JON Ostler, founder and managing director of internet marketing firm First Rate, has gone from spying on people from the sky at the Joint Air Reconnaissance Intelligence Centre at Britain’s Ministry of Defence to helping advertisers locate them on the internet. The computer engineer and self-confessed former “spook”, resigned from the British defence forces in 1998 and moved to New Zealand, where he started a web design firm.
In 2001 he set up First Rate with a few hundred thousand dollars from angel investor SparkBox, applying some of the data analysis skills he learned in the defence service to create a direct response company specialising in search and email marketing, as well as pay-for-performance advertising.
Mr Ostler, who last week signed a deal to run Yahoo Search Marketing’s sponsored search engine text ads across its performance-based advertising network (the Performance Network), is focusing on growing First Rate’s Australian operations after selling the business to ASX-listed marketing group Q Limited in December last year for $NZ2.3 million ($1.9 million)in cash, plus a three-year earn-out.
The group has set up an office in Melbourne, as well as in Sydney, and has used its links with fellow Q-owned company 3D Interactive to launch the Performance Network in Australia. It has signed up about 40 websites, in addition to 130 in New Zealand, running advertising that is only paid for once a particular action, such as a click or customer sign-up, has been generated.
Mr Ostler said the Yahoo deal offered TPN publisher websites “a new advertising revenue stream”.
He predicted that search engine marketing, which research firm Frost & Sullivan has predicted will be worth $975 million in three years, would quickly push beyond the internet to other digital media.
“Even Google is still quite simplistic in the way they approach search (having) just launched universal search in Australia,” Mr Ostler said. “Personalisation really hasn’t happened yet and there’s the integration of search into other channels (such as) video advertising.
“There’s room for Google to help form TV viewing. Google could be linked to your TiVo box. There’s a scary amount of media channels that can start to talk to each other.”
Mr Ostler said First Rate, which generated revenues of a few million dollars in the 12 months to October 2006 and contributes a significant percentage of Q Limited’s annual revenue, had grown at 428 per cent over the past two years.
The company, which has 30 staff, derives about 30 per cent of its revenue from search engine optimisation; 30 per cent from paid search marketing; 15 per cent from email marketing; 10 per cent from its performance advertising network; and the remainder from internet strategy and e-commerce projects.
Clients include Air New Zealand, APN, ACP and the Yellow Pages in NZ, as well as Roses Only and Officeworks in Australia, which already generates 25 per cent of First Rate’s revenues.
Q Limited has bought a number of internet marketing companies in the past year, including research firm Great Australian Survey, digital agencies Market United and Clear Blue Day, search firm Freestyle Media, online campaign management firm Mosaic and mobile marketing company Axis Media Communications.