Populace ads business plan (Winner of QRCE 3rd BP Competition 2009)

Populace Ads
“TO DEMOCRATIZE ONLINE ADVERTISING”

WINNER OF “GOOGLE BEST ONLINE BUSINESS
PLAN” AWARD AT QRCE 3RD COMPETITION

MUHAMMAD ARRABI
ARRABI@GMAIL.COM
UPDATED 2012

Given to my love of this idea but my lack of time – I decided to “open source” it – anybody
can make use of it under the Creative Commons Attribution license. Note: research is mostly
from 2009.

Populace Ads Business Plan by Muhammad Arrabi is licensed under a Creative Commons
Attribution 3.0 Unported License. Based on a work at www.muhammadarrabi.com

Winner of QRCE 3rd BP Competition
2

—  I submitted the original form of this
business plan to the QRCE 3rd business
plan competition in Jordan and won the
1st place called
"The Google Best Online Business Plan".
—  Since then I've consulted several friends,
updated it and added major ideas. Given
my love for the idea, but lack of time, I
decided to "open source" it under Creative
Commons Attribution 3.0 license.
—  Please, steal my ideas J
Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com

In a nutshell
3

—  Populace Ads (PA) is an Online Advertising
Platform, that will act as the Ad Agency for the
millions of SMBs around the world.
—  It has 2 sides (Customers & Creators):
¡  The Customers, mainly SMBs, use very simple wizard-like
interface to create & buy rich and proven Online Advertising
Campaigns.

¡  The Creators are Digital Marketing Specialists around the
world, experts in their local markets, who create the “Dynamic
Marketing Templates” and advertise them to their local SMBs.


A tale of Customers and Creators
4

Digital Experts bring
SMBs Customers to system
Digital Experts
answer simple worldwide
questions & Secret Create
use simple UI Sauce
Dynamics
Templates
User
Data
Many
•  G Channels: Dynamic
oo
•  M gle Templates
o
•  B bile
ing
•  A
OL

The Market Opportunity
5

—  There are millions of SMBs worldwide.
—  15 million SMBs just in the USA, spend $22.5b
annually on ads, but only 7% online. High attrition
percentage from Google Adwords.
—  Why? Too hard technically. Needs are too diverse.
Too expensive to hire Ad Agency.
—  Each Digital Marketing Expert can become an Agent
for Populace Ads – covering the world.
—  If each customer spends $100/month, and we have
only 1 million SMBs, revenues will be $1.2b/year.

The Pain Point
6

AND THE OPPORTUNITY


Why SMBs do not advertise online?
7

—  2 main barriers
¡  Technical Barrier: As much as Adwords is simple, it’s very hard
for business owners. What is the difference between “Broad” and
“Phrase” keywords? How to combine negative and exact keywords to
create high-quality entries?
¡  Marketing Barrier: Owners are great at running their businesses,
but do not know how to write Copy that attracts the right customers,
or understand customer behavior online.
—  What happens today:
¡  Many SMBs try Google Adwords for few months, and they pull out
because it’s not showing results. Can’t measure or track.
¡  Some Medium Businesses buy an account, set it to “automatic”, and
forget about it for a year., only to discover how bad it has been.


The Digital Marketing Specialists pains
8

—  The Digital Marketing Specialists (DMS) are experts
are creating and managing accounts (and many learn
on the job).
¡  However, this process is very time-consuming. And it’s hard to
keep up – with new advertising channels coming out
continuously (Mobile, iPads, iBooks, etc.)
¡  This limits the number of concurrent accounts they can
manage.
—  And they don’t know how to do all the other things
besides technical help
¡  Bringing Customers, Money Collection, Deal Negotiation with
Publishers, etc.


Populace Ads Solves these Pain Points
9

—  For Customers - SMBs
¡  Populace Ads is a one-stop-shop for Online Advertising
Solutions.
¡  Business Owners answer survey-like questions (similar to
Turbo-Tax).
¡  They choose how much they want to spend (we take as little as
$50/month).
—  For Creators – DMSs
¡  We create a fully automated platform that allows Specialists to
create a Campaign once, and they “templetize it” as a Dynamic
Marketing Template.
¡  The Digital Marketing Specialists can service hundreds of
concurrent accounts using these templates – with the PA DMS
Dashboard.

The Market
10

AND THE OPPORTUNITY


Phenomenal Growth for Online Advertising
11

U.S. Online Advertisement Spending (Billions)
(Source: eMarketer, Nov 2010)
$32.6
$28.5
$25.8
$23.4$22.7
$21.2
$16.9
$12.5
$9.6
$8.1 $7.1 $7.3
$6.0
$4.6

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012


Ad Agencies Industry
12

Ad Budget vs. Company Size

Company Size

Ad Agencies Industry, the gap
13

Ad Budget vs. Cost of Online Ads

Ad Budget
Cost of Preparing Online Ads

Break-even
point

Company Size

Ad Agencies Industry, the opportunity
14

Ad Budget vs Cost of Online Ads

Ad Budget

Traditional
Break-even The “no digital
Market for point
Big Ad Agencies marketing” gap

Market for
Smaller Ad Agencies &
Consultants

Company Size

Ad Agencies Industry
15

—  Ad Agencies charge a lot
¡  Campaign Creation $2,000-$7,000+

¡  Campaign Management $2,000-10,000/month

¡  Top agencies charge much more (e.g. for Coca Cola)

—  As a result, out of 15 million small-and-medium
businesses, only 7% do online advertising.


Market for Populace Ads
16

Ad Budget vs Populace Ads cost

Ad Budget
Cost of Populace Ads

A new market opens up for
Populace Ads

The traditional
Break-even
The new Break-
point
even point
Company Size

The Populace Ads Lower Cost
17

—  Cost of Traditional Online Ads is high:
¡  Creative content done by hand
¡  Management done by hand or semi-automated
¡  Marketing research done by hand

—  Populace Ads Solution
¡  Economy of scale
¡  An innovative component that will create campaigns for many
customers automatically. Cost of initial design is high, but
auto-customizing it is very cheap.
¡  Management is fully automated
¡  Marketing research is done for whole vertical, used by all
campaigns.


Target Customers
18

—  Populace Ads’ solution is more affordable but less
customizable than full campaigns done by hand.
—  Target Customers:
¡  (Any company with online ad budget $100-2,000/month is a
potential customer.)
¡  Medium Businesses

¡  Small Businesses

¡  And even Micro Businesses


Who Are the Customers?
19

—  Medium, Small, & Micro Businesses are mostly Local
Companies targeting specific region. They are
increasingly getting clients through the internet.


The Offering
20

BRIEF BUSINESS DESCRIPTION


Populace Ads Website
21

—  Populace Ads will be the one-stop for all online
advertisement needed by SMBs
¡  Create their campaigns
¡  Manage their campaigns

¡  Monitor campaign performance on the web


Populace Ads Website, Advertisers UI
22

—  Simple UI (Wizard-like) Website
¡  By answering few questions
÷  E.g. Business name, vertical, services offered, location, etc.
÷  Ad Channels: Google, Yahoo, Local news sites, etc.
¡  Ad Campaigns are automatically generated
¡  Ad Campaigns are also automatically managed & optimized
—  Behind the Scenes:
¡  Proprietary automatic system for creation and optimization
¡  Possibly a team of SEM specialists for extra customization and
monitoring.


Populace Ads, SEM Experts UI
23

—  SEM Specialists can contribute templates:
¡  Provide a website for SEM Specialists
¡  Local SEM specialists can create their own campaigns
¡  They can market them to their own local communities
¡  Profit sharing – they keep 5-10% of ad spend, Populace Ads
keep 10-15%
—  Goal
¡  Reaching SMBs is very hard
¡  Developing customized campaigns for world regions &
languages is very hard
¡  This will also morph us from Ad Agency status to a Platform,
thus more attractive to be acquired.
¡  Risk: features exposed to competition.


Sources of Income
24

—  Percentage of Ad Spend
¡  Goal is to lower barrier & one-time fees.

¡  Thus, charge 10-50% of ad budget. 10-20% is industry
practice. Up to 50% on low budgets is likely to be acceptable.
—  Special Channels Fees
¡  Might request monthly fee or minimum-budget for special
channels (e.g. News sites ads)
—  Advertisers Discount
¡  We’ll get discount from advertisers (e.g. Google & Yahoo) for
posting large volumes of ads. This discount is part of our
income.


Populace Ads Website, Partnerships
25

—  Future Partnership Program to offer our service
through aggregate websites.


Competition (as of 2009)
26

Simple UI Automated Automated Min.
Campaign Campaign monthly
Creation Mgmt budget
$100
Populace Ads
ü ü ü
Ad Agencies (e.g. (semi) $5,000
marchex.com)
(semi) (semi) $2,000?
Yodle.com
ü
(semi) (semi) $2,000?
LocalReach.com
ü
Simple Search (semi) (very $1
Engine interface limited)
(Google, Yahoo)

Potential Tools (semi) ?
Makers
(Clickable.com)

Execution Plan
27


Plan Overview
28

—  Now: research & spec writing
¡  Write engineering specs for populace ads engine
¡  Research SMB ad verticals, offer by-hand SEM consulting
¡  Raise seed funding, ~$120K

—  +2 mo: Build Prototype (seed funding)
¡  Build Prototype in Jordan
¡  Get 3-5 local customers, tune engine & prove concept

—  +10 mo: US Market (series A)
¡  Create US company: CEO, Marketing, & Sales; Expand Jordan
¡  Reach 1000+ US customers, many verticals, many channels

—  +12 mo: International (self-funded)
¡  Target SMBs in Europe. Expose the “Platform”


Financial Forecast Summary
29

Year 1 Year 2 Year 3
Customers 80 500 1500
Revenue $480,000 $3,000,000 $9,000,000
Gross Margin $80,000 $692,308 $2,076,923
Expenses $104,400 $327,600 $685,600

Net Earnings ($24,400) $364,708 $1,391,323

Targeting 1 million in 3 years.
(take with a grain of salt – lots actually)


Risks
30

—  Risks
÷  Risk that SMBs do not find online advertisement suitable: low
÷  Risk of competitors lowering prices: medium

¡  Addressing risk
÷  SMBs already find online advertisement useful and are spending
more on it.
÷  Competitors cannot lower price beyond the cost of the Ad Servers,
which is the same for all.


Key Issues
31

—  Deciding what vertical to target first
—  Gathering an excellent engineering team in Jordan
to build the Prototype
—  Finding a CEO for the company with extensive SMB
market experience.
—  Finding the best sales method for SMBs – do we
need an on-ground sales force in the US?
—  Finding suitable verticals to Expand.


Conclusion
32

“THE MAN WHO WILL USE HIS SKILL AND
CONSTRUCTIVE IMAGINATION TO SEE HOW
MUCH HE CAN GIVE FOR A DOLLAR, INSTEAD
OF HOW LITTLE HE CAN GIVE FOR A DOLLAR,
IS BOUND TO SUCCEED. “
HENRY FORD


Goals & Objectives
33

—  Phase 1: Prototype, 6 months
¡  Build prototype, can support 500 customers with 1 channel (most likely Google
Search Text Ads)
¡  Prove that the fully-automated Creation & Management engines do work. Tune
them.
¡  Target only 1 vertical to start with
¡  Get 5-10 customers, (at lowered rate or free)

—  Phase 2: Cover Costs, 1.5 years
¡  Expand Engine to support 2000 customers, with 2-3 channels.
¡  Established in 1-3 verticals, aggressive sales & pricing
¡  Get 500 customers

—  Phase 3: Profitable Expansion, 2+ years
¡  Expand Engine to support 20,000 customers, with 10+ channels.
¡  Expand into as many verticals as possible (20+)
¡  Get to 5000+ customers
¡  Sign Partnership with Vertical Portals
¡  Ad Populace as a Platform! (more on next page)


34

Thank You


Populace ads business plan (Winner of QRCE 3rd BP Competition 2009)

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