Flite is revolutionizing both the technical and business models of the ad tech industry. This post will focus on the power of our business model, software-as-a-service and why it matters.
Since inception, the ad tech industry has operated on a CPM basis. Vendors negotiate MSAs and rate cards, drive revenue via ads served, and work to constantly remind customers to use them in upcoming campaigns. Sound familiar?
Vendors generally perform the work associated with a campaign and the customer therefore buys the output of the vendor's platform rather than the platform itself.
The net effect is:
- a plethora of loosely coupled business relationships,
- inch deep process and technical integrations,
- confusion at the client level with regards to which vendor to use and when,
- back office billing nightmares as clients constantly need to match vendors' invoices to customer campaigns,
- poor vendor revenue quality, low margins, limited forward visibility, etc, which impacts the health of the overall ecosystem,
- and scores of companies competing for a slice of the media purchased.
Critically, as clients buy ad unit output not the vendor's platform, differentiation is hard to convey and the axis of competition shifts from product quality to sales and lunch and learn selling.
Flite's SaaS model aims to remedy the ills noted above. At the core, Flite believes its value lies in the power of our platform. Flite clients buy Flite to power not just a campaign but their core digital revenue functions. Like Salesforce, Flite clients log-in to Flite daily and rely on Flite to execute and manage their workflow and to deliver value. As such, our business model is to license Flite along a SaaS model a la Salesforce.
For example, the New York Times recently covered our relationship with Conde Nast, who selected Flite to power the Conde Studio, the central team responsible for premium ad products. Flite is the system that enables the ad execution process to scale - premium ad product management, creative, development, ad ops, and account management. By buying our platform rather than our services teams, the relationship moves from translational to strategic and therefore the business model needs to map to the new reality.
Flite's model is disruptive in that our competitors price on a translational, CPM basis and the industry has grown to expect CPM as the default model.
There are real benefits, however, to customers moving to SaaS relationships, such as:
- Tighter, more valuable integrations
- Today's market demands that publishers move from selling audience to selling audience plus highly differentiated ad products. Differentiation is defined by programmatically integrating a publishers' APIs and content into the ad products the sell ("native" ad products). Flite is the nexus of integration and our clients connect Flite's platform to the content and application systems that constitute their value. When ads were 100% independent of the platform on which they ran, vendor relationships could be purely mercenary and one-off. However, when the very definition of the ad's value requires programmatic connection to core technology platforms, the nature of the relationship moves from translational to strategic. Flite and our clients need to commit to one another across long periods of time.
- Process efficiencies
- Fundamentally, when choosing a platform vs a campaign partner, customers make longer term investments in training, reporting, product definition, process efficiencies, and what was a traditionally bespoke process becomes highly efficient and much more profitable. Simply put life gets more simple, more repeatable, and more profitable.
- Why? Publishers today work with a plethora of ad tech companies and every campaign may include multiple vendors. Video vendor, mobile, web....Each vendor charges a CPM and the publishers' team needs to constantly match vendors to projects, invoices to receivables, and to work to both deliver the campaign on time and to collect apples to apples metrics that determine campaign success.
- By working with fewer vendors more closely, clients gain tremendous efficiencies.
- General SaaS benefits
- No infrastructure or client-side software and shorter deployment times
- Ubiquitous availability
- Fresh products based on weekly releases
- Monthly, fixed payments vs spiky, one off and hard to budget costs
Flite's customers are the ultimate arbiter of the value of our model. We've seen tremendous interest in fixed pricing models vs the variable CPM model. Flite today is proud to support our customers on a SaaS-basis and believe that the commercial model is a true win-win.