One Year Old, Widgetbucks Steps Up Attack on Google Ads

This week marks the one-year anniversary of the launch of Widgetbucks, the online ad network from Seattle-based startup Mpire. Founded in 2005, Mpire’s story makes for a pretty compelling case study in adapting to the market. Although the verdict isn’t in yet—we’ll see how much market share it ends up taking from Google ads, for instance—some early signs of success are apparent. Some 20,000 publishers and blogs use Widgetbucks. The ads get more than a billion impressions per month. And the network has the support of savvy investors like Ignition Partners and Draper Fisher Jurvetson, to the tune of $10 million they put in this past June.

Earlier this week, I had a chance to speak with Matt Hulett, the chairman and CEO of Mpire and the mastermind of Widgetbucks. He’s a fourth-generation Seattlite, was one of RealNetworks’ first 50 employees (“I was the RealPlayer”), and went on to be president of the corporate travel division at Expedia, a founding partner of Atom Films, and the president of Atom Entertainment (which sold to Viacom for $200 million in 2006).

First, I wanted to know how Hulett became involved with Mpire, and where the idea for Widgetbucks came from. Looking at his background, Hulett says, “I’ve picked things to work on that are ‘flanker’ brands. Corporate travel—why are you paying American Express $50, it should be free.” And indie alternatives to big, dumb Hollywood movies. “I like that kind of stuff,” he says. So taking on Google in the ad space is a natural fit for him.

Hulett started as a board member of Mpire (the founder is a friend of his). In the beginning, Mpire was trying to make it as an eBay seller-tool business. “It wasn’t doing well,” he says. “There wasn’t a market for it, but I loved the team. They asked me to come in.” That was 2006. “We started to do a comparison shopping site. But the way to get distribution, I thought, was to turn it into an ad network. Consumer websites, from an investment perspective—it’s hard because most investors won’t invest unless you get critical mass. The easiest way is not to drive traffic through Google, but to put my ads [on other sites]… I was running against time, I had to come up with an idea. I started working with eBay, and they liked the analytics we were doing to find the most popular products. We built really cool widgets for them, had a lot of success, got people bidding more. Voila—I thought that would work on other sites.”

That was early 2007. Hulett and his technical team launched the Widgetbucks ad network in October of that year. “We had no idea how it was going to do. We thought we’d get a couple hundred million impressions in the first 6 months. We hit that in the first 4 weeks,” he says. “Oh my gosh, we hit something.” The key, Hulett says, is that publishers want better ads. “We’d show the most popular products in each category—MP3 players, HDTVs, cameras…Our ads just look cool. We build rich media around smart technology.”

Widgetbucks’ ads are easy to set up, says Hulett, and they’re “smart.” Mpire’s software figures out “what are the right types of ads to show and when,” he explains. “In shopping, we’re checking the performance of our ads. We’ve just launched travel and local ads. We’re wiring up all these different kinds of advertising. The secret sauce is more ways to make money…We constantly monitor what kinds of products we show you and switch different things out depending on how they’re doing.”

I asked Hulett what this spring’s Draper-led financing meant to the firm. “It’s a big deal,” he says. “It’s great validation that a top-tier Valley firm put money in us. Draper in particular is interesting, as the majority of their portfolio is ad-based. They’re a great partner for us. We can pick up the phone and ask a question about ad networks, and a lot of people have expertise around the table.”

And Mpire’s strategy at this point? “We focus on quality. We have human beings looking at each site. It’s all in-house,” he says. Which is tricky, considering Mpire still has only 14 employees (most of them are software engineers). How does it handle the scale issues? “You let other people market for you. You build all your products instrumented, so you can automate how much people get paid, or if there are problems,” he says. “Hire fewer people, but pay them well. I’m a big believer in small teams.”

With the kind of exposure Widgetbucks is getting, it’s easy to forget it’s still a relatively young startup. “You run the risk of wanting to do too much,” Hulett acknowledges. “The advantage of recessionary times is, they can be great things for startups when they are adequately capitalized. During Web 1.0, I was living in Marin [California]. I was driving across the Golden Gate, and it’d usually take an hour and a half, but it only took 15 minutes. What’s going on? Someone said, ‘Matt, it’s the bust.’ Sometimes when it’s all boom, you get a lot of distractions…Google came out of Web 1.0, and there’s tons of examples like that. We’re more performance-based, so we’re not as tied to brands pulling back on budgets. I’m very optimistic. The challenge for us is to execute on the initiatives we’re working on.”

Lastly, I asked Hulett about other startups that are competing with Google in the ad space. He mentioned another widget company, McLean, VA-based Clearspring; Seattle-based AdReady, which handles banner ads for small businesses; Bellevue, WA-based BlueKai, which is building a database of commercial intentions; and Seattle startup Zillow’s real-estate ad network. It’s certainly a crowded field, and Hulett jokes that some can’t keep it all straight. “People think I work at Zillow,” he says. “‘How’s it going at Zillow?’ I’ve never worked at Zillow.”

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