GrooveVC Interview with Vertro CEO Peter Corrao

October 26, 2009 at 4:22 pm Leave a comment

This past week we got an opportunity for a brief call with Vertro CEO Peter Corrao.  During the call we were able to ask several of the questions our community members have submitted over the last few weeks.  Of course, there were a number of questions and topics he could not discuss prior to the Q3 report that will be released in a few weeks, but there were some interesting answers to the submitted questions and a number of good takeaways that helped us to have a better feel for the general direction of this business and how GrooveVC members may be able to have an impact on Vertro’s results going forward.

Q- How is the company’s expansion into China/India progressing?
A- the company continues to test these markets with their ad spend set to maintain a constant presence there equal to about 10% of the total toolbar base.  Over several months we will be able to determine if the return on investment is similar to what was described in the first paragraph for the overall toolbar base performance.  As mentioned on the previous conference call, these toolbars only cost about 10% of what we would typically spend to acquire a toolbar in our core English speaking markets, but they only monetize at about 10% or so of what we normally see from toolbars in the core markets.  Vertro is continuing to spend a small percentage of our ad budget to maintain a constant level of these toolbars over a several month period to determine if we can match or beat the ROI we currently earn in our core markets. Should that prove to be the case, the company can quickly ramp up the ad spend to grow this segment rather quickly, which could open up several promising options that would further improve the monetization of this segment.

Q- Will the Alot Home Page eventually offer a local or directory search option?
A-  In the same way that Home Page users can choose from among “web search, images, news, shopping, etc.”, Vertro intends to offer a local version and is currently reviewing several partner options for this service.

Q- Will Alot Home Page and/or Toolbar users eventually be able to set up their Home Page or toolbar options on their iPhones and/or other mobile devices?
A-  While they were very obviously not wanting to discuss specifics, they did indicate that several initiatives were already underway on this front.

Q- How long does it take on average for Vertro to recoup the marketing cost of acquiring a toolbar user?
A- Alot has historically been able to (on average) recoup the amount they spend to acquire a toolbar user within 6 months.Thus, if they spent an average of $1 to acquire the average toolbar user, they would expect on average to see those toolbars generate $1 in revenue over their first 6 months.  The revenue generated typically declines thereafter and the average has been that they provide about half that much over the remaining average life.  Thus, using these nice round $1 example above, the average toolbar costs $1 to acquire, Vertro recoups that $1 in six months and the user ultimately generates around $1.50 in revenue before they stop using it.

Though he could only discuss trends through the August 31 period results that the company released to the public on September 10, the trend of higher usage rates (i.e. more searches, more clicks) and lower attrition rates have resulted in the company being able to recoup that $1 within five months versus the six months they have historically required.  This is a very bullish trend that the Groove hopes to be able to impact further going forward, as we add new users who will search/shop Alot first and often. In the aggregate, the growing GrooveVC community members’ usage of the Alot toolbar can impact the average revenue and usage rates, lower the attrition rates and ultimately have an impact on the average lifetime values, helping to increase them from levels that would be expected based on historical data.


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