AdGood Provides Affordable CTV Advertising For Nonprofits

There are some ideas that make perfect sense once your hear about them for the first time.

That’s certainly the case with AdGood, a company that takes excess Connected TV (CTV) ad space and provides it to non-profits at a steep discount. The companies donating the excess ad space get a tax break on time that would otherwise go unused. And non-profits not only get cost-effective television advertising, AdGood also provides help creating the ads as well as managing the ad campaign and tracking performance.

I recently spoke with Craig Heiting, Chief Revenue Officer of AdGood when I was at StreamTV in Denver and he walked me through the company’s business model, the challenges of working in a non-profit space and where he sees the company heading in the next few years.

The conversation has been lightly edited for clarity (mostly min)

One of the reasons I wanted to talk to you was that I wasn’t familiar with the business. And I think it’s a fascinating story. Can you talk about the origin of it?

Craig Heiting: So it’s really the brainchild of Chris Johns, who is our CEO. We worked together. He was the creator of all of the ad tech solutions at Whirl. And I was in charge of business development at Whirl in the early days. And our CTO was also an engineering fellow at Whirl as well. So we were all working together at that company, all great friends. And we sold that company to Apple. And Apple blew up.

So that was good. It was good for us.

So we all left Whirl. And we thought, what can we do to give back? And Chris came up with this idea because he was giving blood or something. And he asked them “Why don’t you advertise the Red Cross on TV?” And their response was that it was very expensive.

He knew that CTV and streaming TV, they’re not selling out 100% of their ads. We also knew from a lot of studies that brands that associate themselves with non-profits or social causes have a much higher perception among the 18-40 year group and among people in general.

We also knew that ad slates were horrible. (Ad slates are those generic ads that air when the commercial time hasn’t been sold). And they had a horrible effect on viewership. You know, people would get up and leave. Some people are doing squeezebacks where they hold all the ads to the end. We also know the data shows that nobody likes an ad break that’s five minutes long. They’re gone. You lose them.

So we took all of this knowledge and we thought we can do some good. We decided that we would do that by forming a non-profit ourselves. And then go to all of our friends that are publishers, the platforms, and see if they’ll donate their unsold ad information to us. And we made it as easy as possible.

We said, we’ll just give you a tag you put at the end of your ad break. And we’ll take the scraps, whatever you don’t sell, and we’ll fill that with non-profits. And then we went to the non-profits and we said, we’ll give you these ads for a fraction of the cost. Because the only cost is there’s still some technology expenses involved. So they get about a $6 CPM, which is way better than like an $18 to $25 CPM.

And we get all day parts, all great things. And we got some great partners like LG, and A&E, and Samsung, and Scripps. Right now 4.5 billion ad avails every month that are donated to us. We take all of the ad avails that everybody has, we track all of that. And we give them the tax certification that they need to do whatever they want to do. If they want to write off that as a donation to the platforms, then they do that.

And then we found that there are non-profits that never advertised or couldn’t afford advertising. So we started a media fund where people and corporations and donations could go directly into this media fund. And then we allowed the smaller non-profits to apply like a grant. They apply, and then we give them advertising for free using the money in this media fund.

They can go on our website and create an ad using our AI ad manager. And it scrubs their website and creates their own ad. So if they don’t have an ad, we can create one for them with a QR code that goes to their website. You know, it takes people to their ad. So we’re trying to be everything to everybody and take care of the big ones and the small ones. We do have the big non-profits as clients, but they don’t need us as much.

They can just stretch their money farther.

Craig Heiting: Yeah, they can stretch their money farther. But the little ones, it’s really kind of fun. And we can target just like you would think you could target on any streaming. We can target to the zip code, the demographics, and we can even use lists of their donors and target them and things like that.

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How difficult was it to build the tech stack to do all this? Because there’s a lot of moving parts. I’m assuming some of it is not that different than what a regular ad agency would be using.

Chris Heiting: It really isn’t that much different. In fact, the only difference is that we asked for it for free and then paid a much reduced rate. You know, we wanted that donated originally. But Chris knew how to put that workflow together, Chris and Andy. They knew how to put the ad stack together and all the technology. And we have some great partners like Magnite and Spring Serve. We have a lot of really good partners. So they give us a better rate.

But it’s not free. So that’s the cost that we pass on to the nonprofits.

How long did it take you to convince nonprofits to sign onto this? I’m sure they get pitched stuff all the time and a lot of it turns out to be not a scam, but it’s not what people say they are pitching.

Craig Heiting: They don’t like to be pitched.

This is the biggest challenge that we have, right? Because I thought when we put all this together and I got all these people to donate their unsold inventory, that it would be really easy. I would just put a LinkedIn message out saying, calling all nonprofits, come to us. And they’d all come running. And that’s not happening because there’s no StreamTV Show for nonprofits. They’re like all very segmented and all over the place.

So we’ve had to learn a lot about it because, although all of us have been involved with nonprofits a little bit, none of us really knew the nonprofit community and the inner workings of nonprofits. They don’t like to be marketed to because they’re very leery about that. People are always trying to sell them stuff.

We’re growing slower than I’d like because nonprofits don’t really all know about us. So our biggest goal really is working on getting into the non-profits and getting involved with them.

It seems like you would also have some of the same issues that a programmatic ad company would have in that you want the ad experience for the viewer to be as seamless as possible. For instance, it doesn’t help the nonprofit if their ad runs three times back-to-back.

Craig Heiting: We won’t allow that to happen.

We can even do contextual advertising so we can match the mood of the scene right before the ad. So if it’s a dog that’s dying in the program and you’re crying about that, we can put a dog ad. Save the dogs right there. So we have a lot of good technology because we created all of that technology with Whirl.

But yeah, we make sure that they’re not back to back. We don’t do any faith-based or political nonprofit advertising. They have to be a true 501C and really have a purpose for themselves. So that hasn’t been the issue. The nice thing is we get all day posts. It’s not like the old broadcast way. I came from the broadcast where you’re forced to give a certain amount of your inventory. And you gave them whatever’s left over in the middle of the night. We get all day posts, primetime, everything. So we can really get some good reporting.

Is there something that you can’t do yet that you’d like to do or is in the process where you think, this is something that we’re working towards?

Craig Heiting: I think what’s nice about us too is we can participate with our partners and be innovative in the advertising space because we’re a nonprofit. So when they’re looking, they want to try something new in advertising, they can look to us and we’ll partner with them to look for new ways to advance advertising, particularly with streaming because that’s all we do with streaming.

So that’s really cool. We get to continue to innovate technologically in this industry to make it better, to push it forward because of the fact that we’re doing it. There are things, of course, that we want to do because we want the ad targeting to get better. The more you can give people the ad that fits the mood they’re in at that moment or if they watch a lot of nature programming, give them a nature ad, the more you can do that, that’s good for the viewer, it’s good for the nonprofit, it’s good for the network because they’re getting better satisfaction. So we’ll continue to do that and we get to do that, we get to participate in that.

You mentioned the advantages of being a nonprofit. Are there some disadvantages business-wise?

Craig Heiting: Well, with this kind of idea that we had, it would easy to go and raise VC money or something, and we can’t do that. That’s probably the biggest disadvantage, your hands are tied. You really have to fund this yourself at the beginning. So the three of us are doing without.

Oh, yes. I had a feeling. You know, with this kind of idea that we have, it would be easy to go and raise VC money or something, and we can’t do that. So that’s probably the biggest, you know, your hands are tied. So you really have to fund this yourself at the beginning. So the three of us were doing without.

But we’re getting past that stage where we don’t have to do that and we don’t self-fund. But we’ve been self-funded pretty much to get this going. That’s probably been the biggest learning curve for me because I’ve been involved in a lot of startups. We’re always in one of them. I’ve always been really good at raising money, either from family and friends at first or big VCs. And I can’t do that here.

I can get donations, though. We can get donations into the media fund, which is really nice. Our first big fundraiser is coming up on November 20th at a golf course. It’s a golf open. And all the money goes to that media fund so that we can provide free advertising. My goal would be to get that media fund so big that anybody who can’t afford to advertise can have it for free. And we can help the non-profits grow.

It’s really hard to break out as a non-profit. And today there’s not a lot of funds. They have to scratch. A lot of non-profits wait until the fourth quarter to advertise. And that’s when they spend all their advertising. But we know, because we’re in the advertising business and because we’ve done this for so long, we know that if you don’t build your brand all year long, you can’t break through and queue forward. Because nobody will ever hear of your non-profit. They’ll go for the ones like St. Jude’s that they’ve heard of all year long.

“Oh, yeah, I need to give. I need to do my year-end giving. I’ll go to the ones that I’ve heard about all year long.”

So we’re trying to convince non-profits that maybe spend 70% of your marketing in Q4, but spend 10% all through the year, 10% each quarter, so that you have that brand recognition when you try to break out in Q4.

You talk about self-funding this. I suspect that this is not a high-margin business, which is a challenge as well. You’re not throwing off a bunch of revenue where you can take it and turn it into that.

Craig Heiter: No, we try to keep that as low as possible so that we can keep the CPMs as low as possible for the non-profits. You all have all these rules. You’re never going to make a lot of money being a non-profit. That’s not our goal. Our goal has never been about making money. Our goal has always been to give back, to do something good, because the industry was very good to us.

We wanted to do something that gave back and also made the industry better. We want this to be a permanent structure in CTV, in streaming television, so that it can survive well after when we all go out riding off into the sunset. This is a permanent part of this industry, and everybody wants to support it. I have not gotten a single no when I go ask for donated inventory. They’re all like, oh yeah, why wouldn’t we do this?

Even if they’re cold-hearted jerks, there are good business reasons for them to do it.

Craig Heiter: It is good for business, but it’s not a tough sell. The hardest part is getting the word out to the non-profits and helping them. The more we can do it where they don’t have to pay any money and see the benefits. We can show them all the attrition and where people are going with their ads.

As you mentioned, for most non-profits, raising money has been hard. Have you noticed any impact from various government cutbacks?

Craig Heiter: Tremendous, tremendous. That’s why they need us more now than ever. It’s really been hard because they aren’t getting matching grants and matching funds from the government. It’s harder for non-profits to raise money today than it ever has been. They have to look for different ways.

That’s why I wish that we had some big way to let people know we’re here.We do advertise. We do take a lot of the spots to use our spots on. But I still think they’re a little leery of it. They have never been used to advertising on TV. It always seemed like it was unreachable for them. But we try to show them for as little as $250, you can have a campaign on television. And when you say that, they’re shocked.