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Inuvo Sets $100M Goal For Annual Revenue

6 min read

Inuvo CEO Richard Howe is explicit about the company’s goal: It should be posting $25 million in revenue per quarter by the fourth quarter of next year. In other words, by 2018, it should be a $100 million company.

The publicly traded digital publishing and advertising technology firm has some ground to make up.

For the first half of the year, Inuvo has reported revenue of $34.3 million, a 14 percent increase over the first two quarters of 2015. But getting there has been uneven: record first-quarter revenue of $18.7 million, up 40 percent year-over-year, was followed by a second quarter in which revenue was actually down by more than 6 percent.

Inuvo, now based in Little Rock, did not get a bottom-line boost, however, from its 14 percent revenue increase: It lost $200,907 in the first two quarters this year but had earned more than $1 million in the same period last year.

Inuvo is a many-sided business.

The firm publishes online articles, videos, slideshows and podcasts about health, finance, living, travel, careers, automobiles, entertainment and education on a collection of websites it owns. The content has longevity, Howe said, in that it is as useful in five years as it is on the day it is published.

He also said readership varies based on the content topic and type.

The main website is Alot.com, where the staff defines, writes, edits and publishes proprietary content. The Alot readership tends to skew demographically toward women over 45, he said.

Other sites are EarnSpendLive.com, where the demographic is women ages 18-30, and TheEssentialBS.com, where the audience is men ages 25-35.

“We built our digital publishing business with the strategy to deliver (serve) our own ads. This is very different than any other publisher,” Howe said.

He also said it is typical for publishers to use third parties to help them make money from their content, but Inuvo doesn’t do that. The firm uses its proprietary advertising technology to place and evaluate ads on its own websites.

Inuvo then sells that advertising technology to other digital publishers, who use it to monetize their online content.

“Interestingly, the best way to be an ad tech company is to actually own a digital publishing business, because when you own that business and you know ad tech, you can actually create ad technology that works for you,” Howe said. “And the theory is that, if it works for you, you can commercialize it and sell it to others.”

The advantage Inuvo has, he said, is it’s in a large market — the internet advertising market — which has billions of dollars to go around. Revenue from both sides of the business is derived from that market, Howe said.

But, he added, competition is fierce. “Our ability to compete in this marketplace, I think, is a function of our ability to be fast. … The internet world we live in now is changing more rapidly all the time.”

Howe said one example of the firm’s success is its ad technology called SearchLinks, which went to market last year and has been sold to Reuters, Healthline, Kiplinger, Smarter Travel.

SearchLinks allows publishers to tap into “the enormous search-based budgets of advertisers, thus providing them with an alternative for monetizing web and app content,” a news release said.

It also analyzes the content of web pages, uses that data for ad targeting, optimization and delivery and allows publishers to see the performance of ads in real time, Arkansas Business reported when SearchLinks launched.

Howe explained that SearchLinks, through algorithms, places ads in a way that will be most appealing to those reading different web pages.

Publishers like Healthline and Reuters are buying Inuvo’s advertising technology, and thousands of advertisers — Chevrolet, General Motors, Yahoo and Google, to name a few — are supporting its digital publishing side, Howe said.

How It Began

As he told Inuvo’s origin story, Howe said the firm rose from the ashes of a publicly traded company on the verge of bankruptcy: Kowabunga! Inc.

Howe said he was asked in 2009 to take some of that company’s assets and create a successful business. “So we started from scratch, sold four business lines to fund continued operations, right-sized the resources, eliminated excesses and also raised a few million dollars from shareholders. The company had about $12 million in debt, which we worked out a plan of repayment for with the lender.”

That debt has since been paid off, Howe added.

He said he disliked the Kowabunga! Inc. name and that the new name, Inuvo, comes from innovate and nouveau.

By the end of 2011, it was time to expand. So Inuvo acquired Vertro Inc. of New York to develop the digital publishing component of its business strategy using Vertro’s digital marketing and contractual relationships. The firm moved its headquarters to New York City from Clearwater, Florida, and Howe officially stepped back from the day-to-day operations in the first quarter of 2012.

But the business began to decline, and, at the request of Inuvo’s board, Howe returned to the helm after one year. It was his idea to move the firm to Arkansas in 2013.

He said it was hard to compete in New York, where operating costs are high and employee loyalty was low.

“It was a bold thing to even contemplate doing. … We lost everybody. We basically rehired everybody. And we are a business where the intellectual capital is in the minds of the people. You’re running a business where your asset is actually your people.”

But Howe knew Arkansas because Inuvo shares corporate DNA with Acxiom Corp. of Little Rock.

Before heading Inuvo, Howe was chief marketing and mergers and acquisitions officer for Acxiom. The technology giant’s founder, Charles Morgan, is Inuvo’s largest shareholder and lead independent director. Several on the firm’s leadership team also worked for Acxiom.

Just like Acxiom, Inuvo landed first in Conway and moved its headquarters to Little Rock later.

Howe called the governor for financial help with “not insignificant” moving expenses before relocating to Conway.

Inuvo received a $1.75 million grant from the Governor’s Quick Action Closing Fund in exchange for bringing more than 50 tech jobs, a promise it has kept, the CEO said. The firm employs 72.

Scott Hardin, an Arkansas Economic Development Commission spokesman, said the agency monitors all Quick Action grant recipients to assure that minimum employee levels are met, and Inuvo is in good standing. “We are excited about the company’s future in Arkansas.”

Howe added, “The business has done nothing but thrive since that time.”

And it appears he’s right. According to annual reports Inuvo filed with the Securities & Exchange Commission, its revenue rose in two of the three years the firm has been in Arkansas, and its profit has increased every year since the move.

In 2013, Inuvo’s revenue was up 3 percent to $54.9 million. More important, it swung from a $7 million loss in 2012 to a profit of nearly $500,000 in 2013.

In 2014, revenue dipped to $49.5 million, but net income quadrupled to $2.1 million. Then last year, Inuvo had revenue of $70.4 million for 2015, up 42 percent from 2014. Net income also increased slightly, to $2.3 million.

Moving to LR

When the firm’s lease was up in Conway, it relocated to downtown Little Rock last year because Howe said he was attracted to the capital city’s emerging tech scene.

But he didn’t credit the firm’s success to its location. He said Inuvo is successful because its employees thrive in the firm’s “winning” culture. “Don’t let anybody tell you Arkansans can’t compete on a world stage. They’re absolutely wrong. We’re proving it every day here at Inuvo.”

Howe said Inuvo has also benefited from a leadership team that has worked together before, at Acxiom, although there are a few managers who have not been affiliated with the technology giant.

Inuvo’s chief operating officer, Trey Barrett, had been Acxiom’s director of interactive media products. Dana Robbins, vice president of owned and operated properties, also left Acxiom for Inuvo. She was director of product management at Acxiom until 2013.

CFO Wally Ruiz wasn’t involved with Acxiom but has been at Inuvo since 2010, the year after Kowabunga! Inc. was renamed.

Jeremy Chrysler, vice president of business and new product development, is also not connected to Acxiom but has been with Inuvo as long as Howe has, since 2009.

Others on the firm’s management team are Chief Technology Officer Rick Anderson and General Counsel John Pisaris.

Alongside Howe and Morgan, Charles Pope, Patrick Terrell and F. William “Bill” Conner serve on Inuvo’s board of directors.

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