I don’t usually write much about SureHits in this space, but we’re making a bold move today and I want you to know about it.

First, a brief recap of what we do.  We run an ad network for insurance and loan products.  If you’ve been shopping for either lately, I hope you’ve seen it.  The idea is simple.  When you visit a site with our code installed you are offered the choice of insurance or loan providers based on the U.S. state you reside in.  Advertisers bid for placement on a cost-per-click (CPC) basis and publishers are paid the same way. It’s an alternative (or complement) to Google AdSense or traditional affiliate programs for publishers who have content related to financial services. 

Why Make the Change?
The big issue that we (and all CPC networks, including Google & Yahoo) face is variable click quality.  By “quality” I mean the probability that a click will turn into an outcome for the advertiser such as a mortgage application or insurance policy.  The problem is that while clicks are measured by the ad network, consumers are taken to the advertiser’s website where the outcomes occur.  Therefore, to “see” quality as an ad network, you need to have visibility onto the advertisers’ websites. 

We’ve had this visibility since the beginning of our network in 2005.  We’ve placed our AdProve™ code on many of our advertisers’ sites to see how our clicks turn into quotes or leads (which are highly predictive of later conversions like applications and policy sales).  We have then looked at each publisher’s traffic to see how it matches up to the rest of our network.  

What’s New in the Quality Engine
Starting today, we’re using this data very differently.  For publishers, we will now match pay-outs to both traffic volume and traffic quality.  If publisher A delivers 2x the quality of publisher B, then A will receive twice the payout, all else equal.

On the Advertiser side, what we’ve done is unique.  We have set a Quality standard.  If the traffic advertisers receive in a given day is below that standard, they receive a proportional discount – if they are at 80% of the standard, they pay 80% of their bids for the day.  Further, it’s a closed-loop system whereby the changes in publisher quality exactly equal the cumulative discounts given to advertisers.   

We believe we’ll see the following benefits:

• Advertisers’ confidence in the system will increase.  We’ve built our reputation on quality, but it is extremely hard to manage traffic quality only by removing lower quality publishers from the system.  The automatic quality discount frees advertisers from the concern that traffic quality will dramatically change for the worse, as has happened on so many other CPC-based networks over time.
• We will have even more success attracting both higher quality publishers and lower quality publishers.  How is that possible?  By paying each publisher what their traffic is worth, we will better match the economics to the payout, allowing us to broaden our reach on both ends.  If you picture a graph of the  normal distribution, we have really played within the middle of the curve (our average traffic quality), but will now be able to expand out toward the end-points on both tails.    

Aren’t Yahoo & Google Already Doing This?
In a limited way, yes.  Yahoo started discounting syndicated traffic as part of Panama and Google has used data from Google Analytics to discount their syndicated traffic. We’ve taken it to a whole different level.  We believe the search engines face two very difficult challenges that we don’t face:

1.  Their horizontal nature.  Google & Yahoo serve ads in thousands upon thousands of different categories.  Each has its own unique characteristics.  The definition of advertising success for a car maker, for instance, is very different from that of a car insurance company.
2. Keywords.  Keywords introduce tremendous variance into any discussion of quality.  “Auto Insurance Quote” converts about twice as well as “Auto Insurance Rate.”  That’s just one comparison for one product.  How do you normalize traffic quality across hundreds of thousands of keywords for thousands upon thousands of 3^rd-party syndication partners?  Not very easily.

Because we are focused on just one vertical, financial services, and because we have product bids instead of keyword bids, we avoid those problems.  We have clear definitions of success for our advertisers and discrete product categories, which produces relatively clean data.  We also have a high percentage of our advertisers tracked, which gives us the ability to act on very recent data. The result is that we can base our entire system on Quality, not just offer discounts at the margins.

Of course, the biggest difference is that we’ve set a stake in the ground with our Quality Standard that measures traffic relative to a fixed standard in time.  No CPC-based search engine or ad network has taken this important step in helping advertisers meet their ROI goals.

We couldn’t be more excited about the direction we are taking the company with the Quality Engine.