Snakk Media Revised Key Operating Milestones for FY19

WWW.SNAKKMEDIA.COM


LEVEL-6, 57 SYMONDS ST, GRAFTON, AUCKLAND 1010, NEW ZEALAND
(NZ BUSINESS NUMBER-9429031299855)

Experts in Engaging Mobile Consumers

SNK – REVISED KEY OPERATING MILESTONES FOR FY19
25 July 2018
SNAKK MEDIA LIMITED (NXT: SNK) – KEY OPERATING MILESTONES 2019 FINANCIAL YEAR
As Snakk advised in its release to the market on 30 May 2018, Snakk was undertaking a final review of
the Key Operating Milestones (“KOMs”) for the financial year ending 31 March 2019 (“FY19”). In
accordance with the requirements of Rule 43 of the NXT Rules, the Board of Snakk Media Limited advises
that that review is now complete and the full set of KOMs for FY19 are:

Year ended 31 March 2019 Target
Gross Margin 58%
Compensation to Revenue Ratio 34%
Impressions Served to Impressions Booked % 101%
% of Campaigns Delivered to Target 98%, +/- 5%

An explanation for each of the Key Operating Milestones and amendments is provided below.

Revised KOMs
In reviewing the KOMs for FY19 two new KOMs have been added and two have been
discontinued. The KOMs for FY19 are:
1. Gross Margin %
2. Compensation to Revenue Ratio %
3. Impressions Delivered to Impressions Booked %
4. % of Campaigns Delivered to Target
The two new KOMs are:
1. Impressions Served to Impressions Booked %, and
2. % of Campaigns Delivered to Target
The first ratio measures the effectiveness of Snakk’s overall ability to manage campaigns which
underpins Snakk’s core Managed Services business, and the second measures the variation from
the mean for campaigns delivered.
The discontinued KOMs are:
1. Click Through Rate %
2. Staff Turnover %
A detailed description of the measures, the reasons for adopting them, and the reasons for retiring
two of the previous measures follows.

WWW.SNAKKMEDIA.COM


LEVEL-6, 57 SYMONDS ST, GRAFTON, AUCKLAND 1010, NEW ZEALAND
(NZ BUSINESS NUMBER-9429031299855)

Experts in Engaging Mobile Consumers


KEY OPERATING MILESTONE METHODOLOGIES
NEW KEY OPERATING MILETONES
IMPRESSIONS DELIVERED TO IMPRESSIONS BOOKED %
The Impressions Delivered to Impressions Booked is the ratio of ad impressions served in
managing an advertisement campaign compared to the number of impressions booked by
the customer.
Snakk’s objective and operational measure is to match the number of impressions delivered as
closely as possible as measured by Snakk and independent verification service providers to the
number of impressions booked by the customer.
The Impressions Delivered to Impressions Booked measures the effectiveness of Snakk’s ability
to manage campaigns that underpin Snakk’s core Managed Services business. By managing as
closely as possible to the target, Snakk maximizes operational efficiency allowing full invoicing and
avoiding paying for excess unbillable ad inventory.
Impressions Delivered to Impressions Booked =
Impressions Delivered
x 100%
Impressions Booked

Typically, campaigns need to be managed slightly over 100% per Snakk’s platform measures in
order to ensure independent measures reviewed by customers that use a different basis for billing
purposes achieve 100%.
Industry standards typically allow billing at a 100% even if the actual number of impressions
delivered varies by up to +/- 10% to that booked. Snakk operates to a higher standard than
industry as per its terms and conditions offered to customers. Snakk chooses to bill for the actual
number of impressions delivered as per independent measures up to 100% of the number of
impressions booked and does not, in the normal course of business, bill for any impressions
served over the number booked by the customer.
Snakk’s target is slightly over the impressions delivered as measured by internal platforms to
ensure the independent external measures achieve 100% for billing purposes.

WWW.SNAKKMEDIA.COM


LEVEL-6, 57 SYMONDS ST, GRAFTON, AUCKLAND 1010, NEW ZEALAND
(NZ BUSINESS NUMBER-9429031299855)

Experts in Engaging Mobile Consumers

% OF CAMPAIGNS DELIVERED TO TARGET
The % of Campaigns Delivered to Target is the number of campaigns within an acceptable
range of the target delivering impressions that equal the number of booked impressions.
Snakk maximises its revenue when there is effective sales and operational interaction with
customers and a high level of operational efficiency in delivering impressions that closely match
the customers’ requirements over the majority of campaigns managed.
The % of Campaigns Delivered to Target measures how many campaigns are delivered within an
acceptable deviation range from the target. It is a complimentary measure with Impressions
Delivered to Impressions Booked.
Campaigns falling above the target range cannot be billed and Snakk will incur unnecessary high
inventory costs. Campaigns falling below the acceptable range have not delivered enough
impressions according to the initial customer order and represent either changing customer
requirements or an inability to effectively fill the order. In either case it represents lost revenue
opportunities for Snakk.
Operational efficiency is demonstrated by having a high proportion of campaigns fall within the
acceptable variance range from the target.
% of Campaigns Delivered to Target =
Number of Campaigns Falling Within Target Range
x 100%
Total Number of Campaigns

Whilst an ideal target is to deliver 100% of campaigns with impressions delivered to impressions
booked in practice it is not possible:
a) For the operational reasons given in the explanatory notes to Impressions Delivered to
Impressions Booked, and;
b) Customers will sometimes pause, cancel, or fail to deliver assets required to fulfill
campaigns
For campaign changes driven by customers the number of impressions delivered may be
significantly lower than the impressions booked. However, it is part of the sales and customer
service process to effectively liaise with customers to limit the number campaigns that may be
affected.
For the reasons cited above the actual mean average and target is slightly less than 100%.

WWW.SNAKKMEDIA.COM


LEVEL-6, 57 SYMONDS ST, GRAFTON, AUCKLAND 1010, NEW ZEALAND
(NZ BUSINESS NUMBER-9429031299855)

Experts in Engaging Mobile Consumers

RETAINED KEY OPERATING MILESTONES
GROSS MARGIN
Gross margin is the percentage of total revenue that Snakk retains after incurring the direct
costs associated with producing services sold (Direct Media Costs).
At least maintaining Gross Margin allows a higher percent of revenues to be spent on other
business operations, such as R&D, technology, marketing and expansion into new markets /
territories. As the company grows, a stable or improving Gross Margin will drive the delivery of
positive EBITDA.
Direct media costs are the costs of the advertising inventory that Snakk on sells to its clients.
Snakk’s strategy to maintain and grow Gross Margin includes:
• utilising increasingly sophisticated and efficient technologies to purchase advertising
inventory cost-effectively without compromising quality; and
• maintaining premium product pricing by delivering strong results for advertisers, combined
with product offerings that are underpinned by unique and innovative ad technologies.

Gross Margin =
Gross Margin % = Total revenue less Direct Media Costs
Total revenue

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LEVEL-6, 57 SYMONDS ST, GRAFTON, AUCKLAND 1010, NEW ZEALAND
(NZ BUSINESS NUMBER-9429031299855)

Experts in Engaging Mobile Consumers

COMPENSATION TO REVENUE RATIO
Compensation to revenue ratio is the percentage of permanent full-time employee salaries
within Snakk's operating divisions compared to total revenue.

The company's main cost outside of direct media costs (being the costs of the advertising
inventory that Snakk on sells to its clients) is staff salaries across its various divisions, particularly
sales, marketing and management. Measuring the relationship between revenue and
compensation figures within a period provides a method to monitor how well the business is
utilising its human resources to generate revenues.
The efficiency or scale of a labour force increases as the labour-to-revenue ratio decreases, which
is why a lower ratio is better for the company. Comparing the ratio against the company’s historical
records can show if the labour force efficiency is deteriorating, improving, or being maintained at
the same level over a period of time.
Snakk’s strategy is to optimise the Compensation to Revenue Ratio by:
• Managing staff headcount closely compared to revenue and growth potential;
• Automating manual and people-driven processes whenever possible;
• Utilising technologies to drive operational efficiencies;
• Remunerating staff comparable to market and offering appropriate ‘at risk’ incentives
matched to performance; and
• Use of third party outsourced providers, contractors and non-employee based distribution
channels where feasible to reduce full-time and part-time permanent head count and
associated wages and on-costs.
It is calculated as follows:
Compensation to Revenue Ratio % =

Total permanent full-time employee salaries

Total revenue

WWW.SNAKKMEDIA.COM


LEVEL-6, 57 SYMONDS ST, GRAFTON, AUCKLAND 1010, NEW ZEALAND
(NZ BUSINESS NUMBER-9429031299855)

Experts in Engaging Mobile Consumers

DISCONTINUED KEY OPERATING MILESTONES
Click Through Rate
Click Through Rate (‘CTR’) is the number of clicks on a mobile page or app advertisement divided
by the number of times the advertisement is shown (impressions) as a percentage. Higher click
through rates indicates a higher level of interest and is therefore an indicator of how many people
have interacted with the campaign by clicking on the advertisement.
CTR is an established valid industry measure for the effectiveness of digital advertising, however,
it is influenced by the creative as well as the media ad placement.
Snakk’s business has continually evolved and is becoming less dependent on developing new
creative or modifying creative designed for other mediums for mobile advertising. Consequently,
the ability for Snakk to influence the CTR is reducing and it is therefore becoming a less relevant
measure for Snakk.
Staff Turnover %
Staff Turnover is the percentage of permanent full-time employees that voluntarily leave the
company compared to the total permanent full-time employees.
Staff Turnover was adopted as a KOM at a time when Snakk was expected to grow rapidly with
dependency on a high number of full-time permanent staff. There are a variety of reasons why the
number of full-time permanent employees has reduced including:
• Re-structuring in FY18 to reduce costs without impacting capability
• Adoption of different distribution models in New Zealand and Southeast Asia in FY19 that
do not require permanent full-time employees
• The use of part-time permanent employees and contractors to increase the flexibility of the
workforce
As a result of the reduction in the number of full-time permanent employees for sound business
reasons even small variations in the number of voluntary leavers or additions to the permanent
full-time team will have a high mathematical impact on the staff turnover ratio that is not
necessarily a good indicator of performance. Changes in staff mix is adequately addressed with
the retained “Compensation to Revenue Ratio” KOM.

WWW.SNAKKMEDIA.COM


LEVEL-6, 57 SYMONDS ST, GRAFTON, AUCKLAND 1010, NEW ZEALAND
(NZ BUSINESS NUMBER-9429031299855)

Experts in Engaging Mobile Consumers



SNAKK MEDIA LIMITED [SNK]
In the directors’ opinion, Snakk Media Limited’s (the “Company”) key operating
milestones, taken together, address the most significant factors by which the
performance of the Company’s business should be assessed and monitored and will
result in understandable reporting for investors and therefore meet the NXT
standard.
Dated: 25 July 2018
Peter James
Director
Signature

Rob Antulov
Director
Signature




AUTHORITY FOR THIS ANNOUNCEMENT
Name of senior manager or director
authorised to make this announcement
Joel Williams
Chief Executive Officer
Contact for enquiries Heidi Aldred
Group Company Secretary
Contact Phone Number +612 7903 1500
Contact email investors@snakkmedia.com
Date of release 25 July 2018


Snakk Media shares can be traded on the NXT Market (Ticker Code: SNK). Snakk Media is
required to disclose information under the NXT Market Rules. Information about the NXT Market
and Snakk Media is available at www.nxt.co.nz or from the company’s website at www.snk.co.nz.