“The history of advertising has been kind of simple and unsophisticated,” says Eric Frankel, CEO and founder of marketing SaaS company AdGreetz. Brands typically hire an agency to make one commercial, then hope for the best.
Rather than follow the status quo, AdGreetz has shaken up the billion-dollar advertising industry with a hyper-personalized platform that reinvents how brands communicate with their customers — that’s how the SaaS secures repeat business and grew to a $396,000 ACV.
“Instead of a generic, one-size-fits-all, often static message,” he says in a conversation with Latka, “we help brands ideate, produce, deploy, optimize, and then provide reporting for hundreds of versions” of ad demos, up to tens of thousands, or even millions.
With 12 current clients, Frankel explains past customers didn’t always retain the platform’s services beyond one project — but as the market for video personalization grows, he says, “Once brands test it [and] see these huge results, they typically come back and become regular customers.”
That’s what happened when it worked for Tanishq, a large Indian jewelry brand.
After increasing its click-through rate by more than 4X and the average video watch length by more than 12X, Tanishq “caught [its] breath” for a year, then came back and signed a year-long contract.
Source: GetLatka
For $33,000 per monthly contract, AdGreetz’s services include access to a team of people who help brands ideate; the production of up to millions of video ad variations; as well as integration, where, Frankel explains, the platform publishes the ads to “all of the popular digital platforms in the world.”
In the last 12 months, the company has earned $10 million in top-line revenue: almost $5.5 million in gross revenue and the remaining in revenue from displaying ads for other brands, of which it takes 2% to 5%.
AdGreetz isn’t yet profitable, but with these numbers, Frankel projects it will be by the end of 2020.
Since its start, AdGreetz has raised $12 million and employs 30 people across Bangalore, Los Angeles, London, and New York. As his company continues to evolve within the advertising industry, Frankel seems confident in a promising future.
“We’ve gone from, ‘Kid, get away from me; you bother me,’ into, probably, 62% of the cold calls we make [turn] into people saying, ‘Yes, I’d like to know more,’” he says.
What is AdGreetz’s annual revenue?
In the last 12 months, AdGreetz generated $10 million in top-line ARR.
Who is the CEO of AdGreetz?
Eric Frankel, age 62, is the CEO and founder of AdGreetz.
Transcript Excerpts
How the AdGreetz platform works its magic
“We’re in the middle of doing [Procter & Gamble’s] first hyper-personalized campaign ever — they typically make one commercial; we’ve got 300,000 versions. We call out 224 cities, towns, and villages. We have demos who look like yourself, so there [are] 20-year-old women in the commercial, 30, 40, 50; the same thing with men; people who have babies with babies. We say, ‘It’s Monday, Tuesday, Wednesday, Thursday, never been a better time to switch to this product.’ And then we remind you that your nearest store is either a Target, CVS, or Walgreens, and we give you that address and/or ask you to click now and shop.”
How much a video marketing SaaS can earn
“A typical [contract] is approximately $33,000 a month, which gets up to $396,000 a year. Not everyone retains us every month; there’s a lot of testing going on. This is still a business that about 2% of brands are playing in, although 84% say it’s the future. We’re in the selling process, but then once brands test it [and] see these huge results, they typically come back and become regular customers.”
AdGreetz on the rise after shaking up the status quo
“The history of advertising has been kind of simple and unsophisticated, in my opinion. A brand hires a company to make one commercial. A brand hires a company to push that one commercial out and sits back and keeps their fingers crossed that someone comes to their store … It obviously takes more work to figure out what the messaging should be, what 300,000 versions of this is like [compared with] one. But what’s happening is nearly everyone is starting to come back. They sometimes just need some breathing room.”
Converting customers to an unknown model
“You don’t know how to do this, so we have people who help you ideate. What’s better than one commercial? There are demos that are made, that show [how it works]. And then we get into the SaaS automation part of it, which is then manufacturing the hundreds, thousands, tens of thousands, or millions of versions. And then we get into the automation and integration portion, which is from one platform pushing it out to all of the popular digital platforms in the world. Instead of going Facebook, doing all of this hard work, going onto Google, doing all of this hard work, going onto Twitter, from one place, [we] push it out.”
Full Transcript Nathan: Hello everyone, my guest today is Eric Frankel. If you missed my first episode with him you’ll know, or if you heard it, you’ll know he’s building a company called AdGreetz based out here on the West Coast. Eric, you ready to take us to the top? Eric Frankel: I’m ready. Nathan: All right. So for folks that missed that first episode, give us the quick down low. What’s AdGreetz and what will people pay for? Eric Frankel: We’re reinventing how brands converse with past, current, or prospective clients. Instead of a generic one size fits all, often static message, we help brands ideate, produce, deploy, optimize, and then provide reporting for hundreds of versions, thousands of versions, tens of thousands or millions. And instead of a brand talking to you about dresses, we’re talking to you about your black t-shirt and my black t-shirt and the store a mile from your house where you could purchase it or click and shop now. Nathan: So just to be clear, if I’m sending out a mail merge, for example, to 1000 potential customers, I can customize that video even with my lips moving and saying, “Hey Eric, Hey Steve, Hey Joanne, whatever,” AdGreetz allows us to do that. Eric Frankel: Yeah, except for that it doesn’t necessarily have to be a name, we’re in the middle of doing P & G’s first hyper-personalized campaign ever. They typically make one commercial, we’ve got 300,000 versions. So we call out 224 cities, towns, and villages. We show people, we have demos who look like yourself, so there’s 20 year old women in the commercial, 30, 40, 50. The same thing with men. People who have babies with babies. We say it’s Monday, Tuesday, Wednesday, Thursday, never been a better time to switch to this product. And then we remind you that your nearest store is either a Target, CVS or Walgreens, and we give you that address, and/or ask you to click now and shop. Nathan: Super smart. Eric Frankel: And return, specific to someone in Beverly Hills, on this Friday. Nathan: When we last, I last had you on, which was back in January, actually, of 2018, Eric. It’s been a while. You had ACVs that were averaging in the $200,000 range. Is that still your ACV average today? Eric Frankel: Are we referring to what the average brand is paying us to do business, since I may not speak your lingo? Nathan: You got it. Per year. Eric Frankel: Well, a typical is approximately $33,000 a month, which gets up to 396,000 a year. Not everyone retains us every month, there’s a lot of testing going on. This is still a business that about 2% of brands are playing in, although 84% say it’s the future. So this is … We’re in the selling process, but then once brands test it, see these huge results, they typically cut back and become regular customers. Nathan: So let’s break it down, if I’m paying you 30 grand a month right now, what am I getting for that? Is any of that going to ad spend directly? Or is that all software expense for you? Eric Frankel: Well, it’s all software and some handholding in a new business. So you don’t know how to do this, so we have people who help you ideate. What’s better than one commercial? Then there are demos that are made, that show … And then we get into the SAS automation version part of it, which is then manufacturing the hundreds, thousands, tens of thousands or millions of versions. And then we get into the automation and integration portion, which is from one platform pushing it out to all of the popular digital platforms in the world. Instead of going Facebook, doing all of this hard work, going onto Google, doing all of this hard work, going onto Twitter. From one place, push it out. Nathan: So, Eric, it sounds like you are obviously a high touch, low volume business. How many total customers are you working with today, this month? Eric Frankel: We’re working with 12. Nathan: 12, okay. Got it. And why don’t people retain? In other words, why do they come on just for one project? Why can’t they use you year round, all the time? Eric Frankel: Well, they can. The history of advertising has been kind of simple and unsophisticated, in my opinion. A brand hires a company to make one commercial. A brand hires a company to push that one commercial out and sits back and keeps their fingers crossed that someone comes to their store, drives their car, sees their movie, watches for television show, buys an airline ticket, goes to their hotel. It obviously takes more work to figure out what the messaging should be. What 300,000 versions of this is like, than one. But what’s happening is nearly everyone is starting to come back. They sometimes just need some breathing room. So for example, we did a very successful campaign with the largest jewelry retailer in India. Nathan: Which one, can you name it? Eric Frankel: It’s called Tanishq and they’re owned by Titan, which is the number one company in all of India. Reliance is number one, Titan’s number two. We increased their click through rate 4.6 times, which is big. We increased people watching 12.6 times longer. And that was a year ago. They caught their breath, they’ve come back and given us a 12 month order [crosstalk 00:00:05:34]. This is somewhat shocking because the business has been so easy, but a month or two into it, it becomes easy, but it’s like anything else, it’s you or me learning how to ski if we hadn’t or how to climb- Nathan: Of course. So Eric, how many folks in the team do you have supporting these new diamond customers, for example? Eric Frankel: During COVID, where a lot of people have been furloughing and having less teams, we’ve increased our team. So today we’re only 30, we just opened an office. Of course, there’s no real office because of COVID. We just opened in … We just opened in Paris, we’re in London, New York and LA. Nathan: How many of the 30 are engineers? Eric Frankel: Right now 10 of the 30 are engineers. And we just stole away the CTO from a competitor. Nathan: Which competitor? Eric Frankel: A company called Spirable. And I needed another, very muscular executive in addition to our CTO. He had built their entire stack, he had built them from the ground up. Nathan: How’d you recruit him? Did you give him equity or just triple his pay? Eric Frankel: Neither. So the answer is he makes a little bit more pay, but nothing that would be meaningful to anyone. He owns less of our company than he does of their company. We just had a product that was more compelling, that he thought stood a chance to be more successful, even than their terrific product. So he decided to roll the dice and [crosstalk 00:07:22]
Nathan: Come on over, congrats on that. He likes your little ounce of crazy, right? You have to be a little crazy to be an entrepreneur, he likes your crazy better than the other kind of crazy. All right [crosstalk 00:07:31]. Eric Frankel: That’s literally it, he didn’t tell me that, but I know people who have met [crosstalk 00:07:36]. Nathan: That’s good. How many of your 30 folks do you have actually running point with these new accounts? Do you have any quota carrying sales reps or no? Eric Frankel: Yeah. Yeah. So we have two other sales reps. We have one in the Middle East, we have one in New York, we have myself selling. And a typical account has available to them, and at some point in time, touches a project manager, a tech executive, a creative executive. What am I forgetting? Project manager, creative tech and analytics. Nathan: Okay. And last time you came on, I mean, you’re building all this, obviously you’ve got great customer accounts coming in. You can probably fuel it mainly off customer cash, but you had raised, last time you came on, you had raised 10 million bucks back in 2018. Have you raised any additional capital or are you profitable today? Eric Frankel: We’re up to about 12, but for the first time … What happened since I last spoke to you is seven months ago, a competitor of ours that we think is terrific, but if I was to pull up a chart, I would show you eight or nine things they do versus 42 that we do. Not that more is always better, but we think it is in this particular case. They had the majority of their company purchased for $223 million. Nathan: Which company is that? Eric Frankel: That’s called a Smartly.io Out of Finland. They weren’t bought by a strategic, which would typically happen, but rather they were bought by a private equity firm. And the private equity firm only buys them planning to sell them in three to five years for three to five times more. So that’s created a bit of a marketplace and all of a sudden, when somebody pays something for a company for the first time in our space, it creates a valuation. So now there are many other companies starting to have those conversations with us. Nathan: Are you profitable today? Eric Frankel: No. We will be profitable in about 60 days. I had a board meeting, coincidentally, yesterday. And I’m not selling you, because there’s no reason to sell you, but the reality of our businesses is, I could show you July with five. I could show you August with eight. I could show you September with 12, I could show you October with 15. And the lists are even longer, but many of them won’t happen on time because that’s the way of the world. But the reality is, it’s a really … We launched on September 10th with Pepsi, that only took five years. The P & G deal took five years. But we’ve gone from, “Kid, get away from me. You bother me,” into a probably 62% of the cold calls that we make turning into people saying, “Yes, I’d like to know more,” versus 5% [crosstalk 00:10:27]. Nathan: That’s all obviously great growth and Smartly is obviously bringing the whole market up, which is a good thing for you. We’re running out of time here, so quick question. At last 12 months, how much revenue do you guys do? Eric Frankel: Depending on how you want to look at it, if you do it the way Smartly does, we’re doing 10 million bucks. But a portion of that is cash in pocket, a portion of that is media that goes through us, that we get a percentage of. A small percentage because that’s the media business. Nathan: How much of the 10 million was media spend? Eric Frankel: How much of the 10 million is media spend is about half. So it’s about 5 million in cash and a percentage of the other five. Nathan: Got it. So over the last 12 months you did 10 million top line revenue, gross revenue would be something more like 5 million plus a percent of the 5 million in spend. Eric Frankel: Plus media buying is in the two, three, four, 5% of the other number, depending on what the brand is. Nathan: Got it, so call it 5.4 million-ish, something like that over the past 12 months? Eric Frankel: Something like that, could be. Nathan: Very good. All right, Eric, let’s wrap up here with the famous five. Number one, favorite book. Eric Frankel: Favorite book. I wish you would have told me this in advance. Holy moly. [crosstalk 00:00:11:40]. Okay, what’s my favorite book. Well, first of all, here’s what you need to know. I love books, but my current day starts at 6:00 in the morning in Europe and ends at 11:30 … I ended last night at 11:45 with YES Bank in Mumbai, which you and I have never heard of before. So I haven’t read a book, haven’t taken a vacation. Yeah, I mean, I do. Let’s see, what did I just read? I mean, I love all of Michael Lewis’s books. So I guess I liked the one where he talked about how unprepared Trump was when they came in, that there was no one for Obama’s team to hand off all of those learnings that they had in eight years. I’m forgetting the name of it. Nathan: Number two, is there a CEO you’re following or studying? Eric Frankel: Is there a CEO? I’m not a voracious reader of books and novels at this point in time because of my life, but I would say I’m an addict of the Apple newsfeed. Nathan: Is there a CEO, Eric, that you’re following? Eric Frankel: Everything about every CEO in the business, all the time, and I follow many, many, many, many … What I think are there good qualities- Nathan: Can you name one CEO that you respect? Eric Frankel: No particular CEO that I sit there and say I study. I am not an Elon Musk or I am not a [crosstalk 00:13:09]. Nathan: Number three, what’s your favorite … Just name of favorite online tool, quick answer because we’re out of time. Favorite online tool for building the company. Eric Frankel: Favorite online tool, probably Trello and Asana. Nathan: Number four, [crosstalk 00:13:21]. Eric Frankel: Six. Nathan: Okay. And situation, married, single, kids? Eric Frankel: Married. [crosstalk 00:00:13:30]. Nathan: How many kids? Eric Frankel: Two. Two boys. One of them’s out making his first feature as we sit here and talk right now. Nathan: Very cool. Eric Frankel: Making an independent film. Nathan: And how old are you, Eric? Eric Frankel: Oh, I’m very, very old. I’m 62. Nathan: Last question, what’s something you wish you knew when you were 20? Eric Frankel: Probably, maybe to kiss a little bit more, because then you don’t … Especially when I did 30 years of corporate life as president of Warner Brothers. Because it’s easy to bend people out of shape and it might be better to kiss some butt and continue to be an incredibly overpaid executive at a giant entertainment company. Nathan: Eric Frankel: Good to see you. Thanks, Nathan. Have yourself good one. Nathan: One more thing before you go. We have a brand new show every Thursday at 1:00 PM central, it’s called Shark Tank for SAS. We call it Deal or Bust. One founder comes on three hungry buyers, they try and do a deal live, and the founder shares backend dashboards, their expenses, their revenue. [Inaudible 00:15:10], [LTV 00:15:10], you name it, they share it. And the buyers try and make a deal alive. It is fun to watch, every Thursday, 1:00 PM central. Additionally, remember, these recorded founder interviews go live. We release them here on YouTube every day at 2:00 PM central. Nathan: To make sure you don’t miss any of that, make sure you click the subscribe button below here on YouTube. 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