Paul Walsh: how I made an offer magazines couldn’t refuse

When student Paul Walsh said he wanted to mix computer sciences with psychology, Nottingham University "thought I was mad". They agreed to a trial course, but a year later all the other students had dropped out. Walsh left and found a job in the IT department of a credit-check company. He was soon bored so he and a friend set up a website selling records to DJs. It wasn't a success, but Walsh was now determined to run his own business. In 1999 he set up an IT consultancy to offer tech support to small firms.

He persuaded a friend to invest £10,000 in the new business, Avondale IT, and lend him the same amount so that they both owned 50%. For a few years Avondale IT ticked over designing databases and building websites. The breakthrough came in 2002 when a client asked Walsh how to drive more customers on to their website. "They wanted to use paid-for search results to persuade more people to sign up to their magazines." Walsh had an idea and took on the work and "overnight we became a marketing agency".

He carefully selected key words and phrases that would appeal to likely readers and paid search engines to give his client's website a premium page position when those words were searched. Within months subscriber numbers were up and so was Walsh's budget. He began approaching more publishing houses but "our potential clients were sceptical about internet marketing".

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So he offered them a no-brainer: guaranteed new subscribers for a fixed cost. "We were offering a risk-free marketing campaign where they knew how much each new reader would cost." Magazines loved it. But while it was risk-free for them, it wasn't for Walsh. "We had to monitor how much each word was costing us and be quick to change campaigns that weren't working." By 2004, Avondale IT had 80 staff and a yearly turnover of £4m.

With paid-for search accounting for 90% of the business, Walsh now brought in a managing director, Rob Pierre, to boost sales. One of their first changes was to find the firm a new name. Jellyfish is "a random word that would stick in people's heads".

They also custom-built a computer program to monitor and implement campaigns. "A client might have thousands of key words that we are paying for. The price changes all the time so you need to manage them carefully." The pair also negotiated a management buyout of Walsh's original backers.

Sales crept up, yet one problem continued to dog the firm. It was very hard to know whether a new telephone subscriber for a magazine had been prompted by Jellyfish's advertising. Walsh hit on a solution. Cookies small downloadable programs that monitor an internet user's journey would track customers who arrived from Jellyfish's advertising and give them a specific number to ring. Thirty minutes after the customer left the site, the number (part of a pool of thousands) would be reassigned to a new visitor. The new tool worked by 2010 sales hit £20m.

But Walsh wanted out. Convinced the phone-tracking solution "was a product in its own right, not just an inhouse tool", he sold his majority stake and set up Infinity Tracking. Walsh is sure it will prove a hit with "any business that is trying to build a serious online marketing strategy".