See if franchising is right for you.

AdGrove – Executive Summary

Buying and creating advertising in any media is a time-intensive process reflecting hours of transactions between buyers, sellers, and creative agents. For example, if a buyer wants to advertise in the radio media, he targets a few radio stations with desired listener demographics, discusses contract options with a radio account executive, bids on an ad schedule, negotiates a price, creates ad copy, approves the final ad, and pays for the service. For a skilled buyer, this entire transaction can take up to 3 weeks to complete. For a local deli or sporting goods shop with little or no demographic information, small purchasing power, and less familiarity with radio advertising, this transaction process can take more than 3 weeks and cost the small business more money per ad than large ad agencies. For the seller, in this case the radio stations, the transactions costs of dealing with such small customers can prove to be cost ineffective. is an internet advertising infomediary (‘adfomediary’®) that provides a one-stop shop for demographic information, ad rates, ad campaign schedule planning, ad buys, and creative development, reducing transaction time and costs for buyers and sellers of advertising spots.

The Company, Inc. (`the Company’) is a C-corporation located in Austin, Texas. The Company is located on the Internet at and is the first adfomediary® dedicated to the needs of small businesses.

Products & Services
AdGrove’s featured product will be a user-friendly Internet website that provides free and fee-based services to meet the needs of its customers – advertising buyers and sellers. AdGrove’s first product line will be dedicated to reaching the highly fragmented buyers and sellers of advertising space in the radio advertising sector. Qualified buyers and sellers are invited to join’s community as members. Membership is free and provides users access to valuable, customized services. Selling members receive opportunity to list ads, and gain access to the buying community. Buyers receive access to up-to-the minute aggregated, radio market information, ad campaign planing tools, creative services, ad space, buying discounts, monitoring services, and account management.’s information-rich services reduce a buyer’s time while enabling the development of a cost-effective advertising strategy. In addition buyers receive unique buying discounts, usually reserved for major ad agencies and companies, and an opportunity to participate in discounted “overcapacity” ads. serves as a third sales channel for radio stations, complimenting their national and local sales efforts. Unlike traditional sales methods, the Internet offers radio stations access to a national market and 24-hour selling power. provides radio station members with a listing and brokerage service, access to customers, on-line web advertising, and monthly value reports. These monthly value reports will include buyer profiles, competitive analysis, market analysis, and savings calculated.

Market & Opportunity represents the intersection of two growing US markets: advertising and business-to-business electronic commerce. The advertising industry represents a $190 billion industry and is expected to grow at 5.7% compound annual growth. The radio advertising market is a $17.7 billion sector of represented by more than 12,275 radio stations in 268 major markets.1 Approximately 75% of radio advertising is purchased at the local level.2 Although there has been consolidation in the radio industry since the Telecommunication Act of 1996, the industry is still highly fragmented and growing at an 8.5% annual rate.3 In addition, radio stations have generally been slow to adopt Internet strategies. Business-to-business e-commerce revenues for 1998 were $17 billion and are projected to grow to $1.7 trillion by 2003.4 It is projected that by the year 2002 almost one-third of all business-to-business transactions will be performed via e-commerce (1998).5
Customers: As an intermediary agent has two primary customers: radio stations and small business advertisers. will target the top 4,000 radio stations, which represent 80% of the industry revenues. will target small, high-growth businesses as its primary market. In the US, there are currently 24 million small businesses with approximately 885,000 new firms each year. These businesses represent 47% of all sales in the US. According to research6, approximately 41% of small businesses are online and one in three conducts business transactions on the Internet.7 Each of these firms represents an average of $3.79 million annual revenues, significantly more than the $2.72 million average.
Competitors: and are websites that have launched within the last 18 months that connect buyers and sellers of radio advertising space. However, is the only website with customized services and pricing model to meet the needs of small businesses. In so doing, will expand the current advertising market.

Marketing Strategy’s marketing efforts are centered on strategic partnerships, an educational advertising and public relations campaign, and a regional sales force. will forge a strategic partnership with the Radio Advertising Bureau, the national association that represents 4,300 radio stations and 80% of US radio advertising revenues. will forge an alliance with the U.S. Chamber of Commerce, the worlds’ largest business federation, representing nearly 3 million companies, 96% of which are small businesses. AdGrove’s marketing campaign will focus on driving volume to the website and converting visitors to buyers.

The Start-Up Plan will follow a three-phase start-up plan. During the first phase, the team will create a demonstration site, refine product and services mix, and alpha test among focus groups of buyers and sellers. During the second phase hopes to raise the required venture funding of $2 Million to launch the site. The funds will be used to finalize the development of an integrated website, negotiate strategic alliances and radio station partnership agreements, launch a marketing and sales plan, and launch the website in Austin, Texas. To meet the objectives of the first two phases, will incrementally hire 16 additional staff and outsource the initial development of the website. The third phase will include a launch in 10 cities, including: San Francisco, Atlanta, Washington, Seattle, Minneapolis, Boston, New York, Chicago, and Miami.

AdGrove’s management team has extensive experience in the marketing, Internet, and high-tech sectors. Amy George, Chief Executive Officer, has seven years of professional experience in the field of marketing for small businesses and national clients in the telecommunication, real estate, multimedia, and education industries. Aler Krishnan, Chief Operating Officer, has five years of experience in the high-tech industry in the areas of Internet strategy, program management, software design, and development. Brink Melton, Chief Technology Officer, has three years experience as a software developer and technology consultant. He has experience launching a successful technology consulting partnership dedicated to serving the needs of small businesses in Austin, TX. He is currently pursuing his MBA at the University of Texas, concentrating in information management and entrepreneurship.’s team of consultants are experts in the small business, radio, advertising, high-tech, and Internet start-up fields.

Financial Overview
AdGrove’s five-year financials are displayed in Table 1 (Additional Information in Appendix 9.4). derives its primary revenue from the following sources:

  • Transaction fees for brokering the sale of radio advertising spots. This is the primary revenue stream and the fee collected will be 5% of each transaction.
  • Fees for value-added market research information provided to buyers.
  • Advertisements and paid promotions.

Because of the high investment needs in year 1 and year 2, the Company does not achieve profitability until year 3. By year 5 revenues will grow to $26.9 million with net income of $ 8.6 million. The Company is seeking $2 million in first-round financing with a ROI for investors to be 70%.Table 1 – Financial Summary and Operating Statistics

Key Operating Statistics Yr1 Yr2 Yr3 Yr4 Yr5
Employees 27 57 78 86 98
Financial Statistics
Revenue 53,700 2,625,000 12,770 000 19,200,001 26,900,000
Expenses 4,130,597 8,029,597 9,564,866 11,685,887 13,213,244
Net Income 4,076,897 5,404,697 2,070,337 4,884,174 8,896,391

1 U.S. Industry and Outlook ’99
2 Radio Advertising Bureau (
3 Standard and Poor – Forecast
4 B2B eCommerce report, BancBoston Robertson Stephens, September 29,1999
5 Olbeter, Erik R. “The Strategic Economic Importance of the Internet,” Economic Strategic Institute (November 1998), Washington, DC
6 Zdnet study, June 1998 – Sample size: 50,931 small businesses (less than 100 employees)
7 Dun and Bradstreet 17 Annual Dunn & Bradstreet Small Business Study (February 19,1998)
Table of Contents Appendices
1. Executive Summary
2. Company Overview
3. Products and Services
4. Market Analysis
5. Marketing Plan
6. Operations Plan
7. Management
8. Financial Summary
Management Team Resumes
Small Business Internet Use
Revenue Model and Assumptions
Pro Forma Financial Statements
Strategic Alliance Proposal
Most Wired Cities in America
Market Research
Sample Questionnaire
All information herein is confidential and belongs to, Inc.
Get help with writing a business plan or choosing a franchise.

Talk to a Consultant

Services of Interest

3 + 9 =