Making Money Out of Thin Air

It’s been described as the Airbnb of marketing.

Exact Media, a Toronto startup co-founded by Daniel Rodic (BCom 2012 Trinity) and Elena Sahakyan (BCom 2009 New College), buys the excess space inside parcels being delivered to people who have made online purchases. The company then tucks samples of branded products into these nooks.

If someone buys towels online, for instance, the shipping box may contain a sample of Tide detergent. If a customer buys a swimsuit, she may find a small bottle of Olay sunscreen. The brands pay Exact to find these, well, openings. As Rodic says, “We turned that extra air into a new marketing channel.”

While studying commerce, Rodic’s goal was to become a management consultant. But then he was accepted into The Next 36, an intensive entrepreneurship program co-founded by Ajay Agrawal, the Peter Munk Professor of Entrepreneurship at the Rotman School of Management. “Through The Next 36, I got funding to start my first business, and that’s what pushed me toward a more entrepreneurial path,” Rodic says.

Rodic explains that the company grew out of discussions he, Sahakyan and another co-founder had with an executive at Beyond the Rack, an online clothing retailer. The retailer was looking at ways of providing its customers with cosmetics samples. Together, they realized they could slip the samples into Beyond the Rack’s parcels.

When Exact went to find consumer brands that might be willing to pay for this kind of product placement, they quickly signed up Procter and Gamble and Unilever and realized that selling space in shipping parcels might be a viable business.

Sahakyan, Exact’s vice-president, finance, says the three-year-old firm, which has 25 employees, raised an undisclosed amount from tech investors earlier this year.

As it builds its customer base, Exact is collecting demographic data on e-commerce consumers (for example, women between 20 and 35 who buy clothes online). It then analyzes the data and makes recommendations about the sorts of product samples that these consumers might like. If Exact’s brand clients agree with the analysis and the proposed co-marketing, the manufacturer ships the samples to the e-commerce retailer, which then inserts them into the appropriate parcels.

Armed with some serious financing, Rodic and Sahakyan are planning to expand beyond North America within the next 18 months, possibly targeting the United Kingdom, Western Europe or Asia. The investment capital will allow Exact, which has already distributed some 20 million samples, to develop new marketing schemes for its brand clients while expanding into new regions, says Rodic.

January 2017 update: The co-founders of Exact Media, Daniel Rodic and Elena Sahakyan, have been named to the 2017 Forbes 30 Under 30 list of young innovators redefining marketing and advertising.