1. Can you tell us a little about your background and how you made it into your current role at Yahoo! Shopping?

Greg Hintz: My background is more financial than technical as I have a degree in Economics, am a Chartered Financial Analysis charter holder, and began my working career at Goldman Sachs. That being said I love technology and the Internet, and consider myself a closet technology geek.

My first professional exposure to e-commerce came while running SEM campaigns in the Mortgage space for a comparison shopping engine in 2003. In 2004 I moved to Yahoo! working for three years on the Business Operations team in the Search group. Having spent four years in Search, I decided to learn the Graphical Advertising space by taking a role as the head of Operations Finance for the Entertainment BU at Yahoo! based in Santa Monica. From there I moved into the General Manager Role of Yahoo! Shopping in January of 2008. Given the empirical nature of running a comparison shopping engine I believe my financial background has really helped me in my current role.

2. And for those few that might not be familiar, with Yahoo! Shopping’s interface or the user experience – how would you describe how the site functions and why consumers and e-tailers would want to be part of it?

GH: On Yahoo! Shopping, users can search, browse and compare prices between millions of products from tens of thousands of merchants. Our user experience makes it simple to narrow down this comprehensive selection by grouping the products into more than a thousand categories with millions of different product attributes. Whether you like your jeans skinny or boot cut, or your camera to be point and shoot or SLR, it’s easy to find the right product for you. When users have found the right product they can read reviews from users and experts, compare prices, and find which merchants have coupons or free shipping.

For e-tailers, Yahoo! shopping provides access to the largest audience of shoppers in the comparison shopping space – we’re the #1 comparison shopping site with more than 21 millions users per month. Yahoo! Shopping is the focal point for users across the Yahoo! network throughout the holiday season. Not only is the audience large, but it is well qualified. Users who come to the site with the intent to purchase, and when they click through to our advertisers they represent highly qualified leads. Whether advertisers want to drive immediate sales, or want to build their brand through graphical ads, Yahoo! Shopping is an essential place to advertise during the holiday season and throughout the rest of the year.

3. Are there factors that set Yahoo! Shopping apart from other online shopping communities and comparison sites?

GH: There are several factors that make Yahoo! Shopping one of the best places on the Internet to shop. In the early stages of shopping we provide more information for users. We have integrated the largest selection of “how to buy” articles into our categories, so users can read from trusted sources ranging from “Consumer Reports” to “Good Housekeeping”, which features to look for and which to avoid.

When users are doing their search we provide more attributes to narrow choices down than on other sites, including options such as the ability to narrow clothing and furniture by color.

Finally, when you’ve narrowed your choices down, Yahoo! Shopping is simply the best place on the internet to find a deal. We have integrated the most comprehensive selection of coupons with our core shopping experience so it’s easy to save money once you’ve found the right product.

4. So with all of that said, what do you believe Yahoo! Shopping’s role is in the shopping space?

GH: We are aware that people visit a number of different places when they shop, but we believe that Yahoo! Shopping is an essential place people should visit during their shopping experience. It’s a great place to get information and read reviews, it’s a great place to quickly narrow down your choices from millions of products and tens of thousands of merchants, but most importantly during these tough economic times, it’s the best place on the internet to save money.

5. In what ways is Yahoo! Shopping promoted, and – in this highly competitive industry/market – what is the most difficult part about creating new customers? What about retaining existing customers?

GH: Yahoo! Shopping is predominately promoted through online marketing channels, but we also benefit from the hundreds of millions of people who visit the Yahoo! network every day. When it comes to online shopping, people tend to visit numerous sites before making a purchase. We retain customers by providing the value proposition that you can read reviews and articles, find top brands, brick-and-mortar stores, as well as, your mom-and-pop shops right here on our site. And with our new deals and coupons site, Yahoo! Deals (http://deals.yahoo.com), people want to check back every day to take advantage of our exclusive daily deals.

6. With risk over-simplifying, how would you summarize this last calendar year?

GH: Given the state of the economy, the last 12 months have been extremely interesting in the e-commerce space. Some major trends have developed including increased sophistication of online shoppers, continued focus on deals/discounts/coupons, and finally a renewed focus on ROI maximization from e-tailers. We spent a lot of time over the past 12 months improving the User Interface and Narrowing Functionality of our site to meet the needs of increasingly sophisticated online shoppers. We see our users spending more time searching and then refining that search while on our site. As our users lives become busier they are looking for the most efficient way to save time and money by comparison shopping online.

Additionally, we launched Yahoo! Deals to address the needs of our users to save money given the current economic climate. Coupon usage and searches for online deals have spiked over the past couple of years as consumers look to find ways to stretch their paychecks further. Yahoo! Deals is the first website to provide daily deals, online coupons, grocery coupons, local coupons, store circulars and exclusive deals all in one place. Usage of Yahoo! Deals has grown dramatically since its launch as saving money by shopping online becomes a core part of consumer behavior.

Finally, our merchant partners have responded to the rocky economy by lowering prices to help drive sales. This in turn has caused our merchant partners to put more of a focus on ROI maximization. A little over a year ago Yahoo! Shopping Product Submit launched a bidded marketplace in an effort to help merchants focus on their most profitable categories and thus maximize their ROI. We continue to focus on ways to improve this very important metric in an effort to help e-tailers ride out this current economic slump.

7. What new tools or services have Yahoo! Shopping employed in the last year, in response to the recession?

GH: Yahoo! Deals is one great example of how we responded to the recession. It is the most comprehensive deals aggregation site on the internet. The site features exclusive daily deals on products ranging from video games, to clothing, to products for the home. The site features the largest selection of coupons available including online, local, and grocery coupons. The site also features other ways to save including weekly ads for stores in your neighborhood, personalized deals, and even a cheap gas finder. To make it simple to sort though all of these options we include the ability to search all of our deals, and save items for later.

Because we know how important comparison shopping is to consumers now, we also recently launched an iPhone app to help those consumers do their research on the go. Putting the capabilities of Yahoo! Shopping into the hands of consumers in the shopping context is extremely powerful. In the past, making comparison shopping conveniently available while people are shopping was not really possible. But now it’s a reality with the advent of true hand held computing in devices like the iPhone. In our app, shoppers can read and save detailed product information, compare the best prices and the get read reviews wherever they are. We’re very interested to see how the mobile landscape develops and are excited to be part of it.

8. E-tailers hype up Cyber Monday as the online equivalent of Black Friday, but does research indicate that this is the case? What has Yahoo!’s experience with this recent phenomenon?

GH: Generally speaking, yes — we do see spikes in traffic on Cyber Monday. But Yahoo! did some new research that showed that the Friday after Thanksgiving is becoming the new “Cyber Monday.”

The report showed that not only is Cyber Monday still a top online shopping day, but that the traditional offline shopping day Black Friday also proved to be a significant day for online sales conversions. In fact, online retailers experienced a greater percentage increase in conversions on Black Friday than they did on Cyber Monday.

We have some research here:

http://www.yadvertisingblog.com/blog/2009/10/12/black-friday-is-the-new-cyber-monday/

9. What do you think can be expected from shoppers – and from e-tailers – this holiday season?

GH: I hate to sound like a broken record, but the current economic climate is really driving consumer behavior this shopping season. Based on our internal data it is clear that holiday shopping started much earlier this year than previous years. Additionally, our Yahoo! Deals traffic has spiked as our users try to save money while shopping online. Based on these two data points, my opinion is that our consumers want to buy the same number of gifts this year as prior years, but have much less money to spend. As such, they are looking for cost savings aggressively and using comparison shopping websites as a tool to accomplish this.

10. Is there anything else you would like to add?

GH: One final interesting data point is that retail inventory levels are expected to drop significantly year over year. Specifically, Comscore mentioned that container shipment orders from retailers in the US are down 14% vs. last year. At the same time, consumers were trained last year to expect massive sales at retailers during the holiday shopping season. These trends could lead to a game of chicken between consumers and retailers this holiday season:

• Because of lower inventory levels, retailers may hold prices steady. However, as the shopping season wears on if consumers continue to wait for sales before buying retailers may blink and massively cut prices, which would be a big win for consumers, and a big loss for retailers.

• Alternatively, if consumers notice the hot products this holiday season are not available due to the lower inventory levels they may buy without waiting for huge discounts, which would be a big win for retailers, and a big loss for consumers.

In either case, shoppers who buy online, or simply pre-shop online and then buy in stores will win this holiday shopping season due to the time and money saving offered by comparison shopping engines and other e-commerce sites. I am really excited to watch this shopping season play out and look forward to continued growth in e-commerce in the years ahead!

Greg Hintz is the General Manager at Yahoo! Shopping.

One. Can you tell us a little bit about yourself and how you got to the position of COO/CFO of Zappos.com?

Alfred Lin: I met Tony Hsieh (CEO of Zappos) during our college days. He was the consummate entrepreneur. He and Sanjay Madan, one of Tony’s roommates, took over the grill in our dorm. The tradition was that students would run the grill at nights and serve burgers, fries and shakes. Tony had the idea to put a pizza oven in the grill because he thought it would be higher margin. I had a large college rooming group and so I would go downstairs each night to buy a few pies and I took it upstairs and sold it by the slice. Tony often says that’s why I am the COO/CFO of Zappos.

It wasn’t all that glamorous. I made money purely by accident. All I wanted was to recover the costs of the pizzas. After all, these were my college roommates, but quarters were a prized possession in college because we needed quarters for laundry, video games, vending machines. So instead of paying me $1.25 or $1.50 per slice, I got $2 per slice. I made a pretty good profit with virtually no risk.

After college, Tony and Sanjay started a company called LinkExchange. I joined a year later as VP of Finance after Sequoia Capital invested about $3 million in the company. Seventeen or 18 months later, LinkExchange was sold to Microsoft for $265 million. Sequoia made 17x or 18x in 17 to 18 months.

Tony and I wanted to figure out how to replicate the really fun and early times of a startup. With backing from friends and family of LinkExchange, we started Venture Frogs, a $27 million angel investment fund and an incubator. We invested in about 27 companies. Initially, Zappos was just one of the companies we invested in. Over time, both Tony and I got more and more involved with Zappos because it was the most promising company in our portfolio. We also discovered we enjoyed building business way more than investing in them.

Two. Zappos has been around for 10 years, and started out slowly at first if I remember correctly. When did Zappos became the No 1 e-commerce site for footwear? And what was that realization like for a relatively new company?

Alfred Lin: Yes, Zappos started in 1999. We grew extremely quickly given how little capital we raised to build a relatively capital intensive business where we need to invest in distribution centers and inventory. Today, we have about $180 million in inventory at cost. Relatively early in the company’s existence, we knew we were “the web’s largest shoe store”. In fact that was our tag line for a while, but as soon as we achieved that tag line, we were already moving onto something bigger. We wanted to be a service company that just happens to sell clothing, shoes, bags, and accessories. One of the many things we do is to constantly expand our vision over time.

Three. Most of us have seen the Zappos branded shoe trays at various Airport security check-thrus and they are definitely clever. What has been the response from this, and what are some of the metrics -if any- you use to measure the success of these viral campaigns?

Alfred Lin: The response has been great. We get lots of emails and comments about how creative it was that we were the first to start advertising in the security trays that and how creative the ads were. We do measure ROI on the security trays and they have a pretty decent ROI, although it is still mostly a branding campaign. It’s pretty hard to get someone to respond immediately to an advertisement while they are rushing through a security line with their laptop in the tray.

Four. What is your favorite thing about working at Zappos?

Alfred Lin: My favorite thing about Zappos is the company culture and the people of the company. We are all friends and family here. We all work long hours so having friends and family at work makes it that much more fun and enjoyable.

Five. When you ask people how they found out about Zappos, what do they say? What do they say about their experience?

Alfred Lin: The vast majority of them say that a friend, family member or coworker told them about Zappos. We believe in providing great service to our customers and creating a WOW experience for them because we believe in the power of word of mouth. Our customers are our most powerful advertisers.

Six. How has the ways in which Zappos advertises online changed over the years? What are some ways that the company has changed with the changing trends, and the changing economy?

Alfred Lin: It hasn’t really changed for us. We have always focused any advertising on an ROI basis. We are willing to try and test any vehicle. We redirect money from advertising vehicles that have below average ROI to vehicles with higher ROI. It is as simple (and as complicate) as that.

Seven. How did the Amazon deal come about? Has there been a change in the corporate culture since Amazon purchased Zappos? Has anything else changed significantly?

Alfred Lin: We have kept in touch with Amazon over time. It came about very naturally. We want to continue to build our culture, our brand and our business. We came to an agreement that would allow us to do that this time and made sense for both parties.

Eight. I know Zappos is very open about the premium they place on customer satisfaction. Would you say creating what you guys refer to as the ‘wow’ factor has been the single-most important factor in the brand’s success?

Alfred Lin: The single most important factor in our brand’s success is our culture. The importance of culture comes from a very simple philosophy. You can’t have happy customers without having happy employees, and you can’t have happy employees without creating a culture and a work environment that employees want to belong to and help build. Tony says that brand and culture are two sides of the same coin. So it is important to get all employees aligned to the culture and live, breathe and inspire the culture of the company. You can find many brands that are larger than life and larger than what you might expect the brand to be from the company’s size of revenue, profit, organization, etc. because the employees live that brand.

Nine. I have to ask this one: Zappos is famous for offering new hires $2000 to quit on the spot. The premise is, if they take the money, then they were never that interested in the job in the first place – and, as such would not have made a good Zappos employee in the first place. Have you ever experienced any strange or unusual stories about this, or how often do people take the money?

Alfred Lin: Yes, we believe if you can be convinced to take the money and run, you aren’t that committed to Zappos. We want to weed out the uncommitted as quickly as possible. That is why we make the offer. A very small percentage of people take the offer and that suggests to us that the offer maybe too low. If you are really good at interviewing and judging people, you might be right 60% to 70% of the time. That still means you are wrong 30% to 40% of the time.

10. Is there anything else you’d like to add?

Nope. Thanks for interviewing me.

1. So, the first question is: What is so unique or special about Dynamics Logic’s Measurement  Tools?

Ken Mallon: Well, I guess what is unique is that we have done so many of them and we have so much experience that we can deal with different situations that come up operationally. I think that we’ve been copied by others in terms of our basic methodology and our survey questions so what really makes us unique at this point is our level of experience and as a result our normative database that we have.

2. Your company’s solutions all forms of media, TV, radio, etc. How do you tie everything together?

Ken Mallon: Well we have a solution called Cross Media Research where we actually measures the independent and synergistic effects of each media so we are able to tell our clients – you know advertisers, agencies -how the different media work together, whether or not they are synergistic or not. Sometimes one plus one equals three so we have identified that for them.

3. What are the major differences in tracking brand awareness in the various types of media?

Ken Mallon: You know it’s all pretty much the same. We track awareness by surveying people and asking them what, they have you heard of? And that’s what would be, what we call aided brand awareness and we have unaided brand awareness where we ask people, you know which brands come to mind when thinking of, you know running shoes or whatever it is. And so that question asked in that style has been asked for dozens of years in all kinds of media, it has become pretty standard. That’s the main methodology.

4. Now, your client’s list reads like a Who’s Who of household names. To what degree are you able to tailor solutions or engagement to your various clients; it seems like a lot of the brands you work with would have special needs or are expecting a certain type of engagement.

Ken Mallon: We actually tailor every single project to a certain extent, so you know that, at least to a small degree, every single project has a certain amount of customization or tailoring. And that is because every brand that we work with has different types of brand attributes that they’re interested in. You know, we ask the client up front what their branding goals are. Sometimes they may want their brand to appear hip or they may want their brand to be, you know technical or you know they may have all kinds of attributes that they want people to ascribe to their brand and so we test for those specific attributes in addition to doing our standard testing. And so every single project has customization. There is also sometimes customization that we need to do, because of operationally, in terms of sort of recruitment, how we execute the recruitment on – websites, panels etc depending on what kind of media we are working with, we customize pretty much every project. We tailor it to that brand. Like you said because we are working with a very large brand they tend to know their brands really well, so they know exactly what it is they are looking for in terms of various brand attributes and because we have you know dedicated teams to these brands we have people in general who know everything there is to know about some of these common household brands.

5. Does that make your job easier?

Ken Mallon: I think yes and no. I mean I think it makes it easier because they have some clear ideas on what they want to do but it also makes it difficult because big brands are really complex. You look at, for example, Coca-Cola brand, they have all these sub brands that might have different goals. What Diet Coke wants to do is very different from Coke Zero and the umbrella brand; and, Coke have all other brands too that we need to think about, so how they all work together can become pretty complex. I would say yes and no. We certainly enjoy working with the big brands and you know we are happy that they put their trust in us and we enjoy the challenge.

6. So, your studies indicate not only brand awareness, but intent to purchase as well. How do you track real conversions or sales, online or offline in your studies?

Ken Mallon: We have two methods for this. The first method we can only use for packaged goods companies, and what we have done is developed a partnership with a company called IRI. And, IRI has a large panel of people who scan all of their grocery items. So they have a scanner in their house and when they come home with their groceries they scan them and it gets uploaded into a database. What we have done is created a master panel between the ads that we track and these panel members and so we know who saw which ads and what purchases they made. So for any item that you buy commonly in a grocery store we have a direct way to track ad exposure through to purchase. In other categories where there is no such panel we use a recall-based methodology where we survey people after a campaign and we ask them if they remember what they purchased. And that’s probably the most direct way. These two services work well hand-in-hand because, if you ask someone which paper towel they bought they might not know, so it’s good that we have the database. But for other items, let’s say: consumer electronics, travel, fashion, when we ask someone if they bought insurance they definitely know and so the recall based system works well for the non-CPG. Using these two methodologies we can cover all the categories.

7. That’s very interesting. The next question to ask has to do with the economy and a lot of the commentary right now in advertising has to do with the relationship between efficiency  and brand awareness. How do you believe that the dialogue has changed in the last year, do you see a lot of your brands talking more about ad efficiency versus awareness, do you feel like there has been a major trend across the industry towards what do you guys do?

Ken Mallon: We want to stay nimble and stay relevant to our clients and so about a year ago, while we were sort of in the middle of this downturn we went and talked to a lot of our clients and asked them:  what are your needs right now? How can we better address them? And the main themes that we heard is that they want are ROI; they want ROI measurement and they want it inexpensively. So we went back to the joint board and we looked at our offer and we significantly broadened it and enhanced it during the past year to fulfill this need. And we did it in two ways, one is if you look at our standard brand metrics what we did is we, we are now offering to look at a cost per impact. And so previously we would say your campaign brought brand awareness to 10% of the people who saw it. Well now what we also offer is we can take their spend data and say how many people did you make aware per dollar spent or how many people did you create a purchase intent in X number of people per dollar spent? So we are making it more of an efficiency-type argument even with the brand metrics. Outside of the brand metrics we also expanded, and I have already talked about the sales tracking and measurement that we do, so we added that to our arsenal. So now we have brand plus off-line sales impact and then we did a partnership with a company called compete.com. Compete.com is one of our cousin companies, they were part of TNS in TNS was bought by our parent company and so we formed a partnership with compete and compete tracks behavior. And so now in addition to branding impact and sales impact we also have online behavioral impact studies – and by this I mean we are able to track – after ad exposure – what activities someone did. So is there an increase in user rate? Was there an increase in online sales? Was there an increase in search? An example might be automotive advertisers, they might drive traffic to the client site, let’s say it’s Honda.com or being exposed to that ad make you more likely to go to Kelley Blue Book or to Yahoo Autos or it may increase your likelihood to do a search for Honda. So now we’re tracking post view online behavior as well as tracking sales and it’s a pretty encompassing ROI offer suite at this point.

That sounds pretty comprehensive.

Ken Mallon: Yeah, we sit and talk to our clients so it’s really, no real hole in it at this point. I mean what else would you want to know other than why advertising changed people’s perceptions; it made people buy something, it made people do certain things. The only other areas that are of interest right now are viral and word-of-mouth: does advertising generate people talking, increasing discussion. Interestingly, we’ve developed a partnership with a company called Symphony (which is also a cousin company), and they track bogs and other unstructured discussion areas, and so we now can also track that kind of discussion and buzz that is happening.

8. It sounds like your company figured out how to measure the immeasurable, the awareness aspect. The next question we had touches on that, and also relates to the economy and efficiency. Did you notice a difference in efficiency across different types of advertising,  or in different types of media during the downturn? Does it seem like certain kinds of ads are becoming more efficient, specific to each type of media?

Ken Mallon: I think a lot of advertisers and agencies are trying a lot of ad networks a lot more because of the low cost and sometimes they see better performance, sometimes somewhat worse performance, sometimes the same performance versus their standard buys. But typically it is so much more expensive so from a cost-effective standpoint ad networks can many times be cost-effective, cost effectiveness wise. What else do I see people trying? I think better targeting is being attempted, with behavioral targeting or demographic targeting. Other things that people are trying are video ads, although I think that they are seeing they are very impacting but maybe not yet cost-effective. I would say that the main trend that I see with the economy would be the use of ad networks and the purchase of remnant inventory.

9. So people are trying to cut costs. What else you think is next for online branding management?

Ken  Mallon: I think increasingly people want to look simultaneously at multiple media and digital itself is now being viewed as multiple media because you have media being bought on social networks, media on display advertising, plus search. So you look at search, video, social standard display and people; our clients want to understand how those work together and how those can be synergistic and how those can be independent. And how those can also work with off-line. So I think my first answer would be, understanding how the various digital components work together and how they work off-line. And the second thing I would say is mobile. You know mobile is a pretty big area for us and we are measuring the ad effectiveness of mobile. Also there are different ways of doing mobile executions and so I think because of the prominence of cell phones globally, I think mobile is going to be an interesting area of research.

10. Any last words that you would like to add to tie all this in together or something that we touched on that you would like to elaborate more on?

Ken Mallon: Well I think the final word I would say is that we study a lot about you know what drives things to be effective online. We look at things like ad sizes, ad technologies, targeting and many factors and again and again what we see as being the most important thing that drives success is the actual creative quality. And sometimes this is overlooked because the digital space is so technical people, forget that, “oh yeah I’ve got to make these ads.” Often, you will see pretty average or poor ads online and so I think, the smartest thing you can do if you want to be successful online is to make good ads by copy testing them, really researching and understanding what makes a good ad online.

Ken Mallon is the Senior Vice President, Custom Solutions & Ad Effectiveness Consulting for Dynamic Logic.

1. What is your background and how did you make it over to Permuto?

Navdeep Saini: I have been working in the online advertising industry for about 12 – 13 years now. At DoubleClick we recognized that the web, as an emerging publishing medium, could not sustain the wide availability of free content without some form of monetization opportunity for publishers. DoubleClick pioneered solutions for both publishers and advertisers.  The platform we built back then today still handles a significant percentage of the Web’s online advertising traffic. After DoubleClick, I moved over to Yahoo’s Search Marketing division, where I participated in building Panama, Yahoo’s successful effort to integrate and re-engineer the Overture Search Marketing technology that Yahoo had acquired, and today generates the majority of Yahoo’s revenue. After working in both display and search advertising extensively I recognized that there was an enormous opportunity to combine the best parts of each of these into a completely new advertising model, bringing together the economics and effectiveness of search marketing with the reach of display advertising. Shaukat (Shamim, CEO), Stanley (Wong, VP of Product Marketing), and I discussed opportunities around this new model and decided to form the company Permuto to bring this powerful vision to reality. Read more…

1. What is your background, and how did you make it to Shopping.com?

Tomer Shoval: I’m actually a veteran at Shopping.com. I’ve been with the company for nine years. I started as a Jr. Content Specialist 2000. Since then, I have been able to on take more responsibility and move up the management chain. After five years as head of content, I moved to the U.S. (about 3 years ago) to head up sales. Now I’m the Director of North America for the company.

2. What makes Shopping.com different from other comparison sites?

Tomer Shoval: To be honest, it’s not very different. That’s exactly the realization we had as a company about two years ago. The shopping engine space brings value, but it’s very crowded. We all do good job of helping customers, but the challenge is to maintain a large, loyal group of users, as we are all dependent on traffic acquisition. About two years ago we decided to focus on customer support and selection. Two years ago we had 60% of the top 100 online retailers in our site. Today, we have 90% of the top retailers 100 retailers – and, eventually our goal is to have the top 500. Our focus is to create a new experience – engaging customers, helping customers. Most customers do not specifically know what they are looking, so we would like to develop a unique experience that is helpful for them to find what they’re looking for. Further, we are continually adding content and community – Shopping.com also owns Epinions, and this is a huge asset. The goal is to find as many ways to help our customers.

3. What are some channels in which Shopping.com is currently promoted?

Tomer Shoval: Shopping.com is a technology company foremost. We have built a robust platform have a strong presence in the SEO market, and our main goal is to drive return customers. One big draw we have is our ‘distributed commerce network’ that provides merchants’ offers to publishers. This is great for our merchants because it enables us to increase their reach, and by displaying their offers on a large network of publishers, we thus we are able to scale up their visibility.

4. What is the biggest challenge in generating new customers today?

Tomer Shoval: We need to create a unique value proposition: A) one that solves a pinpointed issue such as, “I know I want to buy a camera, now it’s where do I buy it;” and B) our presence needs to be something that is unique, not easy to replicate. We want to create the presence, for consumers, of the sales person who is there to help answer a few questions and give insight to help make the best purchase possible, as easy as possible.

5. The recession has affected every industry. How has Shopping.com responded to the changing marketplace?

Tomer Shoval: People are buying less and are buying less expensive items. It’s been a challenging year for Shopping.com, just as it has been for every site. One interesting aspect for Shopping.com is that, during challenging economic climate, people talk more about where they buy. Shopping.com has an advantage in providing lost-cost value. With that said, we have been able kept our position in the market. In addition, since we have a CPC monetization with our clients, we were able to introduce new promotions. This helps our merchants maintain a sustainable, cost-effective strategy, and we continue to innovate on our pricing mechanisms. Instead of charging the same CPC for, say, all watches, we have different rates that merchants are charged based on the unit price. This is one way we have been able to get our merchants to stay with us. We have been able to stay competitive, and our reach is continuing to grow despite the recession.

6. Do you plan to keep this value-based pricing in place?

Tomer Shoval: Value-based pricing is an innovative product we are very proud of. And the theory behind it is very simple: not all traffic sources and clicks are equal. Meaning, various publishers drive traffic with various conversion-rates. So, we expose our merchants to these different types of traffic in a cost-effective way. We adjust the CPC, based on which publisher is sending the traffic. We believe it is the best long-term approach because it is dynamic, and scalable. It gives the merchant the ability to scale their reach, without filtering through the thousands of publishers. We therefore say, “don’t worry about it, we will adjust the CPC for you.” So if one source is bringing in traffic but it’s low conversion traffic, they will be charged a lower CPC – then, in the future if the conversion rate changes, the CPC will adjust automatically. VBP is the future in our distribution; moreover, it’s good for publishers. If we charge merchants the same for all traffic sources, publishers with lower conversions can dilute the best publishers’ value. Our goal is for our high-conversion publishers to generate the best CPC as well.

7. What do you think the new areas of development are for comparison shopping engines space? What should we be expecting to see as customers?

Tomer Shoval: I can talk about what Shopping.com is doing – engaging consumers before purchase. And, we are always looking for finding new ways to help make this happen. The shopping comparison space has not been that innovative in the last several years, but those who figure out the ‘special sauce’ will reap the benefits. A lot more engagement, and interaction, which will lead to effective narrowing – this will help the customers.

8. With the recent consumer focus on finding the lowest prices, do you anticipate an influx of new comparison-shopping sites?

Tomer Shoval: To be honest, I think there already is a lot of competition. There are dozens of sites aiming at similar things. Some are more specialized in various areas. Value in this economy is important, but I don’t think this will be enough – customers want the end-to-end experience, with other aspects of value. I believe there will be some consolidation, actually.

9. How do you plan to differentiate yourself in the comparison-shopping marketplace?

Tomer Shoval: We have already started releasing major changes. As we near the holiday season, you will notice major changes to the display: more merchandising info, more images, and the introduction of ‘my shopping’, so customers can save their favorite items. This year we invested heavily in infrastructure, and we have upgraded our feeds system to increase selection. I believe in the next 6-9 months, you will see visibly better site, with better content, and with a much stronger community. In 2010, we will be able to show that we are no longer just a comparison site.

10. What will be the biggest challenge you face in growing your business?

Tomer Shoval: Finding a pinpoint, and effectively solving it in a unique way that will drive loyal audience – moving away from traffic acquisition tactics. Who ever can figure out how to do this, and even take short term hits on their P&L, and invest in this – will be able to stick around for the long term

1 .What does “effective” online display advertising mean to you

Shaukat Shamim: Today Search Engine Marketing is approximately $20B dollar market and continues to set the bar. Advertisers continue to spend in SEM due to the fact it is economically effective and efficient for them. Search has the element of being very ROI driven, and measurable. However, the problem is they can’t get enough of it, since search engine marketing is only 20% total reach and therefore rather limited.

Our objective here at Permuto is to achieve the the same economics and relevance of search engine marketing in display advertising. When you establish and deliver that every time, advertisers will get a new effective channel for their online display advertising campaigns.

2. How are you able to illustrate the effectiveness targeted display advertising to the advertisers?

Shaukat Shamim: The term “effective advertising” means different things to different types of advertisers. For brand advertisers, they measure the success of their campaigns based upon soft measures such as awareness, purchase intent, and favorability. Performance advertisers, especially commerce marketers, are very much driven by hard metrics driven which are measured by metrics such as clicks, conversions, and ultimately return on ad spend (ROAS). So, any solution that will give them positive ROAS that matches and exceeds their best channels will always get them to turn their head.

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