas to Sarasota in 2005, initially following a girlfriend to the area. He turned down a job in investment banking with Morgan Stanley to work for Lemp, after meeting him through a friend. He has since worked his way up to running the company's marketing department.
Prior to working for IntegraClick, Gochneaur played quarterback for Marshall University, throwing for 1,275 yards and eight touchdowns in 2003 and 2004. He later tried out for teams in the Arena Football League.
The Geek: John Lemp began tinkering with Web sites and software programming when he was 14 years old, growing up on Long Island in a blue-collar New York City suburb. He carried his Internet passion on through college, at the Rochester Institute of Technology, and then into business. Lemp, 28, worked for a marketing firm and an e-Learning company while still in school and after that he started his own companies, several of which have turned into IntegraClick subsidiaries. Lemp is now IntegraClick's chief executive.
The Adult: At 64 years old, Ravi Ghai is affectionately referred to as IntegraClick's resident adult. He began working for start-up technology companies in the 1970s, when many IntegraClick employees were just starting to crawl. Ghai earned a degree in electronics and telecommunications from the Indian Institute of Technology, that country's version of MIT. After college, Ghai moved to Canada, then Pittsburgh, and finally, to Sarasota. He was semi-retired before meeting Lemp in 2005. He is now the company's vice president of corporate development.
The Brain: Amanda Huntington says she was always more into the "anthropology, science and math" of a business than the technological side of building a cost-per-action online advertising system. As such, Huntington holds the title of chief financial director at IntegraClick, running operations and finance.
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