Marketecture Podcast Episode 109 Summary: MMMbop with Ron Jacobson plus StackAdapt's Huge Funding Round

Release Date: February 7, 2025
Hosts: Ari Papera and Eric Franchi
Guest: Ron Jacobson, CEO of Rockerbox
Podcast Description: The Marketecture Podcast, hosted by industry experts Ari Papera and Eric Franchi, delves into advertising and marketing insights, featuring interviews with key thinkers and covering the latest industry news.

1. Advertising Measurement Landscape in 2025

Guest Insights with Ron Jacobson:

Ron Jacobson of Rockerbox provided an in-depth analysis of the current state of advertising measurement, highlighting three primary trends:

• Methodological Battle:
  “There is a battle over methodologies. How are you doing your measurement? Is it media mix modeling? Is it incrementality testing? Is it MTA?” (05:20)

• Operational Challenges:
  “A lot of folks just go and suddenly say I'm using media mix modeling but they have no idea how to operationalize it.” (05:24)

• Feedback Integration:
  “It's feeding back attribution results into ad buying platforms to optimize against.” (05:20)

Jacobson emphasized that advertisers often chase the latest measurement trends without a clear understanding of their objectives, leading to ineffective implementation. He advocated for a dual approach: maintaining a day-to-day measurement hub (like MTA) and using methodologies like MMM for periodic validation and strategic decisions.

Key Takeaways:

• Methodologies Aren't Mutually Exclusive:
  Jacobson clarified that brands don't need to choose a single measurement method. Instead, integrating multiple approaches can provide a comprehensive understanding, though it introduces complexity in decision-making.

• Shift from User-Based to Geo-Based Testing:
  With the decline of ghost bidding due to cookie deprecation, geo-based incrementality testing has become the new gold standard.
  “Testing control, figuring out statistically similar geographies… it's considered like the gold standard of measurement.” (07:06)

• Deterministic vs. Probabilistic Data:
  Jacobson discussed the balance between deterministic data (e.g., first-party data) and probabilistic models, especially post-iOS 14.5.
  “There is still a basis of deterministic data but it's going to be layered on top with some sort of probabilistic measurement.” (15:10)

2. StackAdapt's $235 Million Funding Round

Big News in AdTech:

StackAdapt announced a significant $235 million funding round, valuing the company at $2.5 billion. With reported revenues of $500 million and operating profits of $125 million, StackAdapt showcases substantial growth and profitability in the DSP (Demand-Side Platform) space.

Host Reactions:

• Ari Papera:
  “This shook AdTech X right up. It was highly controversial.” (01:52)

• Eric Franchi:
  Expressed initial skepticism about the valuation but acknowledged StackAdapt's strong market position and high take rates, which contribute to its profitability.
  “They are a $500 million business with a $2.5 billion granted private valuation. This is a company that could go public if they wanted to.” (26:06)

Competitive Positioning:

StackAdapt stands out with its high take rates and profitability compared to peers like PubMatic and Trade Desk. The company's ability to cater to SMB advertisers without high minimums has solidified its niche, making it a formidable player in the second tier of DSPs.

3. TV Scientific's Series B Funding

Investment Highlights:

TV Scientific, a portfolio company, secured a significant Series B round with participation from Roku. This investment underscores Roku's strategic pivot towards enhancing performance in SMB advertising through partnerships and data cloud integrations.

Hosts' Perspectives:

• Ari Papera:
  Highlighted Roku’s diversified strategy and its collaboration with TV Scientific as a positive ecosystem momentum indicator.
  “Roku is pursuing a diverse strategy… they are working with DSPs and making the DSP channel more effective.” (29:21)

• Ron Jacobson:
  Noted Roku’s engagement with DSPs as a strategic move to partner rather than compete outright.
  “StackAdapt has found a really good big niche… the power of the SMB advertiser is always underestimated.” (27:22)

4. Mergers and Acquisitions (M&A) News

a. Outbrain and Teeds Merger:

Outbrain and Teeds have officially merged, adopting the name Teeds. This consolidation aims to strengthen their position in the content discovery and native advertising space.

• Host Feedback:
  Both Ari Papera and Ron Jacobson expressed approval of the new name, associating it with the company's focus on video and content.

b. Coinbase Acquires Spindle:

Coinbase acquired Spindle, enhancing its capabilities in attribution for on-chain marketing. This acquisition enables Coinbase to support builders in viral campaigns and fund distribution within the on-chain economy.

• Ari Papera:
  Described Spindle’s role as pivotal for Coinbase’s vertical media network development.
  “Coinbase has the number one app for trading crypto… they can build a vertical media network for builders.” (35:40)

• Ron Jacobson:
  Praised Spindle’s founder, Anton Garcia Martinez, for his rapid innovation and expertise.
  “He is the fastest speaker I've met with the highest density of things… very pro. Antonio.” (36:22)

c. Havas Acquires Channel Bakers:

Havas completed its acquisition of Channel Bakers, a retail media agency. This move marks Havas's entry into the retail media space, aiming to enhance their service offerings.

• Hosts' Insights:
  While initially unfamiliar with Channel Bakers, Ari Papera expressed interest in the agency's capabilities in retail media.
  “Channel Bakers is an agency that handles retail media… great episodes discussed their holistic approach.” (37:02)

5. Tariff Changes and the De Minimis Exception

Impact on TEMU and US Market:

The podcast discussed recent changes to the de minimis exception for tariffs, which previously allowed goods valued below $600 to enter the US without additional tariffs. The removal of this exception poses significant challenges for companies like TEMU, which benefit from bypassing traditional warehousing and distribution channels.

• Eric Franchi:
  Explained how the de minimis exception provided a pricing advantage to TEMU and similar companies.
  “It's how TEMU and their competitors have gotten so big… they ship directly from China… the exception is worth less than $600.” (37:42)

• Ari Papera:
  Highlighted the potential ramifications if TEMU adapts by establishing US-based warehouses.
  “TEMU is still shipping from the US where they have goods in the US Distribution… they might adjust their business model.” (39:34)

• Ron Jacobson:
  Speculated on the broader implications for major platforms like Meta and Snap, suggesting limited immediate impact due to their extensive advertiser rosters.
  “I feel confident Meta will fill in the lack of demand… they have such a wide roster of advertisers.” (39:34)

6. Meta’s Advertising Rule Changes

Restrictions on Health and Wellness Ads:

Meta implemented new rules disallowing email matching for health and wellness-oriented advertisements. This change has significant implications for advertisers targeting these sectors.

• Eric Franchi:
  Noted the uproar among advertisers regarding the sudden implementation.
  “It's been a bit of an uproar… how it was handled and the speed of the change.” (40:15)

• Ron Jacobson:
  Explained the practical effects on advertisers, emphasizing the shift to upper-funnel KPIs.
  “If you're in health and some financial services… conversions are gonna be harder to optimize towards.” (40:38)

• Ari Papera:
  Discussed the potential limited impact on large platforms due to their vast number of advertisers.
  “Seventh largest advertiser in the US… Meta can absorb the changes without massive disruption.” (39:34)

7. Earnings Highlights

a. Critio's Performance:

Critio reported a slight dip in revenue by 1%, but the stock surged by 20%, attributed to strong agency business growth and strategic partnerships.

• Key Metrics:
  “225rmns are using Critio… agency biz is up 50% year over year.” (42:15)

• Leadership Change:
  Meghan Clarken announced her departure as CEO, with optimism surrounding the new leadership.
  “New CEO… sustainable business moving forward.” (42:15)

b. Omnicom's Cost Savings:

Following its acquisition of IPG, Omnicom anticipates $750 million in cost savings, primarily through back-office and operational efficiencies, potentially leading to layoffs.

• Hosts' Commentary:
  Both Ari and Eric acknowledged the typical nature of such cost-cutting measures post-merger.
  “That's how they make these things work economically.” (43:19)

8. AppNexus Alumni and Industry Connections

Discussion on the AppNexus 'Mafia':

The hosts and Ron Jacobson reminisced about the network of startups founded by former AppNexus employees, highlighting companies like Beeswax, Rockerbox, TripleLift, and others.

• Ron Jacobson:
  Emphasized the significant influence of the AppNexus alumni in the AdTech ecosystem.
  “StackAdapt, TripleLift… there’s a definite AppNexus mafia.” (21:26)

• Eric Franchi:
  Shared his reflections on the enduring impact of the AppNexus network.
  “Timing is everything, right?” (21:32)

9. Creative Advertising Innovations

Introduction of Icon:

A new company, Icon, launched with support from the Founders Fund, offering AI-driven creative tools to produce vertical video ads efficiently.

• Hosts' Perspectives:
  While recognizing the potential, they questioned the differentiation from existing tools like Meta’s generative AI offerings.
  “Integration matters more than the AI… geared towards vertical video on social.” (31:07)

• Ron Jacobson:
  Surprised by Founders Fund's investment in this niche, indicating growing interest in AI-driven creative solutions within AdTech.
  “The Founders Fund investing in a creative generation company was not on my bingo card.” (32:13)

10. Corrections and Listener Updates

Acknowledging Listener Feedback:

Eric Franchi addressed several corrections received from listeners, ensuring accurate representation of legislative details.

• Key Corrections:

  • Clarification on PFACA's scope.
  • Correct identification of the VPAA law as the Robert Bork law, not the Clarence Thomas law.
  • Enhancement on the Robinson Patman Act’s current enforcement status.

• Hosts' Appreciation:
  “Thank you to the listeners and the readers. Keep correcting Ari.” (22:31)

Notable Quotes

• Ron Jacobson on Measurement Trends:
  “There is a battle over methodologies… How do you make sure your platforms are optimizing against your source of truth?” (05:20)

• Eric Franchi on StackAdapt’s Valuation:
  “It's a company that could go public if they wanted to.” (26:06)

• Ari Papera on StackAdapt’s Market Position:
  “This is a testament to, if you're close to the spend, you've got a lot of optionality to build a valuable business.” (28:15)

Conclusion

Episode 109 of the Marketecture Podcast offered a comprehensive exploration of the evolving landscape of advertising measurement, significant funding achievements in AdTech, and notable M&A activities shaping the industry. With expert insights from Ron Jacobson and in-depth discussions on StackAdapt's impressive growth, listeners gained valuable perspectives on navigating the complexities of modern advertising strategies and market dynamics.

For more detailed insights and weekly updates, subscribe to the Marketecture Podcast and visit Marketecture.tv.

Timestamps Reference

• 05:20 - Ron Jacobson discusses the three main trends in advertising measurement.
• 07:06 - Transition from ghost bidding to geo-based incrementality testing.
• 15:10 - Deterministic vs. probabilistic data in measurement.
• 21:26 - Discussion on AppNexus alumni startups.
• 26:06 - Eric's reaction to StackAdapt’s valuation.
• 28:15 - Ari on StackAdapt’s market validation.
• 29:21 - TV Scientific’s Series B and Roku’s strategy.
• 31:07 - Introduction of Icon and its AI-driven creative tools.
• 32:13 - Ron's surprise at Founders Fund's investment in Icon.
• 35:40 - Coinbase’s acquisition of Spindle explained.
• 37:42 - Explanation of the de minimis exception and its impact on TEMU.
• 39:34 - Implications of tariff changes on Meta and large advertisers.
• 40:15 - Meta’s new advertising rules for health and wellness.
• 42:15 - Critio’s earnings and leadership change.
• 43:19 - Omnicom’s cost-saving measures post-M&A.
• 44:17 - Final closing remarks and subscription information.

This summary captures the essence of Episode 109, providing a structured and comprehensive overview for those who haven't listened to the episode.