Adam Guild, CEO of the Internet rep company, tells iMedia Connection what sustains the company’s business and what he sees for the future.

Interep Interactive, based in New York, has become the world’s largest seller of Web inventory through investments, acquisitions and affiliations. Its companies include Winstar Interactive Media, which sells such sites as DrPhil.com, five Sony Pictures Entertainment Websites, Morpheus, AccuWeather.com, Kiplinger.com, Office.com, Business.com, Entrepreneur.com, CoolQuiz.com, Rivals.com, SoapCity.com, Ubid.com, HealthAndAge.com; Cybereps -- creators of networks such as Totalwoman and TotalTech; and Perfect Circle Media, which reps the financial and business category with sites that include MyDiscountBroker.com, The Stock100.com, ChangeWave.com, Verticalnet, MaxFunds, StockHouse; iExplore, AOW!, and WebFlyer.

iMedia caught up with Interep Interactive’s CEO Adam Guild to find out why he thinks Interep can succeed in a business that has confounded powerhouses such as DoubleClick, Engage, and L90.

iMedia Connection: Let’s get the tough questions over first. Are you making money at this business, really?

Guild: About every other month we are in the black. Our parent company is pacing at 104% growth for the year. If our business grows at the same rate as radio, we will be firmly profitable into the foreseeable future. We believe these expectations are reasonable because the Internet, although recessed, is still very new with a lot of potential upside.

iMedia Connection: So what’s your secret? How can you make money repping Websites when nobody else has?

Guild: There is no question that the margins have narrowed in this business; but that alone does not mean selling Web sites is a bad business. DoubleClick decided to retreat from sales because margins are worse than for their technology business; Engage imploded for more reasons than we can list, but at the top would be mediocre sales talent. Moreover, when companies try to both sell space and be a tech provider, they end up concentrating on technology and their priorities change. They become managers of a toll operation. They do not care about the quality of the car passing through, as long as they throw the $1.50 into the bucket. This is a trap that MAXW (L90) fell into and compounded when it bought DoubleClick’s network. Finally, most of the remaining companies in our space are highly leveraged public companies that have to answer to Wall Street. Clearly these firms – and even AOL -- were punished by the market as online ad sales evaporated.

While these other companies have adjusted and readjusted their business models to keep on the good side of analysts and investors, we haven’t wavered for a moment in our single mission to be the best Web rep firm, delivering the highest caliber service and results. We are not only the best at what we do, but our clients can count on us being around for the next 50 years.

iMedia Connection: Why are big name sites coming to Winstar Interactive Media and Perfect Circle Media instead of selling their own sites?

Guild: If you were a Web publisher, would you want to be repped by a firm that will sell your individual brand, emphasizing to advertisers the higher value of being associated with your hard-won brand name – or lumped in with millions of essentially undifferentiated eyeballs?

The network model can work, but only if the sites provide a high quality, responsive audience. Being sold as part of an undifferentiated buy has its downsides. Just look at what happened to ABCNews.com and WashingtonPost.com. (Ed note: an ad network recently ran banner ads on those and other sites promoting the illegal distribution of prescription drugs and steroids). We have picked up a number of very big brands that were disappointed with their relationships with the DoubleClicks, L90s and 24/7 Real Medias of the world.

Sites often come to us because it is less expensive and more effective to leverage off of our national infrastructure than to employ their own full-time sales reps. This is not new. In fact, outsourcing began in traditional media with the CBS and ABC networks (two of which our parent company represents). We can amortize our overhead costs against lots of clients, enabling us to operate at a far lower margin than most Web publishers can.

Finally, being a successful rep firm is in our blood. Our parent company, Interep, is the nation’s largest radio rep firm. We know how to run a lean, mean machine that produces results. By the way, because of this relationship, we can package online and radio sales together. You’d be stunned to see how perfectly media use of the Internet and radio mesh.

iMedia Connection: You led me to my next question. Do you leverage your radio client relationships? How?

Guild: Interep has been building its reputation since 1953. Today it is the dominant radio sales force, placing over 1 billion dollars in radio advertising. When advertisers work with Interep, they know they are getting a quality sales person who cares about helping them hit their target audience, not just making a sale. This very positive offline relationship helps us sell online. First, our radio sellers are compensated to throw leads to our interactive sellers. Second, one of the many Interep advantages is our infrastructure that includes the Interep marketing specialists; a team of consultants who's main task is to educate new advertisers on the benefits of using radio and the Internet and to put together cross-platform deals. We're just launching a major one for an automotive advertiser now.

iMedia Connection: What motivated Interep to buy Winstar out of bankruptcy -- was the company considering entering the business at the time, or did it just see a bargain in buying a bankrupt company?

Guild: We were already in the business. We started investing in the repping space in 1996 with a minority investment in Burst. In 1997 we started our own rep firm, Interep Interactive. Prior to the Winstar purchase we bought all of Cybereps and Perfect Circle Media. Winstar was a great addition to our crown jewels. Win parent had made an incredible investment in the branding of Winstar -- which played a big part of our decision to acquire the company. The Winstar acquisition helped us solidify Interep Interactive as a leading force in the interactive space.

iMedia Connection: Why do you keep the Winstar Brand when you have nothing to do with them?

Guild: Simply because Winstar’s former parent company had already spent a great deal of time and effort branding the company. Despite that company's woes, Winstar Interactive was doing a great job. Our goal was to insulate Winstar Interactive clients from the whole bankruptcy proceeding, quiet the situation as much as possible and to get back to business as usual. We are very proud of the fact that we did not lose one client during the transition from Winstar Company to Interep Company.

iMedia Connection: Interep Interactive has alliances with Europe's adpepper and Asia's Mezzo Media. Is anybody making global buys?

Guild: Yes, but very slowly. We are very happy with our partners but like our parent company, we will continue to perfect our U.S. sales strategy and leave the overseas markets to our partners. The alliances give us capabilities to build for the future; especially when the global economy rights itself.

iMedia Connection: When will the pain end for online advertising?

Guild: When the market has been fully weeded of spurious businesses that over-promise and under-deliver for advertisers and site publishers, then online advertising will flourish.

For those of us on solid foundations, as soon as we have two consecutive quarters of profits Wall Street will say, “Looks like we over reacted ... there is a business in online ad sales after all.” Then, the markets will open up again, press will be favorable and more traditional ad dollars will shift into our industry.

Our 4th quarter is looking strong so I hope that will be the start of a sustained comeback.

There is an eerie historical parallel to radio in the ‘50s and early ‘70s -- times when most companies retreated from a business that had not proven itself yet, but later flourished. But radio came back and so will online advertising. It will work for us because it is our focus, our business and our legacy. We did it in radio; we will do it again on the Internet.