Founders at Work.pdf

366 Founders at Work
We approached Expedia and said, “Hey, we’d like to advertise your 50,000
hotels on our comprehensive travel site, and we want to charge you only for the
leads that we’ll send you.” I explained how our leads were highly qualified.
“These are wonderful travelers, they’re reading reviews, and we’re going to do
lots of bookings for you, so we’d like you to advertise with us.” He said, “I’ve
never heard of you guys. Prove it.”
I can certainly understand why he’d never heard of us, because no one had.
And he didn’t really care much whether I was sending him qualified leads or
not. He only cared about whether the leads I sent were going to make reservations.
The way it works is, they give you a tracking code to put on the link. We
said, “It’s no work for you. Give me the tracking code; I’ll start to advertise
50,000 properties for you.” Which I did, and we ran it for a month for free for
them. Then, before the month was out, I gave them a call and said, “How’s it
going?” And he said, “Well, I just looked at the stats the other day. You guys are
doing pretty well. Can I pay you $10,000 for December to buy 20,000 (or whatever
the exact numbers were) leads?” Here was a client who was on the second
or third call offering to pay me money to keep the links up.
This worked. We actually got a lot of people clicking. Probably 10 percent of
the time that people saw that page, they were clicking on one of those links.
Click-through rates at the time were a quarter of a percent or half a percent.
Here we were sitting at 10 percent because the links were so relevant to the
topic at hand. Our first client was thrilled with it.
Livingston: Expedia was the first client?
Kaufer: Yes. He said, “If they stop actually doing bookings and they just click
over, then I’m not renewing the order. So it’s up to you guys to keep your traffic
qualified.” This wasn’t really an issue for us, but it just drove home the point: if
he got bookings, he would happily pay us for advertising.
We said, “If we do more traffic in January, are you willing to spend more?”
He goes, “Yeah, we can ramp it up to $20,000 if you have more leads.” Once he
got a little comfortable with us that he wasn’t going to lose his job over committing
to a faulty buy, it quickly became, “Hey, send us as much as you can.
There’s no cap on this number.” And the guy that I was starting with—talking at
ten grand a month, we were in the hundreds of thousands not too much later—
it would be another year before I actually met him, because it was just a very
practical, “You’re sending me leads that I’m tracking through to people that
actually buy products on my site. I know how much I make when they buy my
airline ticket or my hotel room, and I’m paying you a percentage of that. So the
more leads you send, the more money I make.”
TripAdvisor never knew whether we were earning 25 percent of their profits
or 90 percent of their profits—the answer is somewhere in between—but it
became a pretty easy sales cycle, if you will. And then we started growing traffic
to TripAdvisor.com, and we started expanding our client set beyond Expedia, to
hotels.com, Travelocity, and eventually Orbitz and others.