Mad Man 2.0

Dave Newmark got his start in advertising working alongside his father Stuart Newmark at a full-service agency that did media buys in television, newspapers, direct mail and billboards. But it’s in radio that the younger Newmark, 56, has made his biggest impact. Getting into the niche of using radio talk show hosts to do endorsements for client’s products put Newmark Advertising on a steady growth path. In 2005, Newmark started a new venture that would later be spun off as a separate company, Bid4Spots Inc., an online reverse auction site selling radio advertising airtime that will bring an anticipated $1.5 million in revenue this year. The reverse auction concept hinges on radio stations making bids on what the advertisers are willing to pay to run their spots. It wasn’t that long ago, though, that Newmark was at a low point with Bid4Spots when, in 2006, Google got into the advertising business to sell broadcast media time, a venture the search giant would later shut down. These days, Newmark handles the operations of Bid4Spots and its 15 employees, while his wife, Patty, heads up Newmark Advertising. In addition to the Encino offices, Bid4Spots has a location in London and may open other overseas locations. Newmark talked with the Business Journal about his advertising career, his tastes in radio programming, and why he doesn’t watch the cable TVseries “Mad Men.” Question: What is it like to be a radio ad man in the era of the Internet, which is disrupting all media? Answer: I’ll answer that in two ways, in terms of listening and in terms of advertising. The broadcast business is stable in terms of listening. Arbitron recently announced that radio listening is growing; about 240 million people in the United States listen to radio during some portion of their day or week. And the ad side? As media has proliferated and fragmented, certainly the ad dollars are not matching inventory. Ad budgets are flat, maybe rising a tiny bit. The places where you can put that media money have absolutely exploded. To the extent that advertisers are looking for cool new ways to deploy those media dollars, especially in a way that can be targeted and tracked, that is pulling money away from broadcast media. What has that meant for Bid4Spots? That is great news for us. That’s opening up even more inventory than ever for those advertisers who wish to participate in our auctions. What was the genesis of Bid4Spots? There was a person Roger Bensinger at the Sharper Image, he was the marketing director at the time. He used us to do radio endorsements. Roger came to me and said isn’t there a way to access unsold inventory around the country. I said, no, there isn’t. And I left it at that. (Then) one night I was watching my son on his computer. He was buying some music from Germany on eBay. I thought ‘Auction.’ Maybe I could do an online auction. That’s interesting there was almost a direct ecommerce link. What did the radio people say about that? They said that won’t work. They pointed me to a couple of examples. One was a company called eMadison.com and the other was AdAuction.com. There were others as well, some bulletin board type exchanges. This was during the Web 1.0 days? Exactly. It was 1999, 2000, 2001. And I was asking these questions in 2004. And they were right. Auctions had not worked. I still couldn’t let it go. I kept thinking if every single one of those ad exchanges died by 2004 it wasn’t for lack of funding. Some of them had incredibly high market capitalization. There had to be some basic thing that everybody got wrong. And what was that? I was in discussions with a guy who was helping us with another project at Newmark Advertising and we were talking about supply and demand and auctions. All of a sudden the light bulb went on. I thought, “Oh, my God. I think I know what everyone got wrong. They had it backwards.” If I could push the demand side from the buyers to its lowest point possible I could create a small zone of time in which supply is high and demand is low. I understand that is on Thursday when unsold ad space for the next week might never sell. It is close to the next broadcast week. And that is when we would have our reverse auction. So in my mind I had come up with the concept for it. What were the challenges with that model? The hard parts of course are the details, coming up with the rules for the game and most notably getting all the stations to bid. When I proposed the idea to stations they would all bid against each other and the lowest cost per thousand would win, what do you think? They said, “You want us to what?” There was stunned disbelief at the concept at first. This was not something they had heard of before. So when did the auctions begin? I came up with the idea in 2004. I contracted with an outside company to develop the software, and our first auction was for the broadcast week of Jan. 10, 2005. It was tiny. It was mostly our Newmark advertisers who said, “Sure, we’ll give it a try, Dave.” So in the summer of 2013 how many now participate? Several hundred at a time. It depends. Some come in every single week, some come in seasonally, some come in for a couple of weeks and then they are off for a couple of weeks. There are several hundred that are active. Any thoughts on why you came up with the reverse auction idea and someone else hadn’t done so first? I think it is several things. One of them is that I’m an adman and not a technologist. Other people and companies that have come into this space have come in with a technology base, such as Google and there was another company called Softwave Media Exchange. All of them well-meaning and ambitious but they came at it from the standpoint of technology and not from the standpoint of understanding how buyers and sellers in the ad world work together. Growing up in Los Angeles, what radio stations did you listen to? I certainly listened to KHJ, Robert W. Morgan, and then my favorite station after that when I was a teenager was KNX-FM, which is at the 93.1 position. It was James Taylor and Carole King and Joni Mitchell, Crosby Stills Nash & Young, all kinds of music like that in the late Sixties, early Seventies. Then when The Wave came out (KTWV) it was so amazing, that whole notion of new age music. I happen to love jazz and so I was always listening to KKGO a lot and new age seemed to me to be a very easy take on jazz, I was blown away by it. I listened to it endlessly. What about your radio listening habits these days? I jump around a lot now. I am listening for a whole bunch of different reasons. I listen to public radio a lot, I listen to news a lot, and I listen to talk a lot. I listen to as many music and sports stations as I can. I am all over the dial. I have a different interest in radio now than I ever did which is to make sure I am listening for changes that are happening. Did you always want to be in advertising? When I began working for my father’s agency my original intention was to work for him for a while and then get a real job at a real company and then graduate school. What I had not counted on was that I loved advertising. When you were growing up what was your perception of your father’s job? In addition to his regular job running a large division of Foote, Cone & Belding, my father also taught an extension course at UCLA on advertising. From my earliest years, I remember him showing me some of the lessons/layouts of print advertising or storyboards he was teaching from which gave me a sense that a lot of thought went into the creation of ad campaigns. My most vivid memories of him growing up were the late nights of him working out copy ideas on the manual typewriter set up on the kitchen table. That sense of working whatever hours were necessary to succeed has stayed with me to this day – my days are typically well over 12 hours and sometimes on weekends. So why did you love advertising? Two reasons. It was a great creative outlet, and it was helping people. These business owners had goals and dreams that they were hoping advertising would help realize. It was something that brought me a lot of pleasure when I could bring them that kind of success. Your wife is your business partner. How did you meet her? Patty and I met at a Sun Bowl Brunch party for Stanford University students who lived in Los Angeles who were home for the holidays. The party happened to be at my house. I invited half the people and a buddy of mine invited the other half; she was on his half. So the very first time we met was when I greeted her in my own kitchen! We’ve been together ever since that December day in 1977, making me the No. 1 luckiest man on this planet. I am not kidding. What role does she play in your firm? Patty runs Newmark Advertising and she’s done a fantastic job. We have a terrific vice president, Adam Gilbert. I am not involved in the day-to-day at all. I am able to devote 99 percent of my time to this (Bid4Spots.com). I understand your wife has been instrumental in getting radio hosts to endorse products. On the local side we started with a husband and wife couple in Chicago on WLS-AM radio, Don Wade and Roma. They were so wonderful to work with and had such a tremendous influence on their loyal listener base. Patty discovered them early on and she was dead on right about it. She also started working with this host in Florida who nobody had ever heard of named Glenn Beck. She believed in his ability to persuade. The same thing happened with Sean Hannity. Patty discovered him very early and when he was on a single station in New York. He also has remained grateful and loyal to her. How do you and Patty separate your professional lives from your personal lives? We try not to talk about business too much at home. We also try to do a lot of fun things. We hike. We go to events together – concerts, plays, movies and lectures. We try to travel as much as we can for fun. It’s not easy because we both have busy schedules, and she travels much more than I do for business. You describe yourself as being first and foremost an adman. Do you watch the cable series “Mad Men”? I don’t. I watched the first season, a couple of episodes, and my stomach churned so much during that time. I am 56 now and old enough to be fairly close to that (period the show is set). My father was actually one of the mad men. He really lived that period. He smoked at the office? He smoked at the office and he went for three martini lunches and tried to win over the client with some clever tagline. He carried that whole idea of pitching the line and making the presentation, hoping to win the account to the business he started in 1967 and that I joined in 1979. So watching that show just reminded me of all the stress associated with that kind of work. I couldn’t get past that part of it. I know stylistically it is a magnificent show and it’s also a great insight into personal dynamics. I couldn’t get past the work part so I didn’t enjoy it. So what do you do to blow off stress? Working out stressful situations usually comes down to two things for me: communicating directly and honestly to the person with whom the stressful situation is happening and breaking the stressful situation down into “bite-sized” pieces that can be solved with simple action steps. When most people think of the advertising agency, New York City and Madison Avenue come to mind. Have there been challenges to working on the West Coast? No, the Internet has changed all that. As a matter of fact, it reminds me of a debate we had. In New York, you think about Madison Avenue and that is where you had to be as an advertising agency. Then it migrated south of Houston, and SoHo and that general area. The physical location became less important. The corollary to that in Los Angeles was the Westside. When Chiat/Day opened their Binoculars Building in Venice, for example, the Westside was the place to be for creative people. Our ad agency was located in Santa Monica because I thought that was where we needed to be. As it happens, our commute became harder and harder because we lived in the San Fernando Valley. How did you end up in the Valley? I thought at the time when our lease was up we should stay in Santa Monica. For my father and Patty they looked at it more practically, and they said with email and Internet we can be anywhere we want to be, so let’s move closer to where we live. I thought that would be suicide. I just thought this is going to be horrible. Who is going to want to do business with an advertising agency in the Valley? How did it turn out? I was completely wrong. Our business totally took off after that. We got a better building, more space, lower rent, virtually no commute. We did lose a number of employees who did not want to come over. We were able to hire other people who lived in the Valley and wanted to work in the Valley. I was 100 percent wrong on that decision. I am glad that my father and Patty prevailed. This interview has been edited and condensed for clarity and space reasons.