Nativ.ly co-founders Jared Katzman, left, and Mark Chu-Cheong.
In early 2012, then-Digitas exec Eric Perko wanted to pitch his client, Taco Bell, on doing a campaign with Waze, an upstart company that had attracted tens of millions of people to use its social-driven driving directions app. But there were two challenges: 1) He wasn’t sure if Waze was ready to support a national campaign for a major brand advertiser; and 2) he had no idea how to get in contact with Waze. Luckily, Perko knew someone who did.
“I had put together a media strategy the day before I caught up with Jared and Waze was on that, having no idea if I could connect with Waze or if it was even possible. Jared and Mark already had an existing relationship with Waze,” said Perko, who now serves as director of media at MUH-TAY-ZIK | HOF-FER.
That’s Jared Katzman and Mark Chu-Cheong. At the time, the two former Federated Media ad sellers were starting up their new company, Nativ.ly, which would help startup digital media companies like Waze get their ad businesses up and running and in front of big-name brands like Taco Bell.
Waze already had something of a ad business when Katzman first cold-emailed Waze CEO Noam Bardin about working together. But Waze’s self-serve ad-buying platform was only winning over small “mom and pop” businesses, not bigger brands. Waze’s dilemma mirrored Perko’s: the company was unproven to brand advertisers, and the only way to prove itself would be through establishing relationships it didn’t have.
That dilemma was exactly the type of opportunity that spurred Katzman and Chu-Cheong to start Nativ.ly and reach out to Waze in the first place. “It seemed like no one was focused on building brands on the internet and doing it with really smart custom partnerships with the most exciting new platforms,” Katzman said.
Part of the problem appears to have been that brands and startup execs had a hard time seeing eye to eye. “The thing that startups have more than anything else are great ideas and great ways of changing the industry, but sometimes what they struggle with is relating to the client, the advertiser, because so many times the advertiser isn’t really pushing the envelope,” said Andrea Harrison, head of global social media at Bose, which has worked with Nativ.ly to run campaigns on Medium and The Players Tribune and through Instagram influencer firm Popular Pays.
“There’s not necessarily a common language around media buying that exists between [brands and startups],” said Katzman. “We come in and help to translate.”
“Nativ.ly’s value comes into play when working with startups who don’t have a strong sense of how to work with agencies or clients. When we first did the execution with Waze and it went well, Waze wanted to drive the price up like 10x, and Nativ.ly coached them to keep it down,” said Perko. Eventually, he said, the two sides settled on a “reasonable increase in investment.”
Nativ.ly appears to have hit on a valuable niche. Since working with Waze, the company has gone on to help other notable digital media startups — including Medium, Songza, The Players’ Tribune, Dubsmash, Pocket, Popular Pays and SoundCloud — bootstrap their ad businesses with big-name brands like Google, Amazon, Intel, Bose, Macy’s, Target and SoFi.
In the four years since its official launch in August 2012, Nativ.ly has landed more than $15 million worth of media buys for its clients, with typically 60 percent of the revenue from each of the 160-plus deals to date going to the media companies and the remaining 40 percent to Nativ.ly. The self-funded business is profitable and has 10 employees, including some full-time contractors, working in offices across New York, Chicago, Los Angeles and at its headquarters in San Francisco.
Nativ.ly’s business extends beyond pairing a brand with a publisher and taking a cut of the resulting revenue. It’s as much a digital ad seller as a digital ad sales consultant. “Nativ.ly gives a lot of collaborative services. I don’t just think of them as an ad rep firm,” said Harrison.
The company stewards the entire campaign, from pitching in ideas to hammering out terms to mediating discussions between a brand or its agency and the publisher. “If it’s a startup that doesn’t have any business infrastructure built out, we handle all the invoicing and billing and project management,” Katzman said.
“They can help jump-start the whole engine and teach you how the engine works,” said Tim Hsia, a former business development and partnerships exec at read-it-later app Pocket who left the company in March but remains a consultant to Pocket.
Last fall, Pocket decided it wanted to roll out an ad product and began talking with Nativ.ly about what it needed to develop that business and which brand might be interested in piloting the effort. The 20-person company with 25 million registered users had relationships with small and medium-sized companies, but it was seeking one with a Fortune 500 company, Hsia said.
Pocket and Nativ.ly held several “jam sessions” to hash out the details of Pocket’s native ad format, such as what it should look like and where it should appear. Then Nativ.ly presented Pocket with a list of potential brands, including when those brands were looking to launch a campaign and what their objectives were. The two sides decided on Intel, which had a track record of producing branded content that would seem to appeal to Pocket’s audience.
Nativ.ly worked with Pocket on “everything from high-level strategy to practical operational things like Intel has this tracking parameter, here’s how you deal with that,” said Pocket product manager Tushar Kirtane. That also included helping to translate for Pocket the campaign metrics that would matter for Intel, such as clicks, reads and saves. Working with Nativ.ly “helped solidify our understanding of how to work with brands on a longer-term basis, like having links sent over in Excel sheets,” he added.
As valuable as Nativ.ly’s digital ad business blueprints can be, its address book appears to be its most valuable asset, which sometimes Nativ.ly may keep too close to the chest. For example, Pocket had to go through Nativ.ly in order to communicate with Intel. “I never once talked to someone at Intel,” said Hsia. That has made it difficult for Pocket to continue the relationship with Intel beyond the initial test campaign it had enlisted Nativ.ly for.
Katzman wasn’t involved with the day-to-day dealings between Pocket and Intel but said that he can “understand the frustration” and “will connect them with Intel in a way that everyone is comfortable with.”
Based on conversations with several brand, agency and media execs that have worked with Nativ.ly, Pocket’s example appears to be an exception, as other publishers like Waze, Medium and The Players’ Tribune were able to connect with the brands directly alongside Nativ.ly. But for companies like Popular Pays, which connects brands with influential Instagram users like photographers and celebrities, even being able to indirectly tap Nativ.ly’s contacts was valuable enough.
“There are maybe 40 large agencies, and there are a couple of teams at each agency you want to talk to. It takes forever to find them, strike up a relationship and do a test campaign on your own. But the folks at Nativ.ly know all of them already,” said Popular Pays CEO Corbett Drummey.
Popular Pays had already established its own track record of working with large brands but wanted to find an in with major media agencies that could get them in front of even more big brands. Popular Pays first got in touch with Nativ.ly in early June 2015, and three months later, the intermediary had landed a deal with Google for what stands as Popular Pays’ largest campaign to date, according to Drummey.
“What Nativ.ly did was doubled the amount of deal flow we had through large brands through media agencies,” said Drummey. “We’d done a couple deals with larger brands like McDonald’s and Glenlivet. They exclusively did these large ones, and they got us some huge brands like Google, Amazon, Target, Macy’s.”
Katzman’s connections came in handy a couple of years ago, when his company looked to strike up a relationship with Medium and its CEO, Evan Williams. While at Federated Media in 2009, he had pitched Williams, then the CEO of Twitter, on a deal with Microsoft. Williams remembered that deal when Katzman reached out to him on behalf of Nativ.ly. The former Twitter CEO said Medium had just hired a head of corporate development, whom he introduced to Katzman. Williams did not respond to an emailed interview request for this article.
Medium didn’t have an ad business at the time but was interested in finding a way for people posting content to Medium to make money. Once again, Nativ.ly’s connections came into play. “Medium had told us that design content really resonated on the platform. We were talking to folks at BMW’s agency, and they told us they were very interested in being aligned with really thoughtful design writing,” said Katzman. Nativ.ly negotiated a deal in which BMW would sponsor a series of articles penned by influential designers that would be published to Medium. “For Medium that was very attractive to them as an initial foray,” said Katzman.
Since that BMW campaign, which debuted in July 2014, Nativ.ly has continued its work getting brands on Medium. That work has ramped up recently as Medium has ramped up its ad business with the introduction of its native ad format, promoted posts, in April 2016. Nativ.ly signed the first advertisers to buy these ads, including SoFi and Bose.
“To date we have really been the one spearheading just about all of their brand partnerships,” including brand deals for publishers that Medium has recruited to make their homes on its publishing platform, Katzman said.
Nativ.ly’s soup-to-nuts service saved the firm’s neck — and, in hindsight, potentially its future — when Jordan Grossman took over as Waze’s head of US ad sales in January 2013, right around the time Taco Bell’s campaign was launching. Waze had been working with a few outside companies, including Nativ.ly, to help it sell ads, and one of Grossman’s first orders of business was to discontinue all of those deals — except the one with Nativ.ly.
“I didn’t feel like they were competing with our direct sales efforts,” Grossman said of Nativ.ly’s pardon. “They were creating awareness, aligned with our mission and selling at the same rates as our in-house sellers with the same degree of focus.”
Grossman viewed Nativ.ly as an extension of his in-house sales team and treated them as such. Nativ.ly’s team had access to Waze’s media kits and presentations and even had a role in developing some of that material. They participated in weekly status meetings and were updated with any product or strategy changes. And they were given a target list of brands to strike deals with.
Sure, having Nativ.ly sell ads on Waze’s behalf wasn’t as profitable as having a full-time employee do so because Nativ.ly took a cut of those sales — typically 40 percent, said Katzman — but Grossman considered that revenue-sharing arrangement “a marketing cost” to get Waze on people’s radars.
Eventually, Waze got on the radar of Google, which bought the app for almost $1 billion in June 2013. But the digital ad sales giant didn’t pressure Waze to wrap up its work with Nativ.ly. Not that it had to. Even then — and especially now — Nativ.ly’s business is designed to effectively put itself out of business by getting a publisher to the point of taking the reins of its own ad business.
Since he started at Waze, Grossman’s goal has been to staff up his sales team enough that it could handle all business internally. After the dust settled from the Google deal and Waze remained responsible for selling its own ads, Grossman was able to ramp up hiring his in-house team, and those in-house sellers were able to bring in business, thanks in part to Nativ.ly and the Google deal putting Waze on enough brands’ radars.
By the end of the first quarter of 2014, Waze had assumed responsibility for the entirety of its ad sales, retaining 90 percent of the clients Nativ.ly had brought into the fold. Grossman tried to recruit Katzman and Chu-Cheong to join Waze, having found them to be “two of the finest salesmen that I’ve met in my 16-year career,” but the duo had found its work with Waze to be a blueprint for how Nativ.ly would go on to work with other digital media startups.
“If we do our job really well, we accelerate our own exit. That’s just the nature of it,” said Katzman.
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