Marketecture Podcast Summary Episode: Brave: The Independent Browser and Search Engine
Release Date: February 24, 2025
Host: Ari Paparo
Guest: JP Schmetz, Chief of Ads for Brave

Introduction

In this episode of the Marketecture Podcast, host Ari Paparo engages in an insightful discussion with JP Schmetz, the Chief of Ads for Brave—a privacy-focused browser and search engine. The conversation delves into Brave's unique positioning in the browser market, its advertising ecosystem, search capabilities, and the challenges it faces in competing with industry giants like Google.

Company Overview: Brave Browser and Search Engine

Brave's User Base and Reach

JP Schmetz opens by highlighting Brave's substantial user base: “Brave is a Browser used by 80 million plus people every month. More than 35 million, I think, every day” (01:12). He emphasizes that Brave Search, founded in 2008 and acquired by Brave in 2021, processes over 100 million queries daily, positioning it as a significant player in the search engine landscape.

Privacy-First and Crypto Integration

Schmetz outlines Brave's core differentiators:

• Privacy First: “We block a lot of crackers and ads, which a lot of your listeners will be aggravated by it because we block a lot of the ad text” (03:05). This approach enhances user privacy by limiting tracking and intrusive advertisements.
• Crypto and Web3: Brave integrates cryptocurrency and Web3 elements, such as wallets and tokens, catering to users interested in the evolving digital economy.
• In-House Search Engine: Unlike browsers that outsource search functionality to giants like Google, Brave has developed its own search engine, which Schmetz likens to the “steering wheel” of a car (04:13).

The Advertising Ecosystem in Brave

Ad Blocking and First-Party Ads

A significant portion of Brave’s appeal lies in its ad-blocking capabilities. Schmetz clarifies:

• First-Party Ads Only: “First party ads are never blocked... if you go to CNN.com if the ads come from CNN come, it will not be blocked” (06:13). This ensures that advertisers can monetize without compromising user privacy, as long as ads are served from the same domain.

Ad Formats and Innovations

Brave offers various ad formats tailored to maintain a seamless user experience:

• Search Ads: “We provide a very good value essentially because the conversion rate is going to be very similar... and it's just incremental” (09:06). Brave’s search ads are designed to complement existing campaigns, offering incremental value with potentially lower costs.
• New Tab Takeover: An immersive ad format where advertisers can display large, visually appealing images on the new tab page. Schmetz notes, “We have a lot of gaming companies... Toyota has done many, many new tab takeovers” (16:51). This format operates on a flat cost-per-day (CPD) model and enhances brand visibility without disrupting user experience.
• Push Ads and News Feed Ads: These are smaller, more targeted formats with limited user opt-in, catering to niche advertising needs.

Integration with Advertising Systems

Brave simplifies the advertising process: “We know exactly what people do... we can duplicate that and create an ad out of it” (10:14). This allows for a streamlined, one-click setup for advertisers, minimizing the effort required to launch campaigns on Brave.

Search Experience and AI Integration

Enhanced Search with AI Summarization

Brave Search stands out by incorporating AI to summarize search results: “We are probably one of the largest use case of AI because 1/3 of our queries are answered by AI summarization on top” (04:57). This feature not only improves the relevancy of results but also offers a distinct advantage over competitors like Google.

Default Search Engine and API Usage

Brave Search is the default within the Brave browser, although users can opt for alternatives like Google. Additionally, Brave offers an API, allowing Large Language Models (LLMs) to utilize Brave Search for up-to-date information and citations, thus extending its reach beyond the browser itself.

Crypto and Rewards Program

Opt-In Rewards and Regulatory Challenges

Despite being a notable aspect of Brave’s identity, the crypto-based rewards program faces limitations:

• Low Opt-In Rates: Only about 10% of users participate in the rewards program, primarily due to the complexities involved. “More recently, [a] whole KYC process... gives us another 90% decrease in number of people that go through that process” (19:44).
• Regulatory Hurdles: Stricter regulations around cryptocurrency and money laundering have made it challenging to scale the rewards system, leading to diminished prominence in Brave's offerings.

Publisher Payments

For publishers, Brave allows opting into the rewards system, but it requires user donations, which can be unpredictable and often skewed towards high-profile content creators. Schmetz remarks, “All right, sounds complicated” (20:50), acknowledging the complexities involved.

Challenges and Market Competition

Monopolization by Google

One of Brave's primary challenges is the monopolistic control exerted by Google over search defaults. Schmetz explains, “We face a massive competitor who is known or has been actually found to be abusing its monopoly powers” (21:40). This limits Brave’s ability to gain more market share, as platforms like Apple don’t currently prioritize Brave in their search dropdown options.

Attracting Advertisers

Despite creating compelling advertising products, Brave struggles to engage advertising agencies, which prefer established platforms. “Nearly 100% of all relationships are direct” (11:21), indicating Brave’s reliance on direct advertiser partnerships rather than agency intermediaries.

Lightning Round

In a rapid-fire segment, JP Schmetz shares personal insights:

1. Biggest Challenge: Overcoming Google's monopolistic practices and distribution hurdles to enhance product adoption (21:40).
2. Biggest Challenge in Attracting Advertisers: Securing meetings with top-tier advertisers, navigating intricate vendor approval systems, and demonstrating low-risk, high-reward advertising opportunities (23:02).
3. Brave as an Animal: “It's a lion” (25:09), a nod to Brave’s logo and its attributes of strength and leadership in the market.

Conclusion

The episode wraps up with Schmetz expressing confidence in Brave's offerings and potential once distribution barriers are addressed. Ari Paparo encourages listeners to consider Brave as a viable alternative in both browsing and advertising, highlighting the browser’s commitment to privacy and innovative ad solutions.

Notable Quote:

“Once people start using Brave they stick around. Once people start using Brave search they stick around even more. So we don't have a product problem at all.” – JP Schmetz (22:36)

Key Takeaways

• Brave's Unique Position: Combines privacy-focused browsing with its own search engine, offering significant user and advertiser advantages.
• Innovative Advertising Solutions: From search ads to immersive new tab takeovers, Brave provides diverse formats that respect user privacy while delivering effective advertising.
• Challenges with Market Monopolies: Navigating the dominance of Google and other tech giants remains a significant hurdle for Brave’s growth.
• Potential in AI and Search Technology: Brave's integration of AI summarization sets it apart, offering enhanced search experiences unavailable on many other platforms.

For those interested in exploring Brave further, visit Brave's website or listen to more episodes of the Marketecture Podcast at marketecture.tv.

Timestamps

• Introduction by Ari Paparo: 00:51
• Brave Overview: 01:12
• Privacy and Crypto Integration: 03:05
• Search Experience: 04:57
• Ad Blocking and First-Party Ads: 06:13
• Advertising Ecosystem: 09:06
• Ad Formats: 16:51
• Crypto and Rewards: 19:44
• Challenges with Google: 21:40
• Lightning Round: 21:40
• Conclusion and Notable Quote: 22:36

Note: This summary excludes non-content sections such as advertisements, intros, and outros to focus solely on the valuable insights shared during the episode.