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Justin Drummond is a well-known dotcom veteran and the founder of Media Corp, the LSE-listed business that includes online ad network Eyeconomy and various in-house websites.

The company has been diversifying away from its gambling investments after the US ban last year and is now looking to expand into Europe and the US.

Despite several interruptions from Justin's PR person, we managed to ask him a few questions about the highly competitive ad network space and where he sees the industry heading.

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Where does the business now stand since you started diversifying away from gambling? Where are you now focusing?

We were never really a gambling company, but within our publishing business we owned some very large gambling portals. They were advertising businesses focused on the gambling industry. In 2006, we owned gambling.com and casino.co.uk, two of the biggest gambling portals in the world, plus a bunch of others, and effectively the bulk of our revenues were coming from those sites.

We have had to try and pull away from that, you’re right. Gambling alone contributed about £2.7m net profit to the group in 2006, whereas in 2007 it was only around £700,000. The reason for that was the US ban meant that we could no longer serve ads in the US. So we were affected by that.

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You have outlined a business plan to invest “up to £1m” of your existing cash resources in expanding your business. Can you go into more detail?

Since the gambling ban happened, we have really looked to broaden our portfolio of sites by expanding the ad network business. That’s now the fastest growing part of the business and where we are really focusing. We think we are the fastest growing ad network in the UK now in terms of revenue growth.

The ad network is the area we are really focusing on. It is an exciting area right now with online advertising forecast to overtake TV next year. Our view is we are in a growth market and we have to be more aggressive. We’ve been expanding the business, and rapidly recruiting new sites and the number of publishers we are looking to deal with.

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You said recently that you were looking to double your headcount by the end of this year. How challenging is that proving to be, considering the industry skills shortage? Are any roles particularly difficult to fill?

We’ve brought in some high level people from the industry and assembled a really good team. We’ve been headhunting senior people in other ad networks in the UK. We are also looking to triple the size of the sales team to up to about 30 people this year. The thing is it can take up to three months for them to really get up to speed so there is a bit of a lag.

[The skills shortage] has been a problem. We’ve been advertising in industry mags like NMA, Media Week and Revolution but we have had very few CVs through from that. We have really had to go through contacts for the people we have recruited.

It’s been hard to find good people. We have ended up having to train a lot of people on the sales side. We have a very successful track record of bringing through junior people in the sales team. Within three to six months, they are usually billing pretty heavily. The juniors typically bill around £50,000 a month and the seniors over £100,000 a month per head.

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You recently struck a text ad deal with Yahoo for your own websites. How does Yahoo compare to Google Adsense, in your experience?

We had done some tests with Yahoo resellers historically to see if we would get a click through on those types of ads and they were positive, so we thought it made sense to go straight to Yahoo.

We have trialled Adsense. In the verticals we are focusing on, the CPC rates seem to be higher with Yahoo. The CTRs were similar but the CPC rates were higher, so that was the main reason for our decision. It may not be the case for all industries but in the verticals we are focused on, it made sense for us to go down that route.

With Yahoo, we also dealt with an actual individual whereas with Google you tend to sign up for Adsense online and I don’t know if you ever get an account manager. We have an optimisation manager working with us on the positioning and we thought that approach was positive.

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What spending trends are you seeing from advertisers on the ad network side of the business?

We are seeing a lot of demand lately for blind network-type advertising, which is why we have been looking to recruit more of the large social networking sites. People are looking for huge volumes at low rates.

Historically, it used to be a lot of direct response advertising where people were looking to sign up credit card customers or customers for their loan products. They would look at how much they were spending and working out a CPA model based on ROI.

We are now seeing more branding campaigns from people like P&G and Coca-Cola. That’s quite exciting for the industry. The problem with the direct response stuff is if it doesn’t perform for the advertiser, they don’t rebook.

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You mentioned that your gambling sites had a large audience in the US. Is that mirrored in your other properties? If so, are you fully monetising that traffic?

Not really. Nearly all of our other sites have a UK focus. We have onthebox.com, which is our TV listings website and is ranked number two in the UK, behind radiotimes.com. We are looking to launch that in the US and we have negotiated a content deal with a listings provider. We are in the process of building the US site.

We will use the same domain but it will be geographically targeted. If you log on from the UK, you will get the UK version and if you log on from the US, you will get the US version. We will use IP targeting to tailor the listings to your geographic region, depending on where you are in the US.

The reason for that is we overtook tvguide, the biggest US listings website, in the UK. We thought if we can beat them in the UK we might have a good chance of gaining market share in the US, although they are very dominant in the US. We are looking at a June launch for that.

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With all the industry consolidation happening at the moment, have you received any takeover approaches?

We have spoken to a couple of US VCs that have approached us to find out whether we were interested in raising investment. But we are in a very strong financial position and have a lot of cash in the bank and don’t really need to raise money. The key thing we need to do now is grow the business and get bigger.

The VCs are particularly interested in businesses that have a pan-European presence. We already do quite a bit of business in Europe as advertisers often ask us to buy media in France, Sweden and Germany. In those situations, we tend to use the exchanges.

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Are you looking at putting resources on the ground in Europe?

We are looking to create a physical presence in European markets in the next few months, particularly for the ad network. We have all the infrastructure in the UK - the billing and everything else - so effectively we would just need sales. We are looking at France and Germany first and other markets would follow on from that.

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