A little more than one week ago a
press release went out that seemed as though it should have
generated more interest than it did. The company behind the
release, Snap.com, offers a product unlike any other on the
market. They have, or so it appears, combined the best of
search – user initiated targeting – along with the best of
performance-based online advertising – being able to pay for
search results on a CPA. For those that have spent time
trying to decode Google’s AdWords program, the thought of
paying on a CPA for search traffic would seem incredibly
buzz-worthy. For many reasons, that has not been the case,
but Snap.com’s product and positioning do bring up an
interest topic, that of transparency.
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Transparency refers to the
level of information available to those not directly owning
a particular process. One way to view transparency is
interoffice transparency. Think of the office in which you
work. Are the financials freely shared, assuming that you
are not a public company? If you are a media buyer, besides
knowing your own goals, do you know the company’s monthly
goals or yearly goals? If you are a manager, do you share
the health of the company with those working for it? Some
people will naturally gravitate towards wanting to share
while others will be more reticent.
The issues surrounding
transparency all relate to, as might be expected, how much
information one chooses to share. This is especially the
case when it comes to what information companies share about
themselves and their business practices, and it is along
this vain where the Snap.com announcement and model is both
appealing and leery. Take for example the topic of funding.
Not too long ago Fastclick received funding and chose to
disclose the amount of the funding. The same was true for
several other companies. AzoogleAds, a perennial favorite in
the space, also took in sizeable funding but chose not to
disclose the amount they received. Their varying levels of
disclosure came down to what level of transparency companies
thought best to disclose to accomplish their strategic
objectives.
When it comes to market
level transparency, the pay per click search engines,
Overture most notably, dramatically shifted the amount of
information available. For the first time, it became common
to know what others and more importantly, one’s competition
was paying. Similarly, it became possible for advertisers,
publishers, investors, and so on to rank the perceived
quality of the engine simply by checking the value of their
bids. When it came to ad networks, Fastclick pulled a
similar transparency shift by posting for their publishers
not only which campaigns ran on their sties but the rates
being paid to Fastclick. Prior to their doing so, such
information was limited to the affiliate space where
transparency in pricing was needed for publishers to
determine which ads to run and from whom. Even now,
companies such as AzoogleAds and Adteractive will display
the payouts on many of their offers, but employ certain
transparency techniques such that publishers can feel they
know enough about the offer yet competitors cannot guess
exactly what their backend profit is. All of which leads to
Snap.com and what makes them so different. Any visitor
anywhere can go to the Snap.com site and see full
transparency into their business. Snap.com makes available
to the public more information regarding their performance
than some companies have on themselves.
At first
glance Snap appears similar to any other search engine, but
one query will show how they differ. As opposed to
automatically putting sponsored listings on top, they are
threaded in with the results based on overall relevance as
well as being very clearly identified with bids always
showing. The real differences become apparent when viewing
the bids. As opposed to only being able to pay per click,
advertisers on Snap can pay on any metric such as CPA or as
a percentage of sale. What’s more, with a click of a mouse a
user can see how many searches have been performed on Snap,
what their revenues are, the keywords driving the revenue,
along with the advertisers spending the most money and just
what the advertiser is spending. Their reports interface better than many
of those used by employees and management in our space, and
theirs is publicly available.
At some point in time when
Snap hits a certain scale, they will most likely begin to
close off their system to the outside world. Companies
simply don’t like letting other companies know about their
activities, which means that in its openness, Snap could be
closing themselves off from revenue. While not necessarily a
model for all to follow, Snap certainly provides reason for
those of us in our space to think about what numbers we want
to show and to whom. The trend in performance advertising
has been towards greater transparency, but as has been
demonstrated, the money tends to be made in the middle – by
playing the arbitrage and by taking advantage of the missing
gaps. Systems will ultimately become more efficient and
perhaps at that time full transparency will be standard…but
certainly not for a while.
