A serial entrepreneur, Edward “Ted” Murphy has founded six companies since 1994. Murphy’s latest venture, IZEAoperates a variety of social media properties includingPayPerPost, the world’s largest Consumer Generated Advertising Network. Founded in June of 2006, IZEA has raised over $10 million in venture funding from leading venture capitalists including Draper Fischer Jurvetson. The network has attracted over 140,000 bloggers and 16,000 advertisers and continues to grow.
Murphy’s creative prowess and passion for the unconventional has earned him the ear of some of the world’s largest marketing organizations including FOX, Bombardier, General Motors and Disney. His efforts have received national recognition, including A/V Multimedia Producer Magazine’s “Top 100 Multimedia Producers” for two consecutive years. In 2006 Murphy’s viral campaign created for the launch of PayPerPost was inducted into Marketing Sherpa’s Viral Marketing Hall of Fame. Murphy is a prominent visionary, speaking and presenting to marketing and Internet professionals around the world.
Murphy is the Executive Producer and star of RockStartup, an online docu/reality television show about running a startup. The show can be downloaded via iTunes or on the web site at RockStartup.com.
Eric Enge: Can you start with a brief overview of IZEA?
Ted Murphy: IZEA is a company that’s focused on social media marketing, so we operate a variety of properties, but the team’s most well known properties are PayPerPost and SocialSpark.
Eric Enge: What was your original vision when you launched PayPerPost?
Ted Murphy: PayPerPost was actually spun out of my previous company, where we were doing a lot of outreach programs and we had some really great results for our clients. We discovered that the relationships with the bloggers were difficult to create for each individual advertiser, and that each blogger had different expectations in terms of what they wanted. Some of them wanted to be compensated, some of them didn’t and some people were asking for different things.
What I really recognized was that there was an opportunity to create a market place that connected the advertisers and bloggers and allowed them to easily pair up with each other. And so that was the real idea behind PayPerPost, to provide a way for advertisers to get the word out in the blogosphere and really drive traffic to their websites.
Eric Enge: Right. Ultimately the process of contacting one advertiser at a time if you are a blogger, or one blogger at a time if you are an advertiser just isn’t scalable.
Ted Murphy: Yes, very time consuming and with mixed results. So we wanted to really create something to allow that to be a repetitive process. The other component there is that while we were servicing larger clients we saw an opportunity for smaller clients and for self-serve clients to use this tool. So people that couldn’t afford an agency or a PR firm now have a tool so they are able to reach out to the blogosphere.
Eric Enge: Right, it creates some efficiencies in the market. Did you anticipate that the people would use this as a method for essentially buying and selling a link?
Ted Murphy: You know it’s interesting, because links are almost like the currency of the web, right? That’s how people get from one place to another.
I certainly didn’t recognize the impact that it would have on SEO results; after you have had a couple of advertisers that had really great results using the platform they started beating the SEO drum and really touting that the platform as an SEO tool.
The original vision was more of a viral marketing tool and a traffic generation tool. I think that that was something that we weren’t really prepared for and we didn’t really understand the impact that it would have on both bloggers and advertisers, to be honest,. And this is something that we really had to step back from and take a look at and see how we wanted to address it long term.
Eric Enge: And then of course, other people like ReviewMe, for example, came into the picture.
Ted Murphy: There have been a number of competitive services that have launched, that don’t talk about SEO. Some of the other platforms that are out there are really focused very heavily on the SEO value, and that’s not really, our vision for this form of marketing.
Eric Enge: Indeed, but that whole situation led to your thinking in terms of launching SocialSpark.
Ted Murphy: Yes, I think a lot of the discussions and controversy that resulted were very healthy things; I wouldn’t change anything. I think the controversy helped us really get our name out there; good, bad, or otherwise and I think that the feedback that we got really helped us lay out a solid game plan for the future.
So we were able to listen to the bloggers, the readers and the advertisers and ask, what did you really want from this and what is the right way to do this? Because nobody had ever sponsored posts on that scale before, and so really what it really helped us to do was to establish a strong code of ethics and rethink the entire platform from the ground up.
Eric Enge: Right, and I think this is driven by a certain audience, people who are not willing to engage in PayPerPost?
Ted Murphy: Yes, I think that there was certainly outspoken bloggers and outspoken advertisers that took a stance against sponsored posts. That was really because we hadn’t really set a standardized code of ethics and operations. That’s really what we are focused on now, in order for this entire concept of sponsored post to really grow, we have got to get all the different platforms onboard and operating by the same set of by rules and ethics.
Eric Enge: So are all outbound links in a paid-post NoFollowed on SocialSpark?
Ted Murphy: They are.
Eric Enge: The impact then is to really focus advertisers on whether there is a traffic and branding value from being in this location and on this blog for the advertiser?
Ted Murphy: Yes, and I think that it comes down to the content that is being created on the individual blogger’s sphere of influence. It’s important that we do have a standardized way that we are operating and agree on a set of rules that all these companies can agree on.
Do I think that’s going to happen any time soon? I am not so sure. But I think that we are definitely perceived as the leaders in this space and I think we are really stepping out on a limb here and saying, hey this is the way we are going to operate and we hope the rest you guys follow.
Eric Enge: I mean, if you had a say on a consumer rights group viewing your advertising, this is the thing that they would just absolutely demand.
Ted Murphy: Yes, and I think that that’s a good thing. I think that those groups are going to see more activity for them over time whether it’s sponsored posts or the affiliate programs. You know affiliates, it’s a multi-billion dollar industry and there is no clear code of the ethics for the discloser of affiliate links, and so I see that as another area where there is a lot of room for improvement and growth.
Eric Enge: Right, like the maturing of the industry overall.
Ted Murphy: Yes, exactly. I think that it’s very similar to what we saw in the search engines themselves when you first had less clarity between paid links and organic links, and then now you have the clear identification of those sponsored links. And now that’s really a standard that everybody abides by, and I hope that we will see the same type of thing in blogging and sponsored content that eventually everybody will get together and say this is the way that we are going to do it.
Eric Enge: Right, although it’s still misleading to some users when they perform a search. You see this little blue box with three links at the top. And it does say, sponsored results, but it is over in the right where the eye doesn’t go so quickly. It’s labeled and anybody who spends 15 seconds on the page will see it or notice it, but no one does that.
Ted Murphy: Yeah, and I don’t know if you will get down to the point of the right-hand side, or the left-hand side, or the top, or the bottom; but I do like that those companies were able to come to the same consensus that they are going to at least label this, and they are going to label them in this particular fashion.
Eric Enge: Yeah, I think that’s absolutely a great first step, no question. As you are differentiating a little bit between taking that first step and doing something versus people actually understanding it because of the way they use the web. So what about just paid links in general, don’t we have the same issue with the old links market place?
Ted Murphy: I think that Google has kind of created this value around links as they affect search engine rankings, and so naturally people are trying to get links in whatever way they can. Whether that’s paying for links directly or through business relationships, it becomes very hard for Google, I believe to determine what is a paid link. Is it paid only if I pay cash for it? Is it paid if I receive services for it? Is it paid if we are doing business together in some way?
I think that it’s a big flaw in the algorithm and the way that they are ranking sites that ultimately they’ve got to find a replacement for because there is no way to really judge how a link is created or why a link is created.
Eric Enge: Right, it’s very much like the rat in the maze hunting for the cheese whose behavior changes dramatically the moment they realize they are being observed.
Ted Murphy: Yes.
Eric Enge: The original algorithm was based on the assumption that people don’t care what the search engine is doing with it, it’s just when the search engine became a primary source of traffic that they suddenly started to care a lot. So that’s what makes the whole thing complicated.
But I would also suggest that replacing the algorithm is a very, very difficult thing do. It actually is still the best technique for helping the site when you are dealing with a large number of sites. I mean, if it was easy to replace, they would have replaced it by now.
Ted Murphy: Yeah. Oh, I don’t think that it is. I am happy I am not the guy who would need to try to figure that out. But I do ultimately think that whether it’s bloggers or whether it’s corporate marketers, people clearly understand the value of the link. And the behavior that the original algorithm was based on, the premise that links should determine the ultimate ranking of an individual site, is flawed because there are so many different ways to gain that system.
Eric Enge: Indeed. So I am just going back to target audience for a moment. You talked about a variety of people who wanted something like a SocialSpark. A lot of those would be major brands, right?
Ted Murphy: Yeah, I think that SocialSpark is particularly attractive for larger brands because they get to handpick the people that they associate their brand with, and at the same time it provides a way for advocates of that brand to reach out and contact the advertiser.
SocialSpark is really based on the premise that the relationship can be formed by either party. Either I am an advertiser looking for bloggers that are currently talking about me or I am a blogger who is a fan of a brand who can reach out to that brand.
Eric Enge: Indeed. So this distinction is important to major brands?
Ted Murphy: Well, I think there are honestly two things. I think that one is the platform and the level of detail that we provide, both on the demographics and traffic of the blog, and also on the effectiveness of their campaign. I think the second component really comes down to that code of the ethics.
Advertisers that are engaging in sponsored content want to make sure that they are not going to receive a lot of blow back for participating in a campaign like that. And the way that that would happen is by not having these clear guidelines in place. I think that setting that high level of accountability for the bloggers and the advertisers is really what has attracted a lot of the major brands to using the platform.
Eric Enge: A number of them that really don’t even think about it in terms of being associated with paid links, but they are just concerned about disclosure principles, things like that.
Ted Murphy: Yeah, disclosure is definitely a huge part of that. You know, I think that you’ve seen a lot of companies been called out on the so called viral marketing campaigns where there is a lot of deception in the last couple of years. And as soon as people find out that it’s a paid campaigns there is a lot of backlash. So our approach is to be totally transparent from the beginning.
Eric Enge: Right, because when you get into a broad platform like the Internet has become, there really is a lot of deception. Yet the community is like the news media was for us and developed into in the eighties and nineties, they were the watchdogs in finding all these things that were wrong with anything.
Major news media is still doing that, but now individual people can do it themselves in social media environments.
Ted Murphy: Yes, and it’s more public in many ways because it’s searchable.
Eric Enge: Right, you can reach very large audiences as happened with the video of the Comcast technicians sleeping on the couch.
That was not a positive branding exercise. But you also said something about the way these kinds of entities think about their business. You are an entrepreneur and I am an entrepreneur and we have a certain way of thinking about our business. Even among entrepreneurs there is probably some variance, but when you get into the larger companies they just have so many assets to protect.
Ted Murphy: Yes.
Eric Enge: I mean just to talk loosely about brands. They are things that take tens of millions or even billions of dollars to build.
Ted Murphy: Yeah, and then they become tens of millions or billions of dollars, and so obviously you want to be able to protect that asset the best you possibly could.
Eric Enge: Indeed, so are there other aspects of SocialSpark that you want to highlight for the readers?
Ted Murphy: I think that the biggest positive aspects of the system are that it’s completely open and transparent so as a blogger you can come in, browse all the advertiser offers that are out there without having to login or create an account. Also, you can see what the whole system is about and the other posts that people have done and it really makes it a transparent marketplace on both sides. So, our goal here is to really help quality advertisers and quality bloggers create quality relationships with each other.
Eric Enge: Right, and why did you decide to create a new property instead of morphing PayPerPost?
Ted Murphy: Well, I think that a lot of people, this is a big adjustment for a lot of people. A lot of people that are using PayPerPost both on the advertisers, side and the bloggers side; are moving to the system where everything is out in the open and people can comment on your opportunities, and they can comment on you profile, and there is certain expectation of being active and participating with a blogger or an advertiser; it’s not something that everybody is quite ready for.
The PayPerPost market place is much more passive than the SocialSpark market place and some people like that and some people don’t. We like that, and so we wanted to really have a solution that kind of served both markets.
Eric Enge: Right, so you will continue to run PayPerPost for the foreseeable future?
Ted Murphy: Yes, I think that you will see more and more elements and concepts of SocialSpark showing up in PayPerPost, but we didn’t want to really flip a switch and say alright guys you guys have been using this for the past two years and now it’s completely different.
We probably would have lost a lot of customers that way. We want to be able to get people used to these new concepts and give them an opportunity to adjust and embrace it.
Eric Enge: Right, and of course there are a lot of people out there who are not at all brand conscious and just scrambling for traffic.
Ted Murphy: Yes, absolutely.
Eric Enge: Indeed, so what’s the initial reception for SocialSpark been like?
Ted Murphy: We have had tremendous reception, some great brands that have joined on as advertisers.
Eric Enge: Can you name any of those brands?
Ted Murphy: Yeah, there are a couple that you can actually see running now. Campaigns for VO5 hair products, Dirt Devil products, Reader’s Digest, Dockers, and USA Network are already in place.
Eric Enge: It is in beta now, right?
Ted Murphy: It is in beta, right now we are just iterating on the platform. We’ve got a lot of feedback from people who like this feature and don’t like that feature, and they would like to see things work in a different way. So we are really taking all that feedback and working as quickly as we can to iterate and provide a better user experience.
Eric Enge: Thanks Ted!
Ted Murphy: Thank you I appreciate the opportunity.