LeadsCouncil Live: The Future of Ad Tech

By Michael FerreeNovember 25, 2014

On today's call we will be joined with Rob Leathern and Atul Patel who are both deeply immersed in the ad tech ecosystem. Our discussion will cover a host of topics revolving around technology trends in the ad tech industry. By joining in on this call you will hear discussions on:

Facebook custom audience
Twitter's tailored audience
Programmatic buying
Consumer targeting
and the companies facilitating these services.

Guest Info:
Rob Leathern – www.linkedin.com/in/leathern
Atul Patel – www.linkedin.com/in/atulpatelx

 

 

 

Transcript:

 

Michael:        Welcome everyone to today's Leads Council Live call.  Thank you all for joining us today.  We got a really cool conversation planned for you today.  I hope if I can keep up, it should be a great call on the "Trends in Ad Technology," which is always really, really interesting stuff to me and I'm always fascinated by it. 

                        I hope you guys are, too. 

 

                        Before we get started, I do want to mention that this is a live call, which means that you're more than welcome to interact with us.  All you need to do to do so is type in questions into the Go-to-Webinar control panel.  It should be right there on your desktop.  Simply type in questions in the question section of the panel there and I will see them.  As we go along, I will enter them into the conversation and go from there, but please do interact.  It always makes the conversation all that much better.  Otherwise, let's go ahead and get started. 

 

                        We've got like I said, a great call planned today on "Trends of Ad Technology."

                        I've got two expert guests with me today.  I've got Atul Patel and Rob Leathern. I'm going to just ask them to give us a little background on what they're up to today and what they've been up to in the past and provide a little perspective of their opinions.  Then we'll jump into a number of different topics.  Let me pass it over to Rob.  Rob, tell us a little bit about yourself and about your background and then we'll pass it over to you, Atul.

 

Rob:                Sure.  It sounds good.  Yeah, my name is Rob Leathern.  I ran for about five and a half years a company called Optimal that we sold last October to Brand Networks.  We were and are one of the leading companies in the social advertising space.  We provide software to Fortune 500 companies and agencies to help them manage and automate campaigns across Twitter, Facebook and LinkedIn.  Before that, several years before that I actually worked at LinkedIn as one of the early employees there. 

 

                        I got my start in online advertising back in 2004 when I joined Nextag and we did a lot of lead generation.  I helped build a team that became one of the five biggest display advertisers in the US at the time.  I've been involved in online advertising for well over ten years now.  Currently, am working on a few different consulting projects, kind of looking around with the next one thing that I want to spend my time on and always happy to help out and talk to different companies, investors and so on about online advertising and advertising technology. 

 

Michael:        Great and thanks for being on today's call.  I really appreciate it.  Atul, tell us a little bit about yourself, what you're up to these days? 

 

Atul:                Yes, I think last time we spoke on video camera I mentioned that I was going to take a role at a search company and I did.  I'm the head of products at a company called Intent.  It's a semantic natural language, artificial intelligence platform that could read anything that we chat about, read about and identify what it is that's in the content and then match it with relevant content in advertising.  That's one area, but before that I was CEO of founder of a company called One Screen, focused on video syndication, matching people who make contact with those that syndicate it.  That's actually becoming pretty interesting area right now with all this OTG action people, separating from their cable bills and so forth. 

 

                        But have been advising other companies as well.  There's a company called World of Dance, which is a YouTube MCN.  They have about 600 channels in their network.  I get over I think 50 million use a month.  Another company called Ad Tier, which is an ad surfing platform.  I co-founded and advised Lead iD, which is pretty popular in the lead space.  I have a lot of different things going on, but like what Rob, just talk to a lot of startups and other entrepreneurs and a lot of coming up with ideas. 

 

Michael:        Excellent, well you both have a tremendous amount of experience in advertising side for online and certainly the technologically side of it.  On this call I want to cover a number of different topics.  I want to start off I think with probably one of the more popular topics these days, at least one of them around Facebook and custom audiences and certainly, Twitter, too and this is right at the core

                        I think of a lot what you were doing at Optimal, too, Rob with custom audience.  Can you speak to what's going on in that arena and if there are certain trends that are taking place and how advertisers are taking hold of the custom audience opportunity? 

 

Rob:                Sure.  Yeah, Optimal is one of the early beta partners of Facebook when they rolled out custom audiences as an advertising tool.  Essentially, what custom audience is for those that don't know it, the ability for you to take your email database, optimum email that you have of consumers and upload them into … You can either hash them or have Facebook hash them and upload them into the Facebook system and they'll create an audience for you that you can then show ads to. 

 

                        It's great because you can be sure that the people you're showing ads to our people you're already engaged with.  It could be people, for example, who got part way through a process, started filling out a form, but didn't complete it and you want to push them to complete something or it could be customers that you have, have bought something from you previously, but haven't engaged in some period of time.  You want to give them a coupon that encourages them to come back.  We saw a lot of success with this product from the very beginning. 

 

                        Facebook also then provided the ability for you to create look alike audiences.  Without you necessarily thinking about the demographic aspect of the audience, just upload existing customers as a list or as a targeting group and then allow Facebook to do the work of creating, for example, a 1% sample of people that look the most like that group.  Whether it's the things they like, the demographic characteristics, where they live, it's actually a combination of all of those things.  That can be a very successful tactic as well for marketers. 

 

                        Now following on their lead, Twitter also created what they call a "tailored audiences product."  The interesting thing though as well with Twitter, which

                        I think actually makes in some ways is even more interesting than Facebook, is that you can also create audiences by uploading lists of Twitter IDs.  You could do some kind of analysis of what people are talking about and then you could create an audience just out of that that may be totally different from the built in targeting that Twitter offers.  The reason that you're able to do that is because everything on Twitter essentially, is public.  Whereas with Facebook, there's overlapping privacy preferences so it makes it difficult for you to take a user ID, even though it's technically possible, it's difficult to take a user ID and turn that into a segment. 

 

                        There's tons of opportunities here.  We found a lot of companies who could benefit a lot from using custom audience haven't because they've had to get internally, especially big companies, internally get people OK with in some ways sharing this information with companies like Facebook and Twitter, even though it's hashed, even though you can't get to an email address from what you upload.  There's still this trust gap that many companies compliance officers for example, don't necessarily trust Facebook.  We've seen that theme chipped away at over the last couple of years. 

 

Michael:        I always think from an advertiser's standpoint that what kind of performance are companies seeing with this custom audience?  We always, especially in our industry, there's always a new shiny thing and there's always something new in our space and whether or not the performance is there is always up for question.  You're right there in the mix.  Are advertisers really benefiting from the custom audience?  Are they really seeing uplift in their campaigns? 

 

Rob:                Yeah, I think it's very similar to re-targeting in that the quality of the traffic you drive to your site from which you're re-targeting has a direct impact on how much ROI you're going to get out of it that's one thing.  The second thing with comparing it to re-targeting, which works really well for many companies and perhaps they're more familiar with traditional display re-targeting than they are from something like a custom audience sell, is that there isn't that much of an opportunity cost with some of the re-targeting that's done through something like a Facebook than there is with, for example, sending out an email, another email to someone. 

 

                        Let's say you have someone went two thirds of the way through your form process.  You send them a whole lot of email the next day or the next week.  They may choose to opt out any of communications with you so you now have lost the ability to talk to this consumer forever, whether it's to that email address.  Of course, with something like custom audiences, they're just going to see a Facebook ad anyway.  You're just showing them one of your ads instead so I think there's a benefit there. 

 

                        The final thing which I think people also lose sight of when it comes to re-targeting is that many of the display re-targeting vendors out there don't really price … They price in a way, they know how much ROIs being driven by returning campaigns.  They're pricing in some cases is quite opaque.  They're no charging you, for example, just the cost of the media or with some mark-up.  They might be charging you a flat CPA or a CPC or something like that where they're making a lot more money than frankly, they should.  This is something we've seen in the re-targeting space the last few years. 

 

                        I think when you're working directly with one of these big publishers like a Facebook, Twitter or Google, you can get some of those intermediary costs out of the system and so then you'll see better ROI.  Over time as people do more of these kinds of if you want to call it "email re-targeting or custom audiences" with companies like Facebook or Twitter, I think the ROI is going to be better and there's going to be more transparency around ad costs.  I think that's a really big trend as well that people don't talk about as much in this space. 

 

Michael:        Yeah, what about I was reading the other night a little bit about audience insights with Facebook.  Are companies taking advantage of audience insights and is there much to gain there? 

 

Rob:                Yeah, absolutely.  I think people are sharing so much information, explicitly or implicitly about themselves on platforms like Facebook that if you can identify who are the people that are my customers, you can get and mine the data that Facebook has about those users in an aggregate way to see the characteristics of those users.  We've definitely had lots of customers who learn things about their customers they never knew. 

 

                        As an example, a very silly example, but when Facebook went public there was a story about … NPR was doing a story about it.  I talked to this company that was doing standup paddle boarding.  We ran an analysis of the Facebook data for standup paddle boarding and we found this correlation with the Kansas City Chiefs.  We thought it was crazy.  It was weird.  We didn't understand it.  Then we looked on Google and we found that one of the I think offensive linemen for the Kansas City Chiefs is a big standup paddle boarding guy and he actually takes his dog on that standup paddle board out on the lake. 

 

                        It was just really funny.  You find these weird correlations and interesting things that there's just so much data there that these things can actually be interesting and meaningful and marketers can actually use this data to come up with new kinds of creative and ideas they may never have before.  I think the two of you have definitely seen some interesting trends like that as well.  I think it's kind of just fascinating how there's this depth of data that we never had before that now is available to almost every marketer, even if they have a pretty small budget.

 

 Michael:       Atul, do you want to comment on that? 

 

Atul:                Well, I think obviously Robs is a real deep expert on everything on Facebook and Twitter and other social graphs, if you will.  What's interesting is when you start to look at the syndication, just everywhere else people are going that's really where it gets … I think Rob's alluding to that it sort of multiplies the opportunity. 

 

                        For instance, Nielsen OCR, which is I think it's called "online campaign rating" is something that is being increasingly used by brands when they buy advertising, whether it's an ad network or brand agency trading desk.  What they're basically saying is that I give you $10, $20, $30 CPM, I'm going to give you that only on the amount of your audience that matches the demo that I want.  Now, of course, on Facebook it's easy because you set those filters ahead of time. 

 

                        The rest of the Internet what's happening is you'll get reports after the fact, seeing what your audience was last week let's say and that can adjust or affect how much you get paid.  You're kind of hoping for the best, but now and this is especially the case because Nielsen OCR data is actually powered by Facebook.  There's a deal that they have signed a while ago where the way Nielsen's identifying what that demo is, is actually through a back end partnership with Facebook, where they're doing some pixeling and server to server integration. 

 

                        I think where all this sort of comes to a head is when you could actually do this in real time and not have any waste.  Not have a $30 campaign and get paid only 60% of the total because you're 40% off the demographics.  That could be extreme line, which of course, Facebook's trying to do with Atlas to push out outside of Facebook.  I think that's going to streamline everything and make it much easier for publishers and content owners to make money from it and certainly, for advertisers to use that data to target those individuals. 

                        I think it's very exciting, especially off Facebook the way things are going, but of course, it gives Facebook and a few other big guys a lot of control over the ecosystem.  That's companies that are building tools around it are going to

                        I think succeed around in that market. 

 

Michael:        Let's talk about that for a second.  Rob, you have found it and both of you were founding Optimal and as you mentioned, you recently sold … Is this environment still breeding startups?  Are there venture capitalists still looking at this area and investing?  What's the temperature in, around real-time audience targeting that sort of thing? 

 

Rob:                Yeah, I'll tell you there's still strong interest in this area.  I think one of the things about advertising technology from an investor perspective is that it's often difficult for the investor to differentiate between who has real technology and who doesn't.  There's plenty of players in the market who have really, really good sales teams and they're able to get ad dollars and budgets to flow through their systems when the technology isn't great. 

 

                        One of the things we found is it was always hard if you have good technology, which we thought we did, it wasn't always easy to show that was the case. 

                        I think that's been the issue with investors investing in ad tech companies.  It's one of those ones where you have to have some kind of special angle to it.  Also, there's a lot of players in the space that have a lot of scale now.  By their nature, companies like Facebook and Twitter and LinkedIn have been creating walls to new people coming in and just getting access to their API.  They have constraints.  They can't let people hit their system a billion times a day. 

 

                        They do have some scale constraints with their partners and so what ends up happening is more and more dollars are flowing to a smaller number of partners.  It doesn't mean that the door is closed for new partners to come in, but the bar just keeps getting set higher and higher for these partner ecosystems.  I'd say that the door is open, but it's not open as wide as it may have been a couple of years ago. 

 

Michael:        Atul, are there any companies that you've seen hitting the market in this area that's sort of exciting or interesting? 

 

Atul:                Well, I think to Rob's point, I think to get scale you have to be on the upper end of the ecosystem, where you've either gotten early or you have some really deep technology.  I think what interests me are niche products and eventually be rolled up into the bigger platforms. 

 

                        If you think about something that I'm actually pretty intrigued with is YouTube.  How do you help companies buy advertising on YouTube?  Of course, there's Google's native tool that they have, but how does a company that traditionally has been buying pre-roll from a wide set of ad networks like Tremor Media, BrightRoll, YuMe, Adapt TV and so forth.  Simply re-route a lot of that spend on YouTube where they've built a really strong ecosystem of users.  I use Chromecast all the time.  They always have new features where you could skip ads on your television set using a remote through your [road to 00:19:44] app

                        or even your Chromecast, your android phone connected to your TV. 

 

                        How does an advertiser buy on YouTube and do they have the tools in their existing platforms or is there a niched opportunity there that can scale to a degree and then be rolled up into a bigger story, where someone like Rob's saying, a company has massive scale.  They have a lot of the advertising clients, but now they add this great technology into the mix, they could do more with it. 

 

                        I'm more intrigued by the niche products that could be made.  Certainly, what I've heard and I think maybe Rob's heard this, too, is just having these huge advertising exits may be far and few between, but having the niche products that you could see you roll up into maybe these publicly traded ad platforms.  YuMe's public, [Cheap Mobile’s 00:20:43] public, these are the video centric, but of course, there's rocket fuel and others that you could be acquired by.  From an entrepreneur standpoint that could be an interesting area to look at. 

 

Rob:                Yeah, I kind of agree with that. 

 

Michael:        Hey Rob, I want to just take a step back and key on one thing that you just sort of said about proving to people that you actually had a technology and there was a value there in that technology that you guys built.  How did you go about doing that?  Do you mind explaining how the hurdles in trying to prove that there is something underneath the hood? 

 

Rob:                Sure, yeah.  I think it sounds simple, but I was always a fan of demonstrating a technology versus PowerPoint slides, "Oh, this is what it could do for you."  You obviously have to through the course of showing your product to potential buyer, show them how it works.  You can work and obviously the second step is then when it's actually …

 

                        Typically, the typical customer would run a test.  A Fortune 100 company, they might spend $50,000, $100,000 on testing a product and hopefully, that it works well enough that they're willing to commit a bigger budget and we saw a lot of success with that approach.  As a start up, you kind of have to put your money where your mouth is.  Sometimes you have to give them a discounted testing environment so they can get to know it. 

 

                        Obviously the other thing with some of these big enterprise customers is the sales cycles are long.  You also have to go through things like security audits and other things.  It can get complicated.  It can be a not trivial process to go through, but I think at the end of the day if the technology works well and it makes the customer happy.  By the customer, I don't mean the company. 

                        I mean the person who's using it. 

 

                        Often we had lots of examples of customers who were very innovative and always trying new things.  We had some customers who were very conservative and they just wanted it to do one or two things very well.  It's hard to be continually innovating, also continuing to support all of the different features that platforms like Twitter and Facebook require of you because they made us certain requirements … they do make certain requirements of their partners to support certain functionality.  At the same time, just making sure that it does the basics of blocking and tackling that's what the bigger customers need. 

 

                        It's definitely a process where some customers are looking for different things than other ones are, but if you're able to also show that you can also do a good job within a certain vertical, companies like Facebook and Twitter will help you.  They'll refer you to other customers in those markets or at least put you forth as one of several names because they try not to show too much favoritism, but if you do a good job in a certain vertical or industry then they will share those case studies, share that information with other companies who are looking for solutions in those areas.  That usually works out pretty well, at least from a customer perspective. 

 

Michael:        Yeah, let's talk a little bit about programmatic.  This has been I think a huge topic, at least from content online and just discussions across the board at different events.  For the last couple years, it's certainly been at the top of mind for a lot of people.  Do either one of you want to talk little bit about programmatic buying, what's going on in that space and how it's evolving?  What companies are taking hold of that opportunity?  Atul, do you have any insight there?  Are you watching that much?           

 

Atul:                Yeah I could talk briefly about it, but obviously, Rob early iterations of the company included sort of a full scale BSP.  I'm sure he'll be able to add a lot more.  I think what's interesting about programmatic is the convergence that at least I saw on one screen with video and am still seeing with some of the work I'm doing is how do you actually mix in automated with manual? 

 

                        The programmatic side there's a few ways people define it.  Programmatic is just that it's automated to some degree.  It's not the fact that it's real time bidded or whatnot.  I think where you traditionally have a campaign, let's say I want to buy on your website or application or whatever it might be.  Traditionally, I could find you through the exchanges and we could have an indirect deal or I could work with you directly.  Now, traditionally maybe a year or even maybe even two years ago, it was a hassle.  On one end you'd have an SSP on your side to manage multiple sources of demand or advertising.  Then for the direct deals you use an ad server and then you'd have to put those two together and figure out how you're going to make them work.  How do you know when to go with the direct deal and when to go programmatic and automated?  You'd have this manual process intermix. 

 

                        Then they introduced I think it's Deal ID.  Google Ad exchange has the Deal ID capability where you can actually intermix things that you have manually sold and have direct deals with and intermix that with the automated transactions that you're doing with partners.  I think what's interesting is the technical workflow with the actual ad server, the SSD, the DSP that has changed tremendously and has made this easier. 

 

                        I think that was the biggest burden where in the video space, you'd have these things called "vast tags."  You'd have problems of … It's actually the standard for distributing video advertising.  It's called "video ad serving template."  It's promoted by the IAD.  You'd have this template and you'd plug it into your ad server and then what you'd end up seeing is someone you'd call for an advertisement, let's say Tremor Media would end up calling other people that you already have deals with.  They would then in turn in an SSP-like fashion call four other ad networks that you theoretically could already be working with and it created a lot of duplication and a lot of waste in the process. 

 

                        I think all of that is slowly getting solved.  I'm looking at it more from a product and operational standpoint, but I think Rob could talk about how it's helped them brand and so forth.

 

Rob:                Yeah, I think that you still have this issue where there really isn't one market.  There's multiple ad exchanges.  Even on the publisher's side people have inventory broken up into different buckets.  There's sales forces aren't necessarily correctly incentivized.  There's still a lot of issues that may not have to do with technology.  The technology I think to support all of this stuff working much more efficiently is there.  It's just there's still these barriers that often are legacy of companies wanting to protect a sales force to make sure they can make enough money so that they'll continue to sell the premium, far too expensive inventory, alongside the remnant, far too cheap inventory. 

 

                        The smart people are trying to say, "Well, I can just get this inventory cheaply through an exchange."  Then you have exchanges trying to up the scale what the inventory is.  Then you have good inventory and bad inventory and non-existent inventory all sitting next to each other.  There's a lot of issues that I think when you trace them back to why there are issues with programmatic, I think a lot of it is a people issue.  It's just it's incentives.  It's internal.  People fighting over certain turf, it's those kinds of things.  Ideally, those things go away, but as Atul says, "They are going away.  It's just taking time."  I felt like it was taking more time than I thought it would is one of the reasons we switched our focus from display over to social because we just felt like we could work with a smaller number of parties on the supply side and that they were going to have increasing amounts of data. 

 

                        I think you're seeing that as well, for example, with companies like Facebook working with companies like Datalogics and [Xcium 00:29:31] and Epsilon and so on, too.  They have so much scale they can data match between one another.  Whereas before when we were doing displayed, we'd be working with other data providers who … They had really good, quality data, but the scale wasn't there.  You'd have to see a far greater number of impressions to be able to understand who those users are to make calls to these third parties like New Stars, Target Info or others or Blue Kai and try to understand, "OK, is this person in market for the …" You'd still end up with just a small such segments that it was hard to create a scalable business. 

 

                        I think you're seeing a smaller number of bigger players.  You're seeing acquisitions.  You're seeing Rubicon buying these companies to also have not only the remnant side, but the guaranteed inventory.  I think you're just going to see more and more of that kind of thing happening, where there's consolidation and we're moving towards this notion of one market, one way of pricing all inventory.  But it's gotta to be slow, it's going to continue to be slow.

 

Michael:        Yeah and so when you say slow, what do you think over the next year or two?  You kind of mentioned earlier that it's moving a lot slower than you had projected initially.  What are your thoughts now?

 

Rob:                Yeah, I don't know.  Gosh, if you had asked me in 2010, I would have said,

                        "By 2014, we'd be further along than we are now," so maybe I'm not that good at making predictions.  Everything I think related to this is that marketers still have to do way too much work.  Some of the programmatic, if you think about, "Well, what's the intermediate step of programmatic?"  The step where we are right now is, "Well, maybe I need to create rules."  I need to say, "Well if I see these kind of people then show them this ad.  If this happens then do that." 

 

                        Yeah that intermediate layer, people like Rocket Fuel talk about artificial intelligence and rocket science and everything.  There's definitely a lot of that and there's a lot of very smart people at these companies trying to figure these things out.  But it still comes down to marketers having to do more work than they're doing right now, which some of them are willing to do, some are not.  The ones who are successful are the ones who are doing a lot of this work now, but I'm hoping in the next couple of years that a lot of that work can just have been automatically done. 

 

                        If you have ten different advertisers who share certain characteristics about the kind of audience they're looking for, then you should be able to eliminate a lot of the work.  I think that that's what we're going to see the next couple of years is that just solving the cold start problem of online advertising is going to be addressed to what extent. 

 

                        Secondly, having one marketplace or a smaller number of marketplaces frankly, where you could have much more scale and having figured out the way you're going to do stuff can just be very much more automated and much more scaled up very quickly when you find things are working.  I hope those trends are going to mean that the opportunity just expands for everyone and makes it easier for everyone.

 

Michael:        Are there any companies to date right now that are trying to solve that problem with that cold start problem?

 

Rob:                All the DSPs have been trying to solve that problem for a while and companies that are companies like Rocket Fuel and Media Math, Turn, they're all trying to do that and trying to solve that issue with varying degrees of success.  Part of the varying degrees of success is that they're working with a wide variety of clients with differing extents to which they want to be involved in the process.  Also, sometimes there's multiple layers.  There might be the end customer, an agency or maybe even in some cases more than one agency in between.  I think that, again, you are still seeing different incentives in between happening …

 

                        I tell this story from a view years ago.  We interviewed a young person who was working at an agency.  They said that there's still people doing all of this repetitive work in Excel and so they went to Barnes & Noble on the weekend.  They bought a book on Excel macros and they taught themselves how to write Excel macros. 

 

                        They went in the next week to the person managing this team and said, "Hey, I've written this macro that automates all these reports that you guys send to your guys every week."  They said, "Well thank you so much for doing that, but we're not going to use your macros because we would then have to charge the client less so we're not going to be more efficient because we'll make less money."  I think there's still these incentive issues inside the online advertising industry which need to be addressed and that typically in my experience takes longer than the technology problems.

 

Michael:        Got it.  I'm going to switch lanes a little bit here, but I do want to get back to programmatic and tackle that along with mobile.  I want to switch lanes to search.  Atul, I want to get some thoughts on what's going on with search with regards to mobile, what trends you're seeing there, what type of innovation, if any, are really taking place within the search engines?  What's going on in that channel?

 

Atul:                Yeah, OK, yeah that was a pretty big shift.  I think I'll try to connect the dots.  Yeah, we've been talking about advertisers and data and being able to reach a particular audience.  I think with mobile and sort of how audiences are consuming content, whether it's in feeds like Facebook, Pinterest, Instagram or within apps that are doing different things and that are so precise at what the users wanting to do, they're not just sort of mindlessly surfing the web.  I think it creates a different set of opportunities for advertising.  Just when programmatic, buying a 300 x 250s got maybe easier, more streamlined or it continues to do so, you start to see this challenge around native advertising or in stream advertising, which is as consumers start to flick their thumbs through content that they're reading, how do you actually inject the right message in those streams? 

 

                        You could overlap the technology quite a bit.  There's not that much difference between buying a 300 x 250 display ad and buying a box of any size.  How this correlates to search, I think there's a broader concept here, which is helping the user find what it is they're looking for and not just stuffing a bunch of other content in their face just in hopes that they're going to react.  I think that sort of solves the dilution of advertising and that the problem around that. 

 

                        I'll give you an example of how this correlates to search.  When you go to Google and you search a particular music artist or a place that you want to travel to or a brand that you're trying to understand or a celebrity, any kind of celebrity or movie, you understand what you're trying to do.  If you type in a movie into Google, you'll see relevant information on at the right side.  They sort of call that the "knowledge graph."  In some cases you may not even get an advertising a sort of a CPC ad in the traditional way with the three ads at the top and the right rail Ad Sense or AdWords advertising. 

 

                        Instead, you would see the knowledge graph with advertising integrated within it.  If you searched a music artist, you might see the ability to see pictures of that artist.  I get some high level bio information, know what songs they've put out recently, but the advertising is now a CPC link or even a CPA link, [Interapcity 00:37:48], ITunes, Google Play, Spotify, Pandora, etc.  The same goes with pretty much anything that you search for.  If you're looking for a place to go and they can integrate flight data, being able to buy a flight at a particular price. 

 

                        I think where all of this converges and in terms of what we've been talking about it search is that users on these small devices are looking for things and they want it in a very particular way.  They want to be given that information in a very precise way as well.  On Facebook, you kind of chose who your friends are.  As you go through this stream, these are your friends and this is what you asked to do.  When you're on a website and you are looking for a recipe, you end up getting stuck with a whole bunch of random stuff, including all the offerings of Google links that are out there.  These are your popular quick bait type of content articles that you would just see on the page.  It could take as much as one third of the page's scrollable area. 

 

                        I think where search can bring in more precision to how content is shown to the user, I think advertisers can follow that and get more targeted advertising. 

                        I think all of the stuff we've been talking about around Facebook targeting the data around it, I think applies to that because that's actually a big part of how Facebook's advertising works.  It's sort of "in the stream" of what a user is consuming and what they've chosen to consume.

 

Michael:        When I look at search, especially when you compare it to everything that's going on in display and social, you sort of see a slow-moving, at least from my point of view and certainly it's not as an in-depth close point of view you may have, but it seems like a slow moving evolution of what's going on in search pages and improving.  I think maybe five years ago there's a lot of maybe a little bit longer … There was a little more attempts at innovating the search process with semantic search and different things. 

 

                        Do you see much evolution and how people are searching for things, whether it's Google or whether it's mobile or whether it's different search engines?  I'm just kind of curious, even from the ad side of it what you see on targeting and beyond just search keywords and that sort of thing?

 

Atul:                Well, I think it's all about … It sounds like we just want more.  Where search might seem like you just want more results.  You want pages and pages of results.  I think where everyone's going is you just want that one answer.   Whether it's an advertisement, you're looking for a recipe to make chicken noodle soup because you have a sick kid.  When you search it could be Campbell Soup providing you that recipe or it could be Meredithsrecipe.com providing you with some advertising integrated into it, but you're not looking for pages and pages of results any more, at least on my phone I'm not. 

 

                        I think that precision, the ability to find what exactly the person wants at that moment and whether it's content, whether it's advertising, whether it's content and advertising integrated together, I think that's the big opportunity.  I think, of course, this is a whole different realm when you have the kind of data Facebook has and the ability to understand who you are and your age, your demo, your favorite movie, the books you read, the photos you upload.  They can do a lot more interesting things there.  I think for the rest of the web, I think publishers have to start to look at that precision aspect, giving the user more of what they want and not just a whole bunch of other stuff around the page. 

 

                        Most certainly on that mobile web page not having it be stuffed with non-relevant advertising.  Instead, maybe bringing other relevant articles and advertising in line.  As I'm reading something, I could just flip my way through more content, more ads, but in a stream like fashion the way Facebook has it. 

                        I think that's going to be convergence. 

 

                        Now Facebook and a lot of the other guys like Pinterest, Twitter and so forth have a head start because this is how all of us are consuming content now on the mobile phone.  If you actually look at com scores data around where users are using their phones more, of course, people are using their phones for radio, mail and social networking.  There's a lot of areas where people aren't using their phones as much according to com scores reporting, such as news, looking at travel information.  I think that's the opportunity, again, that precision because you're not going to get people just browsing through results for search or just mindlessly navigating the web on their phones.

 

Michael:        Got it.  I'm going to make another jump here because we're running low on time.  I do want to talk a little bit back more about programmatic and how it's being applied on the mobile side.  I think I read a stat the other day and I can't recall the source so pardon me, but it said that ad spending with mobile programmatic was going to surpass desktop programmatic buying.  Please excuse my not knowing enough about this area, but is there a difference between the technologies that need to be used to implement mobile programmatic buying versus desktop programmatic buying or is it usually encapsulated into a single platform?

 

Rob:                Well, yes and no.  I think part of the issue with mobile is that it's a far less mature user infrastructure in terms of being able to identify users.  That's one of the reasons why I've said for a couple years that I thought it's basically probably a two-horse race, maybe a three-horse race if you want to give Twitter credit as well for having a huge mobile installed base.  Guys like Facebook and Google have a lot of user information and have a lot of logged-in users on mobile devices are going to have a much easier time of identifying users in serving relevant advertising to them, than someone who is relying on trying to identify users using either what apps they have installed or a mobile cookie in a browser that may or may not work in other areas or inside of apps.  It's just a much more, it's a much less mature marketplace. 

 

                        From a technical perspective with some of the things like real-time bidding, those integrations, the ability to call on a server and say, "Hey, I have an impression about to happen on this device.  Here's what I know about the user."  That can work in a fairly similar way to the way it works on the web, just the problem is that you don't necessarily know as much about those users.  That's why I think the power of data and these databases from not only companies like the Facebooks and the Twitters, the Googles, but also data providers who are able to correlate data from other sources, companies like Datalogics.  It's going to become more and more important in the mobile advertising world. 

 

                        There's always been in this issue that app developers who want to try to monetize apps with advertising had a more difficult time, even though presumably having a user on a mobile device, even though they can do less the less screen [inaudible 00:46:13], they should be more valuable if you can access things like location and offer them something that's relevant and not just based on their user profile, but also their location and the time of day and things like that.  Marketers just aren't as far along in terms of creating or iterating their offers along with those dimensions. 

 

                        I think I read, I don't know if it was the Huffington Post or Business Insiders,

                        I read something last year about day parting.  We found a huge underutilization even in social and web of day parting, showing different ads, we're turning your ads up or down in different times of the day based on pretty well established patterns of what users are going to be doing, what are they going to be thinking about.  Now you can very easily go and see what times people are interacting, when are they tweeting, what times of day are they tweeting? 

 

                        All this data's out there, but people and marketers aren't yet utilizing that data very well.  It's still a patchwork of what location information is available for advertising on mobile devices.  In many cases, they're still using very broad GOIP databases that are not getting you down to the level of a city block, but in some cases there is that data available.  I think it's still very much the law of the west, when it comes to mobile advertising, which creates lots of opportunities.  But obviously, I do think that will be bigger eventually, but it's again, going to take some extra time to do the extra complication of different devices on OS's, etc.

 

Michael:        Yeah, as we're wrapping up this called here, Rob, can you just two minutes, if you wouldn't mind taking a couple of minutes give me your forward thinking thoughts on 2015 and ad technology.  What you expect to see and maybe even expand into 2016 and what you expect to see in the industry, in the ecosystem of ad technology?

 

Rob:                Sure, well I expect to see the more consolidation.  The more sub scale companies getting together to really try to be a handful of big players in the ecosystem. 

                        I think also people are trying to really be programmatic about what they're doing.  I'd be very excited to see one of the big agency holding companies really do something very aggressive, whether that's acquiring one of the big technology players in the space … I'd love to see someone do something aggressive.  No one really has so far, but that would be something I'd be very excited to see.  I feel like there needs to be some changes.  There needs to be, as I've mentioned, these incentive issues need to be addressed inside a lot of these companies so there's room for people to take an aggressive stance on that and I'd like to see that. 

 

                        In terms of technology side, I think you'll continue to see evolution.  I think the big guys who have a lot of data and have partnerships with other people who have a lot of data like Facebook and Twitter and Google, I think you'll just see them touching more and more media dollars as a percentage of what's flowing out there.  I think it's going to be kind of more of the same.  I don't know that I'm seeing in the next 12 – 24 months any huge event that will say will change everything, but I do think searching investments, certain acquisitions that could be made by some of these players could accelerate some of that more quickly. 

                        It just really needs some people to step outside of the very conservative viewpoint that they might have with the slow moving viewpoint they might have and try to accelerate things more quickly.

 

Michael:        Great, Atul, give me your thoughts.  We're wrapping up 2014.  We're getting into 2015 and what do you see happening from your point of view at your perspective, any trends, insights, companies, emerging companies that you are keeping your eye on in the industry?

 

Atul:                Well, yeah, I'd sort of say from the supply side I think the publishers that are out there, whether they're content channels for video or they're magazine brands,

                        I think there's going to be a lot of evolution there really quickly.  Whether it's external vendors that are bringing those solutions to them or the companies themselves, trying to organically hire developers and figure out how they're going through change their models so they can compete with Facebook and others for users, I think that's going to be an interesting area.  Of course, the ad tech side on buying advertising is going to be interesting. 

 

                        As far as the way these big publishers work, I think they probably moved a little bit too slow and this is why you see a huge shift in advertising go towards the big platforms like Facebook and so forth.  I think there needs to be a lot of innovation there, whether it's operational, streamlining the operation, making it easier for them to manage advertising.  Of course, there are SSPs, but there's still that issue that Rob had mentioned where people are still involved in the whole process and it kind of slows everything down.  I think there's going to be a lot of interesting innovation there. 

                        Of course, the consumer is going to drive all of this.  I always mention those quick [80 00:51:47] type of advertising.  If consumers are interacting with that, they'll keep going, but I think the consumer is going to start to drive a lot of change and they already have with how they interact with these huge mega-platforms, Facebook being one of them.  I think the consumer's going to drive change.  Publishers are going to have to adapt quicker, whether it's external tech or their own changes and then sort of it connects to what Rob was saying.

 

Michael:        Excellent.  I appreciate you both joining the call today and providing the insight and perspective that you guys have.  It was really valuable information and great stuff to hear so thanks Rob for joining and Atul.  If anyone has any questions for Rob or Atul, I did put their LinkedIn profile message on the registration page for this call so you can feel free to reach out, connect with them on LinkedIn and reach out to them that way.  Otherwise, Rob do you want to share your email if someone has any questions or wants to reach out to you with anything?

 

Rob:                Yeah, yeah any time.  Rob@xa.net.  You just email me at Rob@xa.net.

 

Michael:        OK, excellent and Atul?

 

Atul:                It's Atul@patelx.com.

 

Michael:        Atul@patelx.com.

 

Atul:                A-T-U-L at P-A-T-E-L-X dot com.

 

Michael:        Perfect, alright guys, well thank you very much for taking this call today.  It's much appreciated and it means a lot to me that you guys spent the time to discuss these topics.  Thanks a lot and everyone for joining.  Thank you for being on the call and look out for our next Leads Council Live call coming up in the next week or two.  All right, thanks everyone and have a great day.

 

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