Area ad agency claiming untapped corner of Web

By Brian McNeill

Published: September 2, 2008

Type “flowers delivered” into an online search engine such as Google or Yahoo! and up will pop a text-based ad that might read “Flowers at 1-800-FLOWERS. Same day delivery available. Featuring Martha Stewart Flowers.”

The succinct search engine advertisement was placed there by a rapidly growing Albemarle County agency that is at the forefront of an emerging online advertising niche.

“This field didn’t exist 10 years ago. It barely existed five years ago,” said Alan Rimm-Kaufman, CEO of the Rimm-Kaufman Group.

Inc. Magazine recently ranked Rimm-Kaufman’s company as the nation’s 315th fastest growing private company and the 24th fastest growing firm within the advertising and marketing industry. In 2004, the company generated $400,000 in revenue. By last year, its annual revenue had rocketed to $3.1 million.

The firm controls an estimated $100 million in advertising for its clients, which include e-retail companies Overstock.com, OnlineShoes.com and Zales.com, as well as Central Virginia entities such as the Thomas Jefferson Foundation, Madison County’s Plow & Hearth and Charlottesville magazine subscription service Magazine City.

“The money is pouring in our direction instead of traditional media,” company co-founder George Michie said. “Sorry.”

Rimm-Kaufman and Michie worked at local consumer electronics retailer Crutchfield until they founded the Rimm-Kaufman Group in 2003. While at Crutchfield, the duo saw the rise of online search engines and how they came to dominate most people’s Internet habits. They realized that many companies — especially Internet-based retailers — would pay good money to a company willing to create, manage and place advertisements on the search engine Web sites.

The Rimm-Kaufman group designed its own software to track the effectiveness of each ad it places online. The company’s software constantly tracks whether an ad is working, letting the client know if customers are clicking on the ad and if it is translating into a sale.

The company attaches the client’s ads to search engine keywords. Those that work are kept, while those that don’t are discarded.

Figuring out exactly which keywords work best can be more of an art than a science.

For example, one of Rimm-Kaufman’s early clients was a Web site that sold flags of various countries. The business’ ads would pop up anytime someone searched for “flags,” but many of the hits turned out to be school children researching flags of foreign countries. So Rimm-Kaufman placed an ad that was attached to the key word “flag,” but only when it also included the flag’s dimensions. Only those interested in buying a flag, they found, would search for the size they desired.

While the firm employs business and computer science from schools such as the University of Virginia, James Madison University and Virginia Tech, it has also hired poetry and political science majors to help with the analysis of its ads and to come up with keyword ideas.

Rimm-Kaufman’s clients pay for the ads on a per-click basis, as well as a fee for its services. In traditional advertising, a client buys an ad and hopes that customers will see it and be enticed to buy the advertised product. Under the pay-per-click model, a client can blast its advertising across the Internet for a relatively low price. The advertiser basically does not pay unless a customer clicks on the ad.

“We find that this type of advertising works best when it is very, very honest,” Rimm-Kaufman said. “You don’t want to over promise. You want to tell the truth.”

Moreover, he said, online search-based ads work best when they promote low prices or special deals.

The Rimm-Kaufman Group also sometimes helps its clients improve their Web sites to better the chances that a visitor will make a purchase. The firm’s Web consulting service is expected to be a key part of the company’s future growth, Rimm-Kaufman said.

James Maxham, a UVa professor of commerce, said the Internet advertising industry is booming. In 2003, it totaled $75 billion to $80 billion. Now, that figure is estimated to be between $230 billion and $250 billion.

Maxham said companies such as Rimm-Kaufman are benefiting from the growth of the industry. Search-engine ads are cheaper — and potentially more effective — than television or print advertising, he said.

“A lot of young customers don’t use the Yellow Pages anymore,” he said. “They use search to find any product or service they want.”