Populace Ads               “TO DEMOCRATIZE ONLINE ADVERTISING”             WINNER OF “GOOGLE BEST ONLINE BUSINESS         ...
Winner of QRCE 3rd BP Competition                                              2           —  I submitted the original fo...
In a nutshell                                                        3—  Populace Ads (PA) is an Online Advertising    Pl...
A tale of Customers and Creators                                                     4                               Digit...
The Market Opportunity                                                    5—  There are millions of SMBs worldwide.—  15...
The Pain Point                                              6                       AND THE OPPORTUNITYPopulace Ads Busine...
Why SMBs do not advertise online?                                                          7—  2 main barriers  ¡    Tec...
The Digital Marketing Specialists pains                                                        8—  The Digital Marketing ...
Populace Ads Solves these Pain Points                                                      9—  For Customers - SMBs    ¡...
The Market                                             10                       AND THE OPPORTUNITYPopulace Ads Business P...
Phenomenal Growth for Online Advertising                                                      11        U.S. Online Advert...
Ad Agencies Industry                                             12                   Ad Budget vs. Company Size          ...
Ad Agencies Industry, the gap                                             13            Ad Budget vs. Cost of Online Ads  ...
Ad Agencies Industry, the opportunity                                                   14                  Ad Budget vs C...
Ad Agencies Industry                                                     15—  Ad Agencies charge a lot    ¡  Campaign Cr...
Market for Populace Ads                                             16            Ad Budget vs Populace Ads cost          ...
The Populace Ads Lower Cost                                                     17—  Cost of Traditional Online Ads is hi...
Target Customers                                                    18—  Populace Ads’ solution is more affordable but le...
Who Are the Customers?                                                   19—  Medium, Small, & Micro Businesses are mostl...
The Offering                                             20               BRIEF BUSINESS DESCRIPTIONPopulace Ads Business ...
Populace Ads Website                                                    21—  Populace Ads will be the one-stop for all on...
Populace Ads Website, Advertisers UI                                                        22—  Simple UI (Wizard-like) ...
Populace Ads, SEM Experts UI                                                     23—  SEM Specialists can contribute temp...
Sources of Income                                                     24—  Percentage of Ad Spend    ¡  Goal is to lower...
Populace Ads Website, Partnerships                                                   25—  Future Partnership Program to o...
Competition (as of 2009)                                                        26                         Simple UI      ...
Execution Plan                                             27Populace Ads Business Plan, Creative Commons by Attribution t...
Plan Overview                                                     28—  Now: research & spec writing    ¡  Write engineer...
Financial Forecast Summary                                                     29                        Year 1           ...
Risks                                                         30—  Risks        ÷  Risk that SMBs do not find online adv...
Key Issues                                                    31—  Deciding what vertical to target first—  Gathering an...
Conclusion                                             32   “THE MAN WHO WILL USE HIS SKILL AND  CONSTRUCTIVE IMAGINATION ...
Goals & Objectives                                                       33—  Phase 1: Prototype, 6 months    ¡  Build p...
34                         Thank YouPopulace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
More Financial Slides                                             35                                     DETAILEDPopulace ...
Income Statement Forecast                                                           36                                    ...
Sales Forecast Plan                                                      37                         Year 1 (phase 1)      ...
Personnel Resources Plan                                                         38                            Year 1 (pha...
Technology Resources Plan                                                      39                         Year 1 (phase 1)...
Online Advertising Industry                                                      40—  The big revenues of online advertis...
SMB Ad spending                                             41Populace Ads Business Plan, Creative Commons by Attribution ...
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Populace ads business plan (Winner of QRCE 3rd BP Competition 2009)

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I submitted the original form of this business plan to the QRCE 2009 competition in Jordan and won the 1st place called "The Google Best Online Business Plan".
Since then I've updated it and added major reforms. Given my love for the idea, but lack of time, I decided to "open source" it under Creative Commons Attribution 3.0 license. I encourage all to make use of it

Team members: Muhammad Arrabi, Muneeb Arrabi, Fadi Dallasheh, & Ashraf Dabbas

Published in: Business
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Populace ads business plan (Winner of QRCE 3rd BP Competition 2009)

  1. 1. Populace Ads “TO DEMOCRATIZE ONLINE ADVERTISING” WINNER OF “GOOGLE BEST ONLINE BUSINESS PLAN” AWARD AT QRCE 3RD COMPETITION MUHAMMAD ARRABI ARRABI@GMAIL.COM UPDATED 2012Given to my love of this idea but my lack of time – I decided to “open source” it – anybodycan make use of it under the Creative Commons Attribution license. Note: research is mostlyfrom 2009. Populace Ads Business Plan by Muhammad Arrabi is licensed under a Creative Commons Attribution 3.0 Unported License. Based on a work at www.muhammadarrabi.com
  2. 2. Winner of QRCE 3rd BP Competition 2 —  I submitted the original form of this business plan to the QRCE 3rd business plan competition in Jordan and won the 1st place called "The Google Best Online Business Plan". —  Since then Ive consulted several friends, updated it and added major ideas. Given my love for the idea, but lack of time, I decided to "open source" it under Creative Commons Attribution 3.0 license. —  Please, steal my ideas JPopulace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  3. 3. In a nutshell 3—  Populace Ads (PA) is an Online Advertising Platform, that will act as the Ad Agency for the millions of SMBs around the world.—  It has 2 sides (Customers & Creators): ¡  The Customers, mainly SMBs, use very simple wizard-like interface to create & buy rich and proven Online Advertising Campaigns. ¡  The Creators are Digital Marketing Specialists around the world, experts in their local markets, who create the “Dynamic Marketing Templates” and advertise them to their local SMBs. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  4. 4. A tale of Customers and Creators 4 Digital Experts bring SMBs Customers to system Digital Expertsanswer simple worldwide questions & Secret Createuse simple UI Sauce Dynamics Templates User Data Many •  G Channels: Dynamic oo •  M gle Templates o •  B bile ing •  A OL Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  5. 5. The Market Opportunity 5—  There are millions of SMBs worldwide.—  15 million SMBs just in the USA, spend $22.5b annually on ads, but only 7% online. High attrition percentage from Google Adwords.—  Why? Too hard technically. Needs are too diverse. Too expensive to hire Ad Agency.—  Each Digital Marketing Expert can become an Agent for Populace Ads – covering the world.—  If each customer spends $100/month, and we have only 1 million SMBs, revenues will be $1.2b/year. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  6. 6. The Pain Point 6 AND THE OPPORTUNITYPopulace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  7. 7. Why SMBs do not advertise online? 7—  2 main barriers ¡  Technical Barrier: As much as Adwords is simple, it’s very hard for business owners. What is the difference between “Broad” and “Phrase” keywords? How to combine negative and exact keywords to create high-quality entries? ¡  Marketing Barrier: Owners are great at running their businesses, but do not know how to write Copy that attracts the right customers, or understand customer behavior online.—  What happens today: ¡  Many SMBs try Google Adwords for few months, and they pull out because it’s not showing results. Can’t measure or track. ¡  Some Medium Businesses buy an account, set it to “automatic”, and forget about it for a year., only to discover how bad it has been. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  8. 8. The Digital Marketing Specialists pains 8—  The Digital Marketing Specialists (DMS) are experts are creating and managing accounts (and many learn on the job). ¡  However, this process is very time-consuming. And it’s hard to keep up – with new advertising channels coming out continuously (Mobile, iPads, iBooks, etc.) ¡  This limits the number of concurrent accounts they can manage.—  And they don’t know how to do all the other things besides technical help ¡  Bringing Customers, Money Collection, Deal Negotiation with Publishers, etc. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  9. 9. Populace Ads Solves these Pain Points 9—  For Customers - SMBs ¡  Populace Ads is a one-stop-shop for Online Advertising Solutions. ¡  Business Owners answer survey-like questions (similar to Turbo-Tax). ¡  They choose how much they want to spend (we take as little as $50/month).—  For Creators – DMSs ¡  We create a fully automated platform that allows Specialists to create a Campaign once, and they “templetize it” as a Dynamic Marketing Template. ¡  The Digital Marketing Specialists can service hundreds of concurrent accounts using these templates – with the PA DMS Dashboard. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  10. 10. The Market 10 AND THE OPPORTUNITYPopulace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  11. 11. Phenomenal Growth for Online Advertising 11 U.S. Online Advertisement Spending (Billions) (Source: eMarketer, Nov 2010) $32.6 $28.5 $25.8 $23.4$22.7 $21.2 $16.9 $12.5 $9.6 $8.1 $7.1 $7.3 $6.0$4.61999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  12. 12. Ad Agencies Industry 12 Ad Budget vs. Company Size Company SizePopulace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  13. 13. Ad Agencies Industry, the gap 13 Ad Budget vs. Cost of Online Ads Ad Budget Cost of Preparing Online Ads Break-even point Company SizePopulace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  14. 14. Ad Agencies Industry, the opportunity 14 Ad Budget vs Cost of Online Ads Ad Budget Cost of Preparing Online Ads Traditional Break-even The “no digital Market for pointBig Ad Agencies marketing” gap Market for Smaller Ad Agencies & Consultants Company Size Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  15. 15. Ad Agencies Industry 15—  Ad Agencies charge a lot ¡  Campaign Creation $2,000-$7,000+ ¡  Campaign Management $2,000-10,000/month ¡  Top agencies charge much more (e.g. for Coca Cola)—  As a result, out of 15 million small-and-medium businesses, only 7% do online advertising. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  16. 16. Market for Populace Ads 16 Ad Budget vs Populace Ads cost Ad Budget Cost of Preparing Online Ads Cost of Populace Ads A new market opens up for Populace Ads The traditional Break-even The new Break- point even point Company SizePopulace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  17. 17. The Populace Ads Lower Cost 17—  Cost of Traditional Online Ads is high: ¡  Creative content done by hand ¡  Management done by hand or semi-automated ¡  Marketing research done by hand—  Populace Ads Solution ¡  Economy of scale ¡  An innovative component that will create campaigns for many customers automatically. Cost of initial design is high, but auto-customizing it is very cheap. ¡  Management is fully automated ¡  Marketing research is done for whole vertical, used by all campaigns. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  18. 18. Target Customers 18—  Populace Ads’ solution is more affordable but less customizable than full campaigns done by hand.—  Target Customers: ¡  (Any company with online ad budget $100-2,000/month is a potential customer.) ¡  Medium Businesses ¡  Small Businesses ¡  And even Micro Businesses Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  19. 19. Who Are the Customers? 19—  Medium, Small, & Micro Businesses are mostly Local Companies targeting specific region. They are increasingly getting clients through the internet. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  20. 20. The Offering 20 BRIEF BUSINESS DESCRIPTIONPopulace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  21. 21. Populace Ads Website 21—  Populace Ads will be the one-stop for all online advertisement needed by SMBs ¡  Create their campaigns ¡  Manage their campaigns ¡  Monitor campaign performance on the web Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  22. 22. Populace Ads Website, Advertisers UI 22—  Simple UI (Wizard-like) Website ¡  By answering few questions ÷  E.g. Business name, vertical, services offered, location, etc. ÷  Ad Channels: Google, Yahoo, Local news sites, etc. ¡  Ad Campaigns are automatically generated ¡  Ad Campaigns are also automatically managed & optimized—  Behind the Scenes: ¡  Proprietary automatic system for creation and optimization ¡  Possibly a team of SEM specialists for extra customization and monitoring. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  23. 23. Populace Ads, SEM Experts UI 23—  SEM Specialists can contribute templates: ¡  Provide a website for SEM Specialists ¡  Local SEM specialists can create their own campaigns ¡  They can market them to their own local communities ¡  Profit sharing – they keep 5-10% of ad spend, Populace Ads keep 10-15%—  Goal ¡  Reaching SMBs is very hard ¡  Developing customized campaigns for world regions & languages is very hard ¡  This will also morph us from Ad Agency status to a Platform, thus more attractive to be acquired. ¡  Risk: features exposed to competition. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  24. 24. Sources of Income 24—  Percentage of Ad Spend ¡  Goal is to lower barrier & one-time fees. ¡  Thus, charge 10-50% of ad budget. 10-20% is industry practice. Up to 50% on low budgets is likely to be acceptable.—  Special Channels Fees ¡  Might request monthly fee or minimum-budget for special channels (e.g. News sites ads)—  Advertisers Discount ¡  We’ll get discount from advertisers (e.g. Google & Yahoo) for posting large volumes of ads. This discount is part of our income. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  25. 25. Populace Ads Website, Partnerships 25—  Future Partnership Program to offer our service through aggregate websites. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  26. 26. Competition (as of 2009) 26 Simple UI Automated Automated Min. Campaign Campaign monthly Creation Mgmt budget $100Populace Ads ü ü üAd Agencies (e.g. (semi) $5,000marchex.com) (semi) (semi) $2,000?Yodle.com ü (semi) (semi) $2,000?LocalReach.com üSimple Search (semi) (very $1Engine interface limited)(Google, Yahoo)Potential Tools (semi) ?Makers(Clickable.com) Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  27. 27. Execution Plan 27Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  28. 28. Plan Overview 28—  Now: research & spec writing ¡  Write engineering specs for populace ads engine ¡  Research SMB ad verticals, offer by-hand SEM consulting ¡  Raise seed funding, ~$120K—  +2 mo: Build Prototype (seed funding) ¡  Build Prototype in Jordan ¡  Get 3-5 local customers, tune engine & prove concept—  +10 mo: US Market (series A) ¡  Create US company: CEO, Marketing, & Sales; Expand Jordan ¡  Reach 1000+ US customers, many verticals, many channels—  +12 mo: International (self-funded) ¡  Target SMBs in Europe. Expose the “Platform” Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  29. 29. Financial Forecast Summary 29 Year 1 Year 2 Year 3Customers 80 500 1500Revenue $480,000 $3,000,000 $9,000,000Gross Margin $80,000 $692,308 $2,076,923Expenses $104,400 $327,600 $685,600Net Earnings ($24,400) $364,708 $1,391,323 Targeting 1 million in 3 years. (take with a grain of salt – lots actually) Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  30. 30. Risks 30—  Risks ÷  Risk that SMBs do not find online advertisement suitable: low ÷  Risk of competitors lowering prices: medium ¡  Addressing risk ÷  SMBs already find online advertisement useful and are spending more on it. ÷  Competitors cannot lower price beyond the cost of the Ad Servers, which is the same for all. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  31. 31. Key Issues 31—  Deciding what vertical to target first—  Gathering an excellent engineering team in Jordan to build the Prototype—  Finding a CEO for the company with extensive SMB market experience.—  Finding the best sales method for SMBs – do we need an on-ground sales force in the US?—  Finding suitable verticals to Expand. Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  32. 32. Conclusion 32 “THE MAN WHO WILL USE HIS SKILL AND CONSTRUCTIVE IMAGINATION TO SEE HOW MUCH HE CAN GIVE FOR A DOLLAR, INSTEAD OF HOW LITTLE HE CAN GIVE FOR A DOLLAR, IS BOUND TO SUCCEED. “ HENRY FORDPopulace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  33. 33. Goals & Objectives 33—  Phase 1: Prototype, 6 months ¡  Build prototype, can support 500 customers with 1 channel (most likely Google Search Text Ads) ¡  Prove that the fully-automated Creation & Management engines do work. Tune them. ¡  Target only 1 vertical to start with ¡  Get 5-10 customers, (at lowered rate or free)—  Phase 2: Cover Costs, 1.5 years ¡  Expand Engine to support 2000 customers, with 2-3 channels. ¡  Established in 1-3 verticals, aggressive sales & pricing ¡  Get 500 customers—  Phase 3: Profitable Expansion, 2+ years ¡  Expand Engine to support 20,000 customers, with 10+ channels. ¡  Expand into as many verticals as possible (20+) ¡  Get to 5000+ customers ¡  Sign Partnership with Vertical Portals ¡  Ad Populace as a Platform! (more on next page) Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  34. 34. 34 Thank YouPopulace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  35. 35. More Financial Slides 35 DETAILEDPopulace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  36. 36. Income Statement Forecast 36 Year 1 Year 2 Year 3Revenues $480,000 $3,000,000 $9,000,000Cost of Revenue $400,000 $2,307,692 $6,923,077% of rev 83% 77% 77%Gross Profit $80,000 $692,308 $2,076,923% of revenue 17% 23% 23%Sales & Marketing $8,400 $111,600 $289,600Product Development $72,000 $150,000 $288,000General Admin $24,000 $66,000 $108,000Operating Expenses Total $104,400 $327,600 $685,600% 22% 11% 8%Earnings before taxes (24,400.00) 364,707.69 1,391,323.08taxes (2,440.00) 36,470.77 139,132.31Net Income (21,960.00) 328,236.92 1,252,190.77 -5% 11%% of revenue Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com 14%
  37. 37. Sales Forecast Plan 37 Year 1 (phase 1) Year 2 (phase 2) Year 3 (phase 3)Average Customer $500 $500 $500Monthly SpendNumber of 80 500 1500CustomersAnnual Revenue $480,000 $3,000,000 $9,000,000Charged 20% 30% 30%PercentageAnnual Cost (to $400,000 $2,307,692 $6,923,077Search Engines)Gross Margin $80,000 $692,308 $2,076,923 Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  38. 38. Personnel Resources Plan 38 Year 1 (phase 1) Year 2 (phase 2) Year 3 (phase 3)Executives 1 2 (hire CEO) 3 (Marketing)Execs Salaries *$24 (2/mo) $66 (2.75/mo) $108 (3/mo)Engineers 3 5 8Engr Salaries $72 (2/mo) $150 (2.5/mo) $288 (3/mo)Online Ad Techs 0 2 4OAT Salaries $48 (2/mo) $120 (2.5/mo)Sales 0 2 4Sales Salaries $36 (1.5/mo) $86.4 (1.8/mo)Support 0 1 4Support Salaries $12 (1/mo) $57.6 (1.2/mo)Total Salaries $96,000 $312,000 $660,000*Annual salaries in thousands of dollars (Parenthesis has monthly per person) Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  39. 39. Technology Resources Plan 39 Year 1 (phase 1) Year 2 (phase 2) Year 3 (phase 3)Computers $6,000 $6,000 $10,000Hosting Server $0 $6,000 $12,000Misc Office $2,400 $3,600 $3,600Total Salaries $8,400 $15,600 $25,600 Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  40. 40. Online Advertising Industry 40—  The big revenues of online advertisement go to 3 types of companies: 1.  Ad Agencies create and manage the ad campaigns. (e.g. Populace Ads) 2.  Ad Servers decide where to serve what ads (e.g. Google AdWords engine, Double Click before it was acquired, Yahoo, etc.) 3.  Publishers show the ad on their pages (e.g. CNN.com, the Google search page, any personal blog with AdSense etc.) Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com
  41. 41. SMB Ad spending 41Populace Ads Business Plan, Creative Commons by Attribution to MuhammadArrabi.com

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