Google Ventures-Backed Trada Restructures For Future
- by Laurie Sullivan @lauriesullivan, November 21, 2013
Reports have Google Ventures-backed search engine marketing company Trada closing its doors, but company founder Niel Robertson tells Online Media Daily it simply restructured to prepare for changes coming in the future.
That restructuring cut staff from 65 to 11, according to a source. A layoff reduces liabilities and makes it easier to sell the company, but only until existing customers churn out. These days, the average customer lifetime in search engine marketing sits at about 1.5 years to 2 years, per sources.
Robertson declined to share more details on the restructuring other than to say that the company is "nicely profitable and stable," and that the doors are "wide open" to take on new customers and serve existing ones. He is working on the next "evolution" of the company, which could have come at the advice of investors.
Industry insiders Trada went up for sale in Q2 2013, but there are no takers yet. The company raised $1 million in August. Entrepreneurs say that's typical when the company's out of cash and investors are fed up. They will give small amounts of cash to keep the company going to sell the business. They believe it's better to invest another $1 million in hopes of recovering past investments.
Paid search remains a difficult industry to succeed in, according to an industry source -- adding that Clickable, Click Equations, and Yield Software all raised venture capital dollars and failed.
Trada, a marketplace that connects companies with search experts, emerged in 2010 with a different business model. The company began working with Microsoft and Yahoo in 2011 to support mostly small and medium-size businesses. The experts create keywords and ad groups, and write ad copy for advertisers that lack the resources and knowledge to design, manage and run paid-search campaigns on multiple ad networks.
On LinkedIn, Trada began recruiting business development reps less than two weeks ago. The openings in the Boulder and Denver, Co. area want sales reps with the ability to identify leads.
The premise of remote experts optimizing campaigns made sense. What didn't make sense to me from the beginning was the pricing model. The first optimizer on a campaign often gets the greatest gain. Each incremental level of optimization is harder and more work. So, you have a scenario where the optimizer who gets in first makes the most with the least effort. The incentive to work on mature campaigns isn't there. A traditional agency on the other hand has an incentive to keep working on optimization because they are on a retainer. If the pricing model moved to an oDesk style they might make it.
I agree with Kevin. Their model is incongruent with long-term advertiser success. Ongoing optimization is a basic tenet of PPC; without it, neither the advertiser nor the PPC manager will succeed.
I could image there's also some friction in customer acquisition. When Trada is targeting SMB's they should have a highly efficient, semi automatic acquisition machine. Large clients will go for large agencies where there can interact directly with the consultants, so that's not a target market. I think they can have a change when Trada pivots to an acquisition and technology provider for freelance optimizers targeting SMB's, who cannot invest themselves in those 2 areas. In this way investments in technology and marketing can be leveraged.
In my opinion, the issue was not really about optimization, it was about strategy. "Crowdsourcing" of supposed "search experts" is a disconnected approach that gives little to no credence to the importance that marketing strategy plays in the mix. Solid gains in optimization on the second and third rounds of optimization is about strategy, not push bids up and down. You can't "crowdsource" strategic thinking, that is done through brainstorming as consistent team.
Hmmm do you think that a Google backed venture could give valuable advice on how to combat Google's broken search (panda et al?>If yes count me in....