Snap

dint i just say that the eKonomiKs behind s/w were changing. just to reiterate.

I met with Tom McGovern from Snap, the search engine by the former Overture team, and I continue to be impressed by these guys. Snap just introduced search advertising, something they call "Cost-Per-Action" advertising. While most everyone else offers pay-per-click, where the advertiser only pays when the ad is clicked, Snap offers the option of only paying out when a specific action (chosen from an appropriate list) occurs. As long as the action earns the company more than the ad cost, this represents the perfect risk-free advertising.

Thing about it this way: Staples buys an ad for 3% on searches for binders. Searcher clicks on ad, buys nothing, Staples pays nothing. Searcher buys a single binder for 75 cents, Staples pays 2 cents. Searcher turns out to be a company, buys 5,000 binders for $3,750, Staples pays Snap about $112.

If Staples wants to be smart about it, they can buy cost-per-action ads at variable prices for regular searches, so they pay a percentage-based comission per sale, and fixed prices for searches on business keywords. This would result in a 2 cent payment on a single 75 cent sale, and if you pick your business keywords properly, sales resulting from those terms could be 40 cents, instead of $112.

See, by mixing variable pricing and fixed pricing, you could pay tiny commissions on small sales, and fixed costs on bigger ones, just by picking the right keywords. The best part? You pay nothing if they buy nothing. And of course, you can always use traditional pay-per-click if you'd like.

One thing that struck me as odd is that I was told the rankings in Snap's search engine are based partially on the ads. While this isn't exactly paid search, their relevancy algorithm takes into account the success of the ads. Snap tracks how many people who click on the ads convert into sales. It not only uses that data for billing, it also uses it to determine relevancy.

In Snap's eyes, an ad with a high conversion rate represents a site with highly relevant data. As a result, that site will rank higher in the unpaid listings, representing a version of paid search that isn't exactly paid for. What Snap's advertisers get is higher search rankings based on ad performance, a major advantage over non-advertisers. It might be highly useful for a company to buy a dollar of advertising on Snap, make sure its highly relevant and cannot possibly not result in a successful action (such as watching a video), just to get the effect of paid search with higher search rankings.

Call it "backdoor paid search".

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