Interview with Tim Vanderhook, Specific Media

Back in November, Irvine-based Specific Media ( raised an immense, $100M round of private equity funding from Francisco Partners. Specific Media plays in the very active Internet advertising sector, and we thought it would be interesting to hear what the firm has in mind for its new war chest. We spoke with Tim Vanderhook, the firm's co-founder and CEO. Tim spoke with Ben Kuo.

You've raised quite a bit of capital lately, tell us a little bit about that funding.

Tim Vanderhook: We raised $100 million in a Series B funding. The capital is slated for acquisitions, and to help us expand our product offering. We sat around as a board of directors, and feel that we have a product offering and company that can be truly independent against the major portal themselves. Obviously, Microsoft, AOL, and Yahoo all have competitors, but we felt we could be the last company standing to get to scale. We needed to get some extra funds to do that.

What does your business look like now, and how do you stand out from what seems to be quite a lot of online advertising firms?

Tim Vanderhook: Ultimately, what we do now is what most people put out there. The concept is that we sell people or an audience to advertisers. We go to an advertiser, and ask them who they want to show their advertising to -- they might tell me they want a male, 25-50 years old, in the market for credit cards, who have an income level north of 70 thousand dollars. With our sophisticated system, we can pinpoint those users on the Internet and ensure marketers that their ad shows up. It's a win-win-win business model. For the advertisers, their spend is extremely efficient because they're hitting their target demographic. For the publisher, they can charge a premium for their inventory, which is more revenue to them. And, the consumer still maintains complete anonymity -- we don't know who you are, don't know your address, or your name, you're just a number in our system. The advertisers get a more efficient spend, the publisher gets more inventory at a higher price, and the user maintains their anonymity.

This is only your Series B, and it looks like you have been quite successful, having been around since 1999. How did you make it happen?

Tim Vanderhook: A couple of things. It's definitely the founders and the vision we had. We were right coming off our start and the market we were going after. We didn't have to change course. We stayed focused on what we were going after. Having the right vision of the market put us ahead of the curve, and allowed use to excel faster than our peers. What it came down to, was execution. We have a strong set of management in this company, and we execute on what needs to be done. So far, we've been playing in the display and brand advertising space, and we're now expanding in many other areas, such as text links, to compete against Google. We're also looking at the online and video side in the future.

You mention Google, what's your view of them, and are they moving into your space?

Tim Vanderhook: They've recently purchased ad serving technology through DoubleClick, but they have not purchased an ad network yet. That's what we do. In the past, they have tried to solve problems via technology, and though they're somewhat coming into our space, others are encroaching more. For example, Yahoo acquired Right Media and Blue Lithium, AOL acquired Tacoda and most recently Quigo. AOL and Yahoo are the most positioned to compete with us. Microsoft also recently acquired aQuantive, we competed with them against their DrivePM business. However, all of them are also partners of Specific Media. The reality is it's about who has the more efficient technology, and who can create algorithms and use web serving data to ultimately benefit advertisers and consumers most.

Where's all this consolidation taking the online advertising industry--is this ever going to end?

Tim Vanderhook: Definitely not. The best way to put it, is we're in the second inning of a nine inning baseball game. We're in inning two, we just got over the first inning. It's very, very early in the online advertising game. It's not going to be four companies that dominate, but probably less than ten and more than four. Specific Media plans to be one of those companies.

How big are you now, in terms of people?

Tim Vanderhook: We have 135 employees. In terms of reach we serve ads to 133 million people in the US. We're ranked by Comscore as a Top 5 company in the United States in terms of who we serve ads to. We're the fifth largest globally. We reach 254 million people globally, just behind EBay there. It's a funny anomaly that we're so big, yet no one has heard of us. We flew under the radar, got significant scale, and have become a strong entity.

When do you think we might some of the acquisitions you've talked about happening?

Tim Vanderhook: We're actively looking right now and evaluating them. For us, we're very patient, and know exactly what we're looking for. When we find it, we will pull the trigger. You'll see that in the near future. It won't be the end of 2008 with us not making an acquisition. In this business, if you're not moving quickly, you're actually shrinking. We've got the capital, the vision, and are just trying to find the right partner.


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