By Bruce Rogers

A Series of Forbes Insights Profiles of Thought Leaders Changing the Business Landscape: Lewis Gersh, Founder and CEO, PebblePost

Direct mail—the physical kind that gets delivered by a person to a physical address is not going away any time soon.  Despite the shift to digital, direct marketers still spent nearly $50 billion last year on the channel in the U.S. alone, according to eMarketer. Now along comes PebblePost, which enables marketers to marry the best of digital marketing with the impact of physical direct mail.  PebblePost’s founder and CEO, Lewis Gersh calls it “programmatic direct mail.”

“We invented programmatic direct mail. We have a trademark on it. When I was talking about this three years ago, people were saying, ‘Well, what the hell does that mean?’ And mostly we were kicked to the curb with it.  Now marketers are telling us that we’ve created the first new channel since search and social, which if that’s true, we’ll take that to the bank for decades,” says Gersh, an entrepreneur turned longtime investor in the digital marketing and adtech space, now back to CEO and operator to bring this vision to fruition.

Just like there are programmatic or automated means to combine data on audience segments and digital channels to buy targeted display, email, online video and other digital advertising formats with little need of human intervention, PebblePost created a fully integrated digital platform for campaign management tools, real-time analytics, next day optimization capabilities, collateral uploads and changes, AB testing, frequency capping, suppression, control groups, all in a digital interface. Now output is a piece of tangible media mailed to an actual person with a physical address.

For example, according to Gersh, PebblePost can transform digital activity on a website into a postal address and dynamically render a personalized physical piece of direct mail zip-sorted into a postal hub in under 24 hours fully automated every day. “It’s much more than just a presence on the site, then send out a piece of standard collateral. There’s some direct mail shops that do that kind of thing. What we do is all the behavioral hierarchies. Did you browse, keyword search and cart abandon? What was the page-level information? There are progressive hierarchies, so, for example, browsing for a blazer scores differently than cart abandoning socks. Whatever the goal is for that campaign, we then go to our campaign management system after collecting all that front-end site activity and we run frequency capping, suppression, AB testing, control groups, audience tagging, etc.  After that, we go to our address graph where we’re able to convert about 70% of that digital activity into a postal address,” says Gersh.

PebblePost then dynamically renders a pre-production print file on a zip-sorted basis across all of that activity, all of those addresses, all matched to the appropriate collateral which is then sent through an API to digital printers. Those pieces of collateral come out of the printer and into a postal hub every day in under 24 hours from that online activity. About 1,500 site events are processed to assign and create each piece of mail.

 While PebblePost doesn’t own the digital printers themselves, they integrate their software with many of largest digital printers. Marketers can then track the tangible media back to purchase behavior and close the loop on measuring the return on their marketing investment. The company is building a database of first-party data from its customers that gets anonymized and is used to enhance their system so everything gets more efficient and match rates go up.

“No one has ever done it before. Display advertising today generates on average a .02% response rate on all impressions compared to direct mail’s 1%. PebblePost averages 8% to 10% of all mail sent results in a purchase.  That’s eight times more effective than traditional direct mail and about 400 times more effective than digital,” says Gersh. “We’ve created an opportunity that has more revenue potential than AdWords.”  Google’s AdWords business now represents some $80 billion in annual revenue.

The New York City-based PebblePost is growing fast and working to expand.  It has taken on $23 million in venture funding over three rounds, most notably from RRE Ventures, Greycroft and Tribeca Venture Partners. Over his career, Gersh has been more investor than operator, but sees PebblePost as the opportunity of his lifetime and is committed to personally growing the business as CEO.

“I’ve been in this space for 20 years and built the largest portfolio of retargeters of any fund in the country. I founded a venture fund at the seed stage, with $150 million under management, investing in about 65 companies, half of which were ad retargeters. I led investments in companies like FetchBack, Chango, Tapad, Sailthru, Movable Ink, Mass Relevance, iSocket, 33Across and others that are leaders in the space.”

According to Gersh, 90% of buyer intent data is online, yet 90% of purchase decisions are made in home and 90% of purchases are made in store. “How else do you go from digital into the home where somebody can examine something and save it for considered purchase to then drive them to a store or drive them online or to an 800 number? I think we’re the only game in town. You can try to do it across device and catch them at home but efficacy is poor,” he says.

Gersh grew up in Hell’s Kitchen, New York where his parents had a public relations and promotions company. They were in the music industry, representing big name music acts like The Who, Blondie, Ray Charles, AC/DC, Meatloaf and others. The family then moved to Glen Ridge, New Jersey.  He went to high school at a boarding school in Sedona, Arizona, then on to college in Santa Cruz and then San Diego State where he was captain of the triathlon team, completed Ironman competitions and lived in New Zealand and Australia for a couple years after graduation.

“My parents were really big about pushing me into adventure. I spent my summers working on commercial fishing boats in the Bering Sea and a horse ranch in Colorado.”  He then settled down to a more conventional academic life. He went back to law school. Got a doctorate in intellectual property law from the University of New Hampshire.  His entrepreneurial life began after moving back to New York to work for John O’Donnell, who had built Sony Home Video, Sony Laser Optics, Sony Motion Pictures and Sony Music Video when he left to start his own venture named Worldly Information Network.

“I went to work for John as general counsel and met the founders of AOL through one of our investors Mitsui.  I then started Worldly Investor, which was a joint venture with AOL and Omnicom in 1998. “We became the largest provider of free investing newsletters on the web and were on track to deliver a billion transmits of email in 2000. And back then a billion was a lot. After I sold the company in 2002, I used the leftover office space and became the “accidental” VC. I started an angel investing firm called Gersh Venture Partners, later changing the name to Metamorphic Ventures, and after that adding partners. I had my first hit with IndustryBrains which was the first B2B cost-per-click ad network. And then after that had success with FetchBack, Chango, Tapad, Sailthru and all these great retargeting companies,” says Gersh.

But Gersh missed the operating side. He left the fund in 2014.  “I wanted to discover a new way to leverage programmatic — my definition which is ‘data-driven decisioning with high levels of automation that continuously enhance the efficiency and efficacy of the marketer’s goal.’ So, one day I was at my farm upstate on my tractor cutting hay in a field and the idea started gelling and I called a buddy of mine who eventually helped found PebblePost, and said, ‘Think I got a big idea, let’s grab a beer.’ The rest is history.”

“It’s so ironic that after 20 years of my life building the largest portfolio of digital retargeters, to leave to go back to the operating side to bring innovation to digital and direct mail, my friends are like, ‘Dude, are you sure?’  I’ve never been more sure of anything in my life.”

Bruce H. Rogers is the co-author of the recently published book Profitable Brilliance: How Professional Service Firms Become Thought Leaders

By Bruce Rogers

I write a column on thought leaders changing the business landscape and am the Chief Insights Officer for Forbes Media responsible for managing Forbes’ Insights thought leadership research division, as well as the Forbes CMO Practice. I am the co-author of “Profitable Brilliance: How Professional Services Firms Become Thought Leaders” now available on Amazon http://amzn.to/OETmMz as the previously published “In the Line of Money: Branding Yourself Strategically to the Financial Elite” available on Amazon http://amzn.to/AuHRN9

Sourced from Forbes

Photo courtesy of PebblePost. Lewis Gersh, Founder and CEO, PebblePost

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