Online marketing is big business: emarketer predicts that digital ad spending will surpass TV ad spending in 2017. TV spending is expected to total over $72 billion next year, while total digital ad spending will come to more than $77 billion. While it’s getting easier to spend, with customer attention spread out an endless number of platforms and therefore an endless number of platforms to spend on, this means tracking and improving ROI can be difficult.
Sydney startup Alley combines big data with predictive intelligence to simplify the process, helping clients acquire new and retain existing customers. Launched with $8,000 two years ago, Alley’s turnover was more than $3.5 million last year and it is this year on pace to turn over $10 million.
The startup’s offering is broken up into two parts: helping clients attain customers, and retain them. To attain, Alley Acquire analyses millions of data points from a client’s customers, both on-site and off, across multiple devices and campaigns on different platforms, to provide a picture of the customer that is most likely to buy a product. Lookalike modelling algorithms then look to find potential customers that share these same characteristics.
Alley Retain then brings together customer data, that is on-site behaviour and purchase history, and uses predictive algorithms to determine when a customer is most likely to perform a particular action, at which point the customer is re-marketed through the avenue most likely to re-convert them.
Founder Nick Lavidge explained, “We know based off of driving that customer through the sale cycle what type of ads they like, what type of messaging they like, if they like female creative versus male creative, and if they like Instagram ads vs Facebook ads. We have all this data with us so we’re able to provide kind of the right messaging to the right person at the right time.”
Despite the fast growth of Alley, Lavidge wasn’t always in the online marketing space, having launched a voice technology startup after graduating from university.
“It’s kind of like Siri before Siri was fully around, so when we first started putting it in electronics, first with a clock and then in everything from coffee machines to microwaves, we didn’t have any clients. We had to build an ecommerce website and drive awareness that way, build a brand, drive our customers. Our first online channel was ecommerce, and that kind of fell to me,” Lavidge explained.
Lavidge left the company to head up the digital marketing department for Oakley worldwide, then the digital department of 2XU in Australia. With 2XU less than five years old, he said it was fun to go back to a company with a startup mentality and learn more about the Australian ecommerce market, the growth of which then pushed him to launch his own business.
Alley originally launched as an end-to-end ecommerce service, helping clients with everything from warehousing logistics to building websites, customer service, and digital marketing.
“We realised about a year into it that we were pretty good at running warehouses and pretty good at building websites, but we were very good at driving qualified customers and having them acquire multiple times to our customers,” Lavidge said.
The business made the decision to cut its other departments and focus in on the customer acquisition and retention space a year ago – a scary, stressful decision decision, Lavidge said, but obviously the right one.
“Our revenue started to skyrocket around two months after we started focusing on our core competency,” he said.
Clients are appointed an account strategist, data scientist, and a number of digital marketing specialists to help drive growth. The growth of Alley’s client base, which includes Oakley and Netgear, has come through the startup being selective with who it brings on; having worked with agencies in the past, Lavidge said he saw a broken business model that he didn’t want to replicate.
“One of the things I disliked is that they’re so focused on driving their own revenue that they forgot about their clients, and every agency will tell you that they don’t do that but, it’s not true. One of the things we do is work on a 30 day contract that clients can opt out of at any time; that was one thing that I hated, I didn’t like that I was handcuffed to a certain agency for six months if they weren’t doing a good job,” Lavidge explained.
Lavidge believes Alley is helped in this regard thanks to its data, which can help it track the potential of a company to grow.
“When we look at a client we can take a look into their data and we can know, with about 10-15 percent variance, how much revenue we can drive them,” he said.
While the startup has more clients in Australia, Lavidge said approximately 40 percent of the startup’s income is now coming internationally. With an office in Phoenix, Arizona, Lavidge said Alley will likely continue to open new offices around the world, but he envisions it being based in Sydney, “the ecommerce mecca”, for a long time.
Looking ahead, he said the startup is focused on improving its systems to make sure everything runs more efficiently so that it can continue to scale, and the demand for what it does scales.
Image: Nick Lavidge. Source: Supplied.