The new funding (from Insight Venture Partners) and hires could potentially mark a turning point in the four-year-old company's existence, as Kanoodle now boasts the resources to add content- and local-targeted sponsored links to its keyword search business. Analysts project that content-targeted advertising will become a $1.4 billion market by 2007, so those companies that can immediately offer such services and expertise stand to benefit tremendously.
Given that Sprinks more or less pioneered content-targeted sponsored links, snaring its top personnel gives Kanoodle immediate authority within the segment. The company's new Content Division will be headed by the three Sprinks veterans: Lance Podell (president), Doug Perlson (senior vice president, partner development and operations) and Mark Josephson (senior vice president, marketing and business development). To accommodate the expansion and get closer to the ad agencies it hopes to charm, Kanoodle has opened a New York City office.
Podell identifies two factors that motivated his move to Kanoodle: a lack of resources ("they had enough to do about five percent of what we wanted to do") and Google's purchase of Sprinks on October 24. "Google bought pieces of the Sprinks product - Sprinks as it existed went away," he notes without any bitterness. "We were sort of cut off at the knees." As a result, Podell and his team went looking for a place to continue their work, and found a willing partner in Kanoodle. "Entering into the contextual market means more choice for advertisers," Keating says. "It was the right fit for everybody involved."
Where Podell sees a point of differentiation between Kanoodle and its competitors is in the variety and specificity of its offerings. "Advertisers loved [Sprinks] because we gave them the most control over their media buy," he explains. "We sold a content product and a keyword search product. You bid on them distinctly and measured them distinctly - we were the only player in the marketplace that offered it that way." When asked why none of his competitors tried to emulate this model, Podell responds, "They assume there is a technology solution to everything. What makes this business work is the human element plus the technology." Podell also notes that being a cog in a massive media machine (Sprinks was owned by Primedia) gave Sprinks a better understanding of how to interact with advertisers and publishers.
As for increasing Kanoodle's visibility, the company has a compelling story to tell. Although rarely mentioned in the same sentence with commercial search giants like Overture and Google, the company has enjoyed 16 consecutive quarters of increasing revenue, and is currently outpacing its 2002 performance by a whopping 185 percent. "It's necessary to get our name out there," Keating says. "With that visibility, hopefully we can convince advertisers and publishers that we have the superior product." Opening a NYC office should help in this regard, he adds: "[New York] is where the ad agencies are. We should have more access to them."