From Grapeshot CEO John Snyder’s vantage point, a culture of innovation and a willingness to partner in the UK has created new opportunity for his company. Having originally entered the ad tech space targeting the sell-side in 2008, Grapeshot has since pivoted and brought keyword targeting to European -- and soon U.S. -- ad buying clients such as Xaxis through the AppNexus app marketplace.
As Snyder says, “We're a technology company that wasn’t even in advertising, and it was a sell-side publisher who said, ‘I think you could be useful here.’”
AdExchanger spoke to Snyder recently about his company and industry trends…
AdExchanger: What problem is Grapeshot solving?
JOHN SNYDER: Currently on the buy side, real-time bidding (RTB) has several gating problems. First, there is not enough safety for a particular brand. Margins are going to be pressurized as cookies go up in value, and people always want performance. What we solve through the introduction of keywords and not categories, is a buyer can actually say, "I want a '401 retirement plan,' but not 'fraud' and not 'banking bonuses.'" You're putting keywords around each brand.
So do you consider companies such as Proximic or Peer39 in your competitive set?
In the UK market, Peer39 is very well established, and Proximic has been available on platforms like AppNexus. We come to market charging three times the price [of our competitors]. And we charge the same price point - which is a 15 cent CPM - across well over 45 customers, who are all paying because they're getting value.
Thinking about contextual [today] is almost like the early days of Yahoo where you navigated the Internet by categories versus Google where you used keywords to basically cherry-pick the users who were specific about certain words.
What is a use case for using Grapeshot technology from a buy-side perspective?
I'll give you one about Christmas. If you want to go as an ad buyer and “own” Christmas, you can go out and target everything to do with Christmas and presents, whether it has to do with clothing, gadgets for the men, and so on. You can target the context you like for Christmas, wherever you like.
Now, no publisher is packaging up special Christmas things to the degree you can with a “long tail” of relevant inventory in the exchange.
Also, in the US, there is a very rich dataset of cookies. In that we're all interested in Christmas [from an audience buying perspective], the best way to go and buy “Christmas” is to buy the pages that are talking about it.
There appears to be some irony here in that most often the opportunity around buying audience is associated with RTB. Yet, what you're selling is the contextual opportunity of RTB.
I see the U.S. market as a very mature "cookie" market, where the buyer "knows" the cookies unless they opt out. That means everyone is sharing access to the same pool of cookies. Forrester said recently at the AppNexus Summit that cookie prices on average were going to go up from $3 to $6.80 over the next couple of years. Basically, audience doesn't quadruple in the U.S. in a matter of months or years, whereas inventory does - but you're chasing a fixed population in the U.S.
There's a real opportunity to go out into the “long tail” and its exploding pool of inventory to cherry pick just the things about “Christmas” and buy at a cheap price.
Regarding the AppNexus platform and the openness that you're seeking to innovate, how does this differ from other, more “closed,” marketing stack offerings?
First of all, when I was looking at the platforms, initially AppNexus wasn't my first choice. It was purely by chance we went with them because there was a client in the U.K. saying, "Guys, we want to see your tech on AppNexus." And it's been an absolute delight ever since.
People don't know what to call AppNexus, but I call it an innovation platform. It is a platform where at the API level you can do things very quickly.
We are still integrating with other platforms, too, and there are differences. For example, one's trying to build an open platform and the others have, in some ways, far better features such as quality of reporting and visualization.
I think about AppNexus in the same way that I consider the revolution brought on by Lotus Notes, which opened itself to many systems integrators. It was the system integrator who knew the media and the finance industry, and who created custom uses of Lotus Notes. The same happened with Oracle SQL.
Returning to your product line, Grapeshot used to be in the recommendations space. Are you exclusively focused now on the keyword opportunity today?
The keyword opportunity underpins everything that we do. We have a legacy business in content recommendation. One of our key customers is Virgin Media. We've been delivering products for them for the last four years. The most recent one is the TiVo experience - but on mobile tablets and PCs. What we're doing is understanding how people look at TV, movies, and music and personalizing the content experience.
That works off exactly the same APIs and systems that we use to support keyword targeting on AppNexus or Turn, for example. Whereas we want to deliver the most personalized or recommended content, we want to do the same in advertising.
The thing with advertising is, we decided to use only the contextual part of our keyword technology. We feel the business of doing the DMP, managing the cookie pool, and things like that are already done by people like Turn, AppNexus and MediaMath. So we don't have to bring that part of our capability to the advertising market. There's only one customer where we do combine, as it were, cookie profiling and context.
We run all of the Yellow Pages advertising in the U.K. It’s is a very big business with about 40,000 advertisers. We're the technology that delivers millions of ads today across AOL, eBay, big publishing sites.
How many on the team today?
We're at 27 and growing. Our team in New York will include an SVP of sales in New York in January.
What about funding? Are you profitable?
We pushed towards break even this summer and, for now, we're using our own internal funds to grow on both the U.S. and European fronts.