Monday, October 30, 2006
Interview with Russ Mann, CEO of SEMDirector
Russ Mann is CEO of San Diego-based SEMDirector (www.semdirector.com), which provides search marketing automation software for Fortune 500 firms. Russ was most recently at Peregrine Systems, where he helped to sell the firm to Hewlett Packard for $425M. Prior to that, he also ran Fair Isaac's MyFico.com consumer financial group. SEMDirector is taking search engine marketing expertise - which has traditionally been considered a "black art" - and putting those best practices into software that automates the processes, going directly after what has traditionally been something interactive ad agencies have done manually. We spoke with Russ to understand the software, how it helps companies, and why the firm's products have been so popular with Fortune 500 firms.
Ben Kuo: What's the history of SEMDirector, and how did you end up there?
Russ Mann: While finishing up the Peregrine transaction, I was talking with the guys from Silicon Space, a San Diego-based systems integration firm that provides web software and application development for the Navy, Disney and other enterprise customers, about their high-growth division, SEMDirector. Based on my background in enterprise-scale CRM, analytics and online lead generation, they asked to moderate a panel at a symposium jointly hosted by SEMDirector and Google. We had high level executives from about fifty enterprise-scale companies actively participating on a Friday afternoon in La Jolla. They each wanted to hear more about why search engine marketing is good for customer acquisition. Sitting on the panel, I was amazed by the number of companies there. I had been a corporate guy, running an online business unit using search engine marketing to drive growth over 300% in one year, and it was amazing to see these Fortune 500 companies finally waking up to search engine marketing. Interestingly, last August was also the first time that Yahoo and Google were on the cover of Fortune Magazine-- about the future of internet advertising, on the one year anniversary of Google going public, and things were just starting to take off for the second time in the online advertising space. I joined SEMDirector in March as CEO, we secured private equity investment and spun the company out from Silicon Space in May, and we were off to the races.
Ben Kuo: What are SEMDirector's products, and who uses them?
Russ Mann: When we spun out, we had one Fortune 50 firm as a customer, and we now have four of the Fortune 50, plus another handful of the Fortune 500 who are using SEMDirector solutions for enterprise-class search engine marketing. We call this space Search Marketing Automation (SMA), and we’re leading the space because of our innovation and thought leadership. Prior to SEMDirector, most organizations did search engine marketing with services, either hiring boutique interactive agencies or larger traditional ad agencies who would then hire more people to use Excel spreadsheets to manage keywords, bid prices, budgets and spending. Dema Zlotin, co-founder of SEMDirector, saw this as a great opportunity. Because search marketing is largely text-based, and the Internet is essentially software —there was a significant opportunity to automate, aggregate and optimize results with sophisticated analytics– instead of throwing bodies at the problem. The history of software is that it usually starts as a service, and as best practices are established in a new space, the processes become codified and automated in software. We're at that inflection point in this particular space. Processes which have been traditionally service-oriented are being automated. If you're in a mid-market firm, one or two people can manage search engine optimization. But, it’s quite different for a Fortune 500 firm, with twenty business units, lots of marketing managers, several ad agencies, and multiple budgets to coordinate around the world. That's what SEMDirector is focused on. SEMDirector has developed the first and leading end-to-end solution for search marketing automation. We have two solutions for paid search, and another for organic search engine optimization -- something that has traditionally been entirely services oriented. We also have two analytics packages; one for competitive analysis and one for ROI and margin analysis. We also have services for integrating with back end systems. The SEMDirector solutions integrate with Omniture, WebSideStory, Webtrends, and we are working the integration with Coremetrics. We know how to work with the big analytic platforms. We're also working on integration with Salesforce.com, Siebel, and other ERP tools like SAP. We have a heritage of ten years of system integration, and we're a software company, so that integration is easy for us. SEMDirector typically works with their customers in one of three ways: as an extension of their in-house marketing team utilizing our agency services and solutions, as a management dashboard to monitor and optimize internal search marketing programs and third, as an analytic console to evaluate and quantify the SEM programs developed and executed by their agency or agencies. Interestingly, we have many customers that love their agency, they just want better analytics and an easier way to coordinate their efforts. With SEMDirector, you don’t have to get rid of your agency, but you can leverage our solutions to increase the ROI of search engine marketing.
Ben Kuo: How is the enterprise software sector doing?
Russ Mann: I was at a venture capital conference a few weeks ago, and a well-respected speaker from Jeffries Broadview said that the two hottest sectors for IPOs and M&As are “anything related to Internet Media/Advertising”, and “Software-as-a-Service (SaaS)”. SEMDirector is at the intersection of both of those. All of our solutions are hosted, secure, redundant, and fire-walled with Navisite. We don't require any code on the client side or client website. And we are working with some of the largest advertisers in the world, who are now looking to increase and optimize their advertising spend and presence on Google, Yahoo!, Ask, MSN, and the others. We're at the crosshairs of two of the hottest growth sectors of the industry. The enterprise software sector with traditional products like SAP and Siebel is slower, but software-as-a-service is now hot, with Salesforce.com being the leading example. We're as customizable and strategic as Siebel is, but much faster to implement, and hosted, to give you faster ROI, much like Salesforce.com. It's the best of both worlds, in a very hot sector, and we're one of the very few software players in search marketing automation.
Ben Kuo: Can you talk about your investors?
Russ Mann: We have taken a good sized A round from Dubilier & Co. The principal of Dubilier & Co. is the son of the founder of Clayton, Dubilier, and Rice, one of the world’s oldest and most respected private equity firms. They are more of a boutique than a traditional VC, and we’re very happy with both the strategic and tactical guidance they have been giving us. It’s an interesting new trend, where private equity firms and boutiques are stepping in to early stage investing in what was traditionally the sole province of seed-stage VC.
Ben Kuo: How long have your products been shipping?
Russ Mann: Our first product went live a little more than a year ago, and we now have four solutions live and in production. We have one more big solution in development to round out our end-to-end suite. It's important to note that the company has been around, as a division of a company, for just over two years now. It's a startup, but not a garage organization. I'm also very excited about the executive team we've recruited. First, Dema Zlotin, the founder, is a former Accenture consultant and Junior Research Fellow at the San Diego Super Computer Center, where he set up some of the first language standards for VRML. Craig Macdonald, our head of product management is from Fair Isaac, a leader in fraud analytics and marketing analytics. Some people in this industry talk about their Wall Street analytics expertise--well, we have experts in fraud analytics and marketing analytics. Our CTO, Brian Bartell, is a Ph.D. in text analytics, and spent his early days at Verity -- and really understands search engines and how they work. Our head of sales, Matt McGee, is out of WebSideStory, also one of the leaders in web analytics. Our head of professional services head, Jeff Scime, was at Sybase, and is well-respected in the enterprise database space. Michael Bridges, our agency team head is not a Madison Avenue type, but was over with me at MyFico.com, and was personally responsible for all online marketing including search, email, banner, affiliates and not just customer acquisition but retention and upsell efforts. He really understands the analytics behind search marketing and how to turn it into immediate revenue and profitability. Most importantly, he was the customer—he understands customer needs. The team we've assembled here in San Diego is the most incredible team from some of the best web site analytics, search marketing, and Fortune 500 firms in the world.
Ben Kuo: Lots search engine marketing people claim that SEM is a "black art" that can't be put into rules or software. What are your thoughts on that?
Russ Mann: I love that question. I think it has been a benefit to practitioners to call it a black art, so that they can charge higher premiums for the IP that’s in their heads. At the end of the day, it's not a black art. It's text, algorithms, and science, and can be packaged through common sense business rules and analytics. That said, there are a few great high end firms --a partner of ours is Global Strategies Inc., one of the top SEO firms in the world, which is headed by Bill Hunt, who wrote the book on SEO. They have the best of breed, latest and greatest, thought leadership on search engine optimization, and there are some things you can't really package up. But, using the 80/20 rule, a large portion of it is common sense, such as watching your META tags, Sitemaps, headers, and monitoring, auditing, optimizing, and automating things. Really, folks who claim that it's black art are trying to take advantage of low hanging fruit. We are the first people, as far as we can tell, to automate this good, common sense stuff--and we are patenting our methodologies. When you automate these types of processes, you get much greater scalability and higher ROI. For search engine marketing, which is critical to customer acquisition and retention -- automation of best practices is essential.
Ben Kuo: Thanks!