AdGrove.com
Adgrove.com is an internet advertisement infomediary or adfomeiary that specializes in providing radio advertisement information to small businesses that are looking to advertise on radio . The company presented a business plan to potential investors in order to raise setup capital. The plan presented the overview of the company, the target demographic, the marketing strategy, the operations strategy and the financial overview.
Creating and buying ad spaces is a time-intensive process that involves several hours of transactions (sometimes to the tune of 3 weeks) and several disparate pieces of information. As such these activities are very expensive for small business owners who want to advertise on any media, especially radio. Small business owners seldom have the extensive demographic and market data that is required to make buying decisions. Conversely for radio stations, dealing with small customers is not cost ineffective in terms of number of hours spent on negotiation versus the actual returns. AdGrove.com aims to close the gap between these entities by providing a one-stop information purchase and deal-making solution that cuts down on the number of hours required per advertisement sale transaction. Radio stations can update their advertisement slot details, their pricing details, their demographic reach details, their program details on the website. Small businesses can view this information and make a decision on buying. Small businesses can also create their ads (both copy and voice) and submit to sellers online saving even more time. All this will be facilitated by AdGrove.com for a fee.
AdGrove.com is targeting the 12,375 radio stations that are present in the United States to create the advertisement database. This will be achieved through an alliance with the Radio Advertising Bureau and their 4,800 members. AdGrove.com is also planning to reach the customer base comprised of small businesses in the sectors of retail, automotive, consumer services, business, entertainment, food, hotel, travel, computer, and snack sectors. This will be achieved by targeting small businesses that have high-growth potential, are already on the Internet, and where business owners are in 18-40 demographic since they are more likely to adopt or have adopted technology in their businesses and are more open to e-commerce.
Business-to-business e-commerce is a $17 billion industry, whereas advertising is a $190 billion industry. These are both high-growth and rapidly growing areas of business. It is estimated that the B2B industry will grow to $1.7 trillion by 2002. This is in conjunction with the growth of the internet usage by small companies which have less than 100% employees. Over a two-year period, internet adoption by small businesses has doubled and is expected to grow exponentially in the decade. Radio advertising represents 75% to 100% of revenues of the close to 13,000 radio stations that are present in the country. This industry, which is worth almost $18 billion is expected to grow annually by 8.5%. Internet and radio industry marketing campaigns are responsible for the steady growth in this sector. Radio is a primary source of information for many people at home and while they drive to work. Close to 95% of radio owners listen to radio more than 3 hours a day; radio reaches 80% of professionals and managers. These numbers indicate that radio is a great means to drive traffic to the website and that there is a large potential for firms acting as intermediaries between radio stations and small businesses.
With the view to attracting more visitors to the site, AdGrove.com will sell radio advertising space and market research data for prices that are set to the perceived value of the product. The company’s revenues will primarily be comprised of transaction fees for brokering sales. Other sources will be fees for market research, advertisements on the web site, paid promotions, and membership fees of buyers and sellers. Pricing will be competitive given that AdGrove.com has both direct competition in the form of BuyMedia.com and indirect competition from traditional radio sales, market research firms, advertising agencies and websites selling other media. However, AdGrove.com expects that by focusing on the radio segment and small businesses, the data that the company provides will have more depth and enable faster decision making and create value for money.
Reference
Center for Business Planning. (2016). AdGrove.com. Retrieved from businessplans.org: http://www.businessplans.org/adgrove/adgro00.html
