AdGrok’s Grandiose Proposition: Replacing the “Craptacular” Google AdWords Interface

8/26/10Follow @wroush

This is the sixth in a series of profiles of companies emerging this summer from Mountain View, CA-based startup incubator Y Combinator.

AdGrok is at an interesting point in its evolution as a startup. Right now, the company is probably better known for a series of controversial blog posts by its CEO, Antonio Garcia-Martinez, than for its actual product.

AdGrok has developed a browser-based tool that helps small businesses grapple with the complexities of managing search engine marketing campaigns. In essence, it’s a user-friendly front end for Google’s AdWords platform, the system that the company uses to sell ads on search result pages. Considering that 1) Google earns close to $30 billion a year on AdWords ads, 2) those ads presumably generate much more business than that for the companies who place them, 3) anybody who advertises through AdWords has to cope with its notoriously clunky user interface, there could be a huge market for AdGrok’s service.

But you wouldn’t learn any of that from Garcia-Martinez’s posts, which have focused on such subjects as the spiritual poverty of the “quant” lifestyle at Goldman Sachs (that one prompted 109 comments and 539 “Likes” on Facebook), New York City’s shortcomings as a technology hub (278 comments, 814 likes), and the precise amount of money a young startup entrepreneur would have to earn on his company’s exit if he wanted enough “fuck-you money” to retire at age 30 (35 comments, 72 likes, and the answer was $4.2 million). The posts have been widely tweeted and retweeted over the last month and have generated hundreds of heated responses at forums such as Y Combinator’s Hacker News.

I wasn’t too surprised when Garcia-Martinez confessed to me this week that he studied journalism in college—the posts wouldn’t be nearly as provocative if they weren’t so well written. And there’s actually more cunning to his blogging strategy than you might imagine. The posts have drawn thousands of visitors who never would have discovered AdGrok’s website otherwise, without costing AdGrok a dime. “We got a lot of free PR based on my blog post about New York City,” he says. “It was like, whoosh—tens of thousands of page views and lots of signups.”

So maybe handing a blog to a literary-leaning CEO who’s given to “grandiose propositions” (Garcia-Martinez’s term, not mine) is a pretty good way to advertise a startup that’s all about advertising. To hear Garcia-Martinez tell it, AdWords customers are victims of a profound lack of innovation at Google, and AdGrok is just the company to solve the problem.

The AdGrok GrokBar in actionGoogle didn’t invent keyword-based search advertising, but it did introduce two very useful twists. One was relevance: you can’t get your ad to show up on a search-result page simply by bidding for certain keywords; it also has to meet Google’s criteria for relevance to the user. The other innovation was to get rid of the traditional ad sales force and automate the whole process of creating ad campaigns and bidding for placement.

“Bob the smiling ad sales guy was gone—you could now log in with a credit card and do your thing and be online quickly,” says Garcia-Martinez. “But the reality is that they just substituted one middleman for another. They got rid of the sales guy, but now you need a professional campaign manager. It’s very complicated, and the average mom-and-pop e-commerce site just doesn’t have time to duke it out with the pros on AdWords.”

Garcia-Martinez and his co-founders at AdGrok, Matthew McEachen and Argyris Zymnis, know how uneven the playing field is: they used to work together developing search engine marketing platforms for big-budget customers at Adchemy, the Foster City, CA-based digital marketing agency. Platforms like Adchemy’s free users from dealing directly with AdWords, but mom and pop have to cope with a user interface that Garcia-Martinez derides as “craptacular….It just sucks. Google can get away with it, because they are basically a monopoly. They aren’t motivated to change the interface because they don’t need to.”

But that doesn’t mean there aren’t users who would pay for something better—perhaps enough of them to provide a tidy revenue stream for the right startup. AdGrok is reinventing the AdWords interface in two major respects. First, the company is taking a “bottoms-up” approach to search engine marketing and ad campaign management. In contrast to the top-down approach that AdWords offers—an overview of all the campaigns you’re running on all of your sites and pages—the AdWords GrokBar follows you around on the Web, giving you a picture of how well your AdWords campaigns are performing at the level of individual Web pages.

This bears a bit of explaining. Say you sell furniture online and you’re running AdWords campaigns designed to garner visitors for your catalog pages on tables, chairs, and sofas. If you go to your sofas page and open the GrokBar—a Firefox browser extension that slides out from the left side of the screen and is otherwise visible only as a tab (see screen shot on page 1)—AdGrok will connect to AdWords behind the scenes and show you a summary of the sofa-related keywords you’ve been bidding on, how much you’ve spent on each, and how much traffic they’ve sent to your sofas page. You can add new keywords to your sofa campaign or change the wording of your ad, right from the GrokBar.

From within the GrokBar, you can also pop up a level or two for a top-down summary of your AdWords spending on all of your furniture pages. If AdGrok’s algorithms see an opportunity to improve the performance of a specific campaign, you’ll see suggestions. To take a simple example, the maximum bid you’ve specified for the keyword “sofa” might not be high enough to get your ad on the first page of search results—so the program would suggest raising your bid, and tell you how much you need to raise it to win. Or it might suggest, based on the editorial content of your ad, keywords that you hadn’t considered bidding on, such as “chaise” or “divan.” All changes are transmitted back to Google. In fact, once users install AdGrok, they “never have to log in to AdWords again,” Garcia-Martinez says.

During its beta testing period, AdGrok isn’t charging for its service. And for small spenders, those who put less than $100 a month into their AdWords campaigns, it will probably stay free. But Garcia-Martinez says the company will eventually start charging bigger spenders fees. The team hasn’t decided yet whether to charge on a percentage basis or simply levy flat fees, but in the long run the cost of using AdGrok will probably average out to about 5 percent of what users spend on AdWords, he says. (That’s a lot less than the 20 percent that ad agencies typically charge for handling campaign management.)

Interestingly, AdGrok might never have gotten off the ground if Garcia-Martinez, McEachen, and Zymnis hadn’t gotten into Y Combinator. “We had been kicking around the idea during our lunch hours [at Adchemy], and we applied to Y Combinator on a lark,” says Garcia-Martinez. “We were surprised when we did get in. Y Combinator was the kick that gave us the nerve to quit.”

But while Adchemy probably wasn’t happy about losing three young programmers, they and other ad agencies shouldn’t worry too much about competition from AdGrok, Garcia-Martinez says. The “Fire your agency” slogan on AdGrok’s home page is really more of a “rhetorical flourish” than a serious suggestion, he says. In fact, some of AdGrok’s early users are agencies, which are using the service to manage some of their low-budget accounts more efficiently.

How should Google, the great disintermediator, feel about being disintermediated by a company that wants to put its own software, rather than Google’s, in front of AdWords users? It ought to be pretty happy, if you think about it. Small and medium-sized businesses make up only about 10 percent of Google’s AdWords market, according to Garcia-Martinez. But there might be more of those advertisers—and they might spend more—if the AdWords platform weren’t so forbidding. “There is all this money sitting on the side that is not coming in because you are not empowering them,” says Garcia-Martinez. “We’re the Charles Schwab of AdWords.”

Which begs the question of whether AdGrok is building its system simply in order to get acquired by Google. If you follow the tech blogs in Silicon Valley, you know there’s a meme going around—started by TechCrunch’s Michael Arrington—about the unnamed venture capitalist who allegedly laments “an entire generation of entrepreneurs are building dipshit companies and hoping that they sell to Google for $25 million.” I couldn’t help asking Garcia-Martinez whether AdGrok is, in essence, one of those dipshit companies.

“Is that what we’re trying to do? No, I think the idea is bigger than that,” he answered. For one thing, the startup already has plans to branch beyond AdWords to other advertising venues, starting with Facebook and Microsoft’s Bing search service. For another, Google might not even be interested. “If Google wanted to do this, they could do it themselves,” Garcia-Martinez points out. “The AdWords interface has been unchanged for going on eight or nine years now. If they haven’t improved it, it’s not for lack of resources—I think they just don’t care about the long tail.” Which is fine with AdGrok, because the long tail at Google is voluminous enough to hold at least a few profitable startups.

Wade Roush is Chief Correspondent and Editor At Large at Xconomy. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

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  • Jules Pieri, CEO Daily Grommet

    Come on Wade…did you really think a PR maestro was going to admit to building “a dipshit company to sell to Google for $25 million?” I did like his answer, even if I don’t believe it.