Hydra Looks Up, With Funding In Hand, Legal Troubles Behind

Beverly Hills-based Hydra, the cost-per-action (CPA) advertising network, has new funding in hand and legal issues behind it, and is now looking upmarket, the firm told socalTECH in an interview Thursday. The ad network--which announced a restructuring and buyout by an investment group led by founder Zac Brandenberg earlier this week--is now looking to court more major advertisers and large brands. In an interview with Mason Wiley, SVP of Marketing, and Gary Cooperman, CFO of the firm, the two executives explained that the restructuring came because the firm decided to set its sight on bigger companies. Wiley and Cooperman said that many of the firm's early CPA advertisers were often aggressive online marketers like neutraceutical firms, makers of diet pills, and others, and that the firm ultimately saw those customers as a low value business--and sometimes a big credit risk, due to customer complaints and rebills.

According to Wiley, the buyout of Hydra by Hydra Group also puts the firm's legal battles behind it. Wiley says, "Those battles were over philosophical differences in where the business should go," specifically around whether or not to continue to serve those more aggressive marketers. Wiley also explained that the new funding will also help fund new capital investments to allow the firm shift the business to where the new investors and management team believe the firm should go. Hydra--which according to Cooperman had 2008 revenues of over $100M--saw a retrenchment in revenues in 2009 as it shifted its customer base--but Cooperman says it hopes the firm will be in the same revenue ballpark as it was in 2008 and 2009, and up from there in 2011.

How does the firm hope to attract more large brand advertisers? Wiley says that in the past, because of the reliance of CPA networks on affiliate marketers, people have had a challenging time monitoring and controlling their vast networks of affiliates. He says that Hydra is making a big investment in monitoring and quality control, in order to deliver quality leads, launched its own education portal, and is now working on its own internal distribution efforts to find customers for its advertisers. The firm hopes those efforts will attract more of the big brand advertisers such as Citibank, DirecTV, and Blockbuster who are now its customers.