Tech startup: LinkSmart Inc.
INITIAL LIGHT BULB Pete Sheinbaum, LinkSmart’s founder and CEO, cut his online entrepreneurial teeth with E! Online before dodging the dot-bomb by connecting with DailyCandy in 2000. He worked as COO and CEO for the women’s lifestyle e-blast and left after Comcast acquired it in 2008.
Along the way, Sheinbaum learned a powerful lesson. “We were missing a big opportunity on our website,” he says. “People would come, sign up and never come back. We could build it all day and we could sell it all day, but we had trouble getting people to go there.”
Digging deeper, Sheinbaum says he realized that in-text links had a click-through rate that was about 20 times that of the site’s banner ads.
“Publishers have an insatiable appetite for traffic,” says Sheinbaum. “SEO (search engine optimization) was failing them because of Google’s Panda and Penguin updates. I thought, ‘What if I took a publisher-centric view of the world and built a tool for them?’”
Sheinbaum says inserting links into articles has traditionally been “unbelievably manual and not scalable at all,” adding, “This is a platform that was waiting to be built because all of those links are put in by hand.”
Chosen keywords are linked to topic pages and other pages. Links are typically directed back to internal pages to boost the number of page views per visitor, but customers “have complete control over where the links go,” Sheinbaum says.
The click-through rate is about 4 percent – versus 0.4 percent for traditional banners. Publishers “can grow their audiences very quickly,” Sheinbaum says.
Complementing LinkSmart’s platform is a marketplace that allows pay-per-click link exchanges between publishers. “It’s a new incremental revenue stream,” says Sheinbaum.
The 20-employee LinkSmart has about 500 customers, including CBS, AOL, Reuters and other major publishers. “We are doubling our publisher base every two to three months,” Sheinbaum says.
Officials at Seattle-based BuddyTV credit LinkSmart with 58 percent of its in-content clicks across the company’s entire network in September. “I’ve been checking out the product multiple times daily because there are so many ways that you can slice the data, and so many ways to gain valuable insights,” says Andrew Sumitani, BuddyTV’s manager of business operations.
THE MARKET “Our market is anyone who wants to drive traffic to their website,” Sheinbaum says. Publishers spend “tens of billions of dollars” on SEO and banner ads annually, he adds.
FINANCING In June 2010, LinkSmart closed on a Series A round of $4.1 million and subsequently closed on a Series B round of $5 million earlier this year. Investors include Foundry Group and Costanoa Venture Capital. Sheinbaum anticipates going after another round of “growth capital” by 2015.
“It’s technology that’s been around forever. People have been linking to other pages since the beginning of the Internet, but there hasn’t been any technology to wrap around those links. It’s a little thing that’s been hiding in plain sight, but it’s extremely powerful.”
— Pete Sheinbaum, LinkSmart CEO and founder