SPOTLIGHT ON… Eyal Vadai From ECN Research

Adrian: I was very impressed when we were setting up this interview, you mentioned that you showered and shaved, is this something that you do normally?

Eyal: I do. just thought I would get extra spiffy for a phone interview. I am a free loving kind of guy, similar to Hagai and I don’t really put myself together well for work, just wear jeans and a T-shirt.

Adrian: Fair enough! So tell me, where do you live?

Eyal: I live in Manhattan on the upper east side and I’m currently married, six months this month.

Adrian: Do you like being married?

Eyal: It’s the same as not being married. There’s no real change in our life style.

Adrian: Haha.. I’m sure your wife is proud. 🙂  So what did you do before what you’re doing now?

Eyal: Prior to starting Iron Traffic with my partners, I was working for a few Internet marketing companies, brokerage, and then for some properties like About.com and Sweeps Club.

Adrian: Oh, you worked at About.com?

Eyal: I did. I worked at About.com in 2001 and worked at Venture Direct. I worked at Sweeps Club, which was acquired by Naviant and then acquired by Equifax. So I have a pretty long history in this industry.

Adrian: When did you start?

Eyal: In ’99 at venture direct. I feel like an old man in this industry and I’m not even 30.

Adrian: ECN Research, that’s an unusual name. Can you tell us where the name comes from?

Eyal: I don’t know if I should be giving away this secret, but lets say we worked on it for Eight Crazy Nights

Adrian: In terms of your business, do you want to just tell us about your current focus and what’s going on with ECN Research?

Eyal: Sure. ECN Research is an online lead generation platform, basically, designed as an acquisition tool for market research companies. A lot of traditional market research companies are fairly new to the online world and are having good experiences with us in acquiring panelists online using our technology.
We also help some of them with studies and all kinds of ad-hocs, sometimes they fall short of a specific project and they come to us in order to complete it. So we mail our users and help them reach their goals. It’s a great match for them since we capture more than 20 points of demographic information on our users and also works well for them since we only charge them on the results for that specific project

Adrian: So who’s a typical client for you then?

Eyal: Mainly market research companies, I don’t feel comfortable giving out specific names, just because I’d probably need to get approval from them. But we do work with some Fortune 500, publicly traded companies.

Adrian: So like a Nielsen?

Eyal: in that ballpark, yes.

Adrian: Right, okay. How many people in your company now?

Eyal: There’s five of us in the New York office and seven more in the Israel office. The office in New york is where we do all sales and business development. Our Israeli counterpart is dedicated to IT and creative

Adrian: So what is different to what you’re doing at ECN Research, compared to all of the incentive models?

Eyal: We focus on quality of data verses volume. We might not be able to compare ourselves with the incentive based sites out there in terms of volume, but since we take so much emphasis in quality our clients are pretty satisfied. Our retention rate has been incredible since we launched our platform, most of the clients we have; have been working with us since day one. We are always being asked for additional volume but as I said before it’s more about quality than quantity.

Adrian: Your focus has been to build a sustainable business that will last for a long time?

Eyal: Correct.

Adrian: And what’s the typical conversion rate for your site?

Eyal: Off a click, it’s 20-30 percent completed. So if I get 100 clicks, 20-30 people would complete the survey.

Adrian: Well that’s pretty solid. And so you’ll pay about a dollar for that?

Eyal: A dollar fifty-ish.

Adrian: A dollar fifty. So on an overall ECPM basis, how do you stand up against the guys that are doing – "get a free best buy card"

Eyal: We are probably around the same or a little less, just because what we pay vs. what they pay just for an e-mail address

Adrian: That’s got to be frustrating for you with the media buying and going in and trying to drive traffic, no?

Eyal: It is. That’s what I do all day. I try to overcome those challenges. I mean, if you do it people are happy. I have publishers running this since the first day that are still running it. We don’t have a lot of people e-mailing us. We work with the big affiliate networks. We work with a lot of site placements, like text links here and there. Some people build us into their content, we work with a lot of the other survey related companies.

Adrian: So you’re more like an offer that’s been around for a while, it’s stable, who’s going to continue to be around. It’s not one of the offers that gets taken down and changed all the time.

Eyal: Right.

Adrian: So people feel comfortable building you into a part of their permanent website process?

Eyal: Right. It’s a relationship thing, something we’ve been doing lately is to incorporate our platform in the registration process for other sites

Adrian: How does that work?

Eyal: there are some people that have a site and they collect data but really don’t do anything else with the traffic. So we come to them and say, "Hey, let us implement our technology into your registration process and we’ll pay you ‘X’ amount of dollars for everything that you drive to us."

Adrian: Interesting. Can you talk to us about the company revenues and how big it actually is in terms of volume?

Eyal: I’d rather not. We’re supporting 13 people, so it’s doing okay and we’re all happy.

Adrian: Okay. Why is a publisher going to care about talking to ECN Research versus getting a $1.75 on the latest Best Buy gift card offer?

Eyal: It’s quite simple. Most of these sites are short-term campaigns. I hate talking negatively about them, but they’re the short-term campaigns. Users eventually get tired of the whole enter your e-mail address and get a free i-pod, so after you run these type of campaigns for a couple of times they stop working for publishers. We have a different approach to this, we’ve been doing this for three years now. We’re not a fly by night operation, where it’s the new hottest craze kind of thing. We are a steady, consistent campaign that’s been doing the same for people on a consistent basis.

Adrian: Have you ever missed a payment to publishers for being late?

Eyal: Never, never. We don’t have any collection issues with anyone. It’s a reputation that I’m proud of, that no one has any issues.

Adrian: When you talk with the clients that you have that are buying the survey leads, what do they say to you about the kinds of leads that you provide them verses the other survey companies?

Eyal: Well they enjoy the quality. A lot of them, like for the market research, they take our data and then they send them a survey about let’s say, Coca Cola or Pepsi or whatever. So their response rate is usually higher than when they buy it from someone else. Their typical response rate with us is about 15 to 20 percent, whereas, somebody else is more like 9 percent or 8 percent. On their back-end they’re making a lot more.

Adrian: Right. Have you guys ever thought about putting the zip/email payout on the front?

Eyal: Yes. But again, it reduces the quality of the data.

Adrian: Right.

Eyal: If you don’t know what’s going to happen, why should I pay for a zip code? I mean more important is the information, that’s how I make my money. A lot of these guys, they make their money off of the CPA campaign. I don’t have that in my process.

Adrian: Yeah. So that’s an interesting point. So you have no CPA campaigns in there whatsoever?

Eyal: Not in order to be entered to win a prize.

Adrian: Is there a reason why you decided not to put those in?

Eyal: The user, I want to make it a user-friendly experience. I don’t want to get hate mail saying, "You know I filled all this out and I didn’t get my iPod. I didn’t get my this or whatever it is."

Adrian: So what you’re building is a business model founded on integrity that will work long-term?

Eyal: Yeah. I seem to think long-term verses short-term. It is definitely worth it. Especially, now that I’m married, it’s definitely a concern.

Adrian: So are there companies that are doing these kind of less aggressive surveys in the same way that you’re doing them?

Eyal: There are. One of them was recently acquired, and another of them recently got funding.

Adrian: What are the kinds of things that you do to make sure that you get traffic?

Eyal: I’m on the phone with publishers, I’m e-mailing publishers. I’m asking them what kind of results they’re seeing? Is it working for them? On an ECPM basis…CPC basis, what they think I should change. I’m constantly in touch with the publishers I work with. I care more for them than I do for me.

Adrian: How many publishers do you have?

Eyal: Never Enough.

Adrian: Right. With the names in your database, what ends up happening to that? Do you build a list and do lots of follow-up?

Eyal: We manage our database internally. We do a lot of ad-hocs, which are studies for market research companies. If they need to fill an order that they have, they’d come to us and say, "Hey, can you please…I need 20 more or 30 more people that live in Wyoming to fill this out.". So we’d query the database and then mail out that offer for them. We’ve sent other market research offers to the database. We try to keep it relevant and not to abuse it with mortgage and debt and any of those kind of offers that are not relevant to the users experience. The e-mail our users received is branded by us.

Adrian: And so if a user tries to unsubscribe, do they immediately get unsubscribed?

Eyal: Yeah, we’re totally compliant to all the rules and laws of CANSPAM.

Adrian: Good. So longer term, I mean and this is something that we’re seeing happening in the CPA networks, that there’s more competition, there’s less differentiation. And so longer term, what is going to happen to your business as there’s pressure on margins and things like that?

Eyal: Well we keep 13 people but we keep a tight ship on expenses, we keep it slim.

Adrian: All right, fair enough.

Eyal: I could change to e-mail only. I mean we do work on other products such as SurveyAnnex.com, and other ideas that we develop. We recently developed a product called CooksCentral.com, which is a site where users can upload recipes, discuss recipes and rate recipes that they have. We just launched it. We’re still tweaking out all the bugs and changing ideas, but that’s another. You know, forums and chats and all these groups are becoming the new trend…

Adrian: In this case, you’re looking to build some kind of a user base that has a lot of traffic?

Eyal: Correct.

Adrian: So it fits the model of MySpace?

Eyal: Kind of, the main idea here is to use our lead generation platform and branch out a little in order to acquire different. When someone registers for CooksCentral, we collect data as we do with our other sites using the same ECN Research technology, it’s a great way to acquire new users

Adrian: So do you have that working or you’re still in the process of getting that working?

Eyal: It’s working, it’s live. We haven’t marketed it yet, we’re just making sure that all the functions are working at 100 percent.

Adrian: So if a publisher is interested in running this they could get an early crack at it if they contact you?

Eyal: Yes. I’m definitely willing to test the market.

Adrian: So what is your longer term strategy?

Eyal: Well ultimately, is to be acquired by one of the people we work with. If there’s anybody out there with a few extra shekels and they want to purchase us, please let us know 🙂 .

Adrian: You’d like to be acquired by one of the panels?

Eyal: By one of the panels or even by someone that has synergy with what we’re doing today. I think the potential for this, for somebody who has the capital and the resources can take this company to the next level. We grow the company slowly, all from our own money and no one else has invested anything.

Adrian: Have you thought about getting outside investment to grow more quickly?

Eyal: We have, we’ve talked about it. We’ve talked to a few people in the past. No one has come with an offer that has made sense for us.

Adrian: Okay. Well thanks for making time for the interview.

Eyal: I enjoyed it!

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