Phillypreneurs

Running a business has ruined me. OK, maybe I’m being a little dramatic but I can’t think of another way to describe the perpetual slide from ‘Pipe Dreams’ to ‘Practical Business’ way of thinking. Where I was once repeating the ‘All you need is passion’ mantra, I now catch myself saying over and over again to aspiring entrepreneurs ‘Look for unexploited niches, grab the low hanging fruit, find the quickest and easiest way to get something to market”. “The worst case scenario”, I’ve said, “is that you get into a slug fest with a bloated corporation willing to dump massive amounts of reserves at the competition. They can afford to bleed a lot longer.” All well intentioned and in most cases good advice, but as I’m realizing all over again, sometimes you can’t avoid taking on a bully if you want to win. Like the little Hebrew Shepard boy, who squared off against the armed-to-the-teeth giant with only a child’s toy for a weapon, sometimes a startup needs to go toe to toe with its worst nightmare to succeed.

Meet David:
Tapinko, a recent graduate of the Philadelphia based DreamIT program, is an online management SAS for purchasing and managing offline ads (e.g. newspapers, billboards, t-shirts, tatoos, etc). In other words, Tapinko is a smart offline ad management application. Tapinko initially focused on the college Newspaper market, including UPenn, Harvard and Tufts but has quickly expanded to add new niche publications like Adirondack Living.

Armed with funding from friends,family and a couple credit cards, co-founders Peter Groverman and Nicolas Warren saw an opportunity to fix the archaic print sales process and take a chunk of the $42.2 billion print newspaper ad sales market (2007 Newspaper Association of America). A target rich environment for streamlining and automating if there ever was one. Could you imagine the revenue if they captured even a small piece of that? Tapinko could. Unfortunately, someone much bigger had already claimed that market.

Meet Goliath:
Google Print Ads is a dynamic offer-based marketplace project for print advertising, essentially Google Ad Words for newspaper ads. Advertisers proposed the price they were willing to pay for an advertisement, and publishers accepted or declined those bids based on factors like day-of-week, desired newspaper section, pre-established rates for the advertiser’s industry, and available inventory. Propped up by its $21.796 billion a year (2008) war-chest from pay-per-click success and it’s surging brand equity, Google publicly started courting newspapers and magazines in 2007. The Print Ads program includes 807 papers, including: The New York Times, News Corp’s New York Post, the New York Times-owned Boston Globe, Tribune Co’s Chicago Tribune and Los Angeles Times, The Washington Post, Hearst Corp’s San Francisco Chronicle, and MediaNews Group’s San Jose Mercury News, according to Google. If there were ever a company a startup should avoid taking on head to head, it would be Google.

See the full list of papers:

Like that simple Shepard Boy, Tapinko prepared for battle against the behemoth for the potentially lucrative offline newspaper ad market with not much more than their nuanced business model and positioning as a weapon.

TapInko connects offline media with potential advertisers through profiles found in their media guides, creating an efficient marketplace to buy and sell ads. (think Ebay).

Google Print Ads was a dynamic offer-based marketplace - not an auction. Advertisers proposed the price they were willing to pay for an advertisement, and publishers accepted or declined those bids based on factors like day-of-week, desired newspaper section, pre-established rates for the advertiser’s industry and available inventory (think Priceline), taking the craft and trade of sales out of the system.

Where TapInko provides a directory of easily searchable and accessible media guides, Google Print Ads allowed publications to display only a limited amount of information and restricted access to Google account holders only. Furthermore, with Google Print Ads, publications still had to print media guides and sales people laboriously made door to door sales in the community. TapInko makes life easier by providing a tool that enhances all aspects of this traditional approach.

Google Print Ads’ software did nothing to empower the publication sales teams. It tried to replace them.

Local businesses currently account for between 40%-60% of publications ad sale revenue. In addition, publications sales teams are the backbone of every publication which turned out to be a big problem. “Google has the right idea with the online method,” The GW Hatchet recently disclosed. “But sales people do nothing with the Google approach.” A recent Tapinko survey of local Collegiate Newspapers from around the country found that almost all would like to see a tool that would help their sales teams with the local area sales clientele.

Google simply overvalued the technology and under valued the human intelligence of a sales team. By having a ‘name your bid approach,’ Google Print Ads limited a sales person’s ability to walk a customer through a sale. The advertising director at The Michigan Daily, even stated that he did not want their sales people broadcasting the Google method to their local advertisers in “fear of having the local community feel they can low ball the publication for cheaper rates.” The TapInko software is broken down into easy to use uniform steps that allow sales people to complete sales quickly and conveniently whether in person or over the phone. In the end, Google’s biggest success and asset, Google Ad Words, was it’s undoing in trying to capture the Newspaper advertising market.

In January of this year Google officially announced on its corporate blog that it would be shutting down the Print Ads project to refocus on online advertising. So why did the seemingly invincible Google fail? In a pure technology perspective, Google did not necessarily ‘Fail.’ They created successful software that did exactly what it was designed to do, and it did it well. It just didn’t fit with how people actually did business.

The ultimately lethal problems Google faced were the results of three core issues:

3. They weren’t willing to see it through a rough economic down turn in order to eventually realize profit.

And now that Gooliath has fallen there is a gaping hole in the offline advertising management market. According to Tapinko co-founder Peter Groverman they are poised to fill that gap. They were already courting many of Google’s old clients when the big news that Google Print Ads was folding hit the blogs and they’ve been in high gear ever since. The even better news, at least for Tapinko, is that there will suddenly be a whole slew of former Google Print Ad employees with established relationships in the industry and more importantly are already familiar with the Tapinko business model who find themselves in the unenviable position of losing their job in a down economy.

In the end it could be a perfect storm of conditions that sees the young Tapinko ultimately triumph over Gooliath and reap the lucrative rewards of a now wide open battle field.

Interested to see what his reaction would be to this article, I sent it to Peter before publishing and this is how he respoonded:

Dave Speers is an online marketing consultant and start-up junky that has worked with a wide variety of Philadelphia businesses and organizations including Victory Brewing Company, Dibruno Bros, Ocean City Tourism, Chickie's and Pete's Sports Bar and The Kyle Korver Foundation. Dave is currently spending most of his time consulting for the Welch For PA congressional campaign in Southeastern PA.