Peter Nguyen got a perfect score on the math portion of the SAT, so naturally, he took up online advertising.
“It fit my profile, because direct-to-consumer and digital marketing both are majority math—they are all numbers at the end of the day,” said the founder and chief executive of Ad Exchange Group, an Irvine-based firm that develops and executes digital ad campaigns but charges clients only when it generates sales.
Nguyen, who was among five recipients of the Business Journal’s Excellence in Entrepreneurship awards on March 8 (see related stories on this page and pages 1, 6, 8 and 9), says it’s all about “maximizing earnings per click.” He developed the Campaign Management Platform that split-tests—compares multiple versions of a web page to learn which one draws more sales—to continually optimize Ad Exchange’s media buying and placements.
“We are analyzing [everything],” he said. “The goal is to have your [earnings-per-click] greater than your [cost-per-click] to make it profitable.”
Ad Exchange, along with media buying partners, spends “millions a month” on ad placements for about 150 brands. Facebook gets the biggest share of the budget, followed by Google ads, email campaigns, and search advertising—ads that pop up on search results webpages.
“We do more than 10,000 transactions daily,” Nguyen said, adding that “we don’t charge any upfront fees until we generate a customer for them.”
The company insulates advertisers from “click-fraud,” or “the practice of repeatedly clicking on an advertisement hosted on a website” to generate revenue for the publisher.
Many brands “don’t know where clicks are coming” Nguyen said, or if bots instead of people are “reading the ad impressions. With our performance-based (business model) it doesn’t matter—we are taking the risk.”
The Ad Exchange, aside from media buying, often “designs the entire funnel for the brands,” including ads and landing pages. Having its own skin in the game makes it “very selective” about who it brings on board. It largely picks brands “that fit with our platform and that are low-hanging fruits,” almost always the companies that have e-commerce capabilities and that sell their products directly to consumers.
Its larger clients include Dollar Beard Club in Newport Beach, Suja Life LLC in San Diego, Bulletproof 360 Inc. in Bellevue, Wa., and Lake Mary, Fla.-based Jeunesse LLC.
“We are doing fantastic with them—about 1,500 sales a day,” he said of Jeunesse’s Instantly Ageless skincare product, which sells for $75.
Ad Exchange, which employs 28, opened its doors in 2013. Nguyen projects the company’s 2017 revenue will reach $140 million, up from $100 million last year.
His team, along with a “large, private” partner, is developing Ad Exchange’s programmatic, or automated, ad-buying capabilities.
“We’ll either buy media on our platform for our clients—and still work on a performance-based model—or we might license out the platform,” Nguyen said.
He’s also looking at social media influencer marketing, either to “buy media directly for our brands” or have influencers “endorse a product and then get paid for every single time a transaction occurs.”
“What we saw 10 years ago in the direct-to-consumer space, we are seeing the same thing in the influencer market,” Nguyen said. “It’s very untapped, and a lot of the brands don’t know what they’re doing.”
Ad Exchange also plans to monetize “prospect and consumer data” it collected while generating “almost $800 million in revenue for our clients in just under four years.” It’s pursuing a patent on the fraud-prevention technology, which also monitors the quality of traffic its ads generate.
“Not only is it important that we generate a sale, but we want to make sure that each sale that comes through is a best-quality sale,” Nguyen said.
“We are using millions of records and hundreds of millions data points that we have, to further understand which consumers we want and which ones we don’t.”
Ad Exchange sprouted from his work on Advertiser360, a video course he developed to “help people build their own products or services online,” that was later adopted by Waco, Texas-based Baylor University’s entrepreneurship program.
Nguyen, prior to Ad Exchange, co-founded Push Innovation, a warehouse and fulfillment center that’s shipped about 10 million packages since its inception; the Push Innovation Live call center, which handles about 30,000 calls a day; and Chargeback 360, a credit card chargeback mitigation company that processes nearly 100,000 chargebacks per month.
He earned a bachelor’s degree in business from the University of Florida in 2005, where at age 19 he started his first company, WhizNotes, a tutoring service that conducted exam reviews for math and science courses. A year later, he founded Shox Printing, a graphic design and printing firm.
A serial entrepreneur needs “a relentless spirit,” he said. “For me, failure only happens when you actually give up. I just never gave up.”
