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Marketecture: Get Smart. Fast.
Episode 120: Michael Walrath on Yext, Yahoo, and AI. Plus the AdLand acquisition and Google’s cookie reversal.
00:56:16
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- [00:00]
Ari Paparo
This podcast is brought to you by JWP Kinetics. JWP provides the technology that manages and delivers video, maximizes visitor engagement, and monetizes it through positive ad experiences. Find out more about how JW P Kinetics can help your company achieve results@jwplayer.com that's jwplayer.com.
- [00:23]
Eric Franchi
This episode is brought to you by Zeta Global. Do you know what it takes to transform marketing into a data driven profit center? Are you able to align the C suite around your AI vision and strategy? Zeta Global has the Playbook to help you get started. Download Driving growth in the AI era today at zetacmo AI Book Again, that's Z E T A CMO AI book.
- [01:04]
Ari Paparo
All right, welcome to the Market Podcast. This is Ari Paparo. I'm with Eric Franchi. Eric, how you doing?
- [01:10]
Eric Franchi
I'm great. I missed a big week from going on vacation.
- [01:15]
Ari Paparo
Unfortunately, you should never go on vacation. You're going to miss the news. So yeah, last week we had a lot of news and now this week we have the last week was antitrust, this week is cookies. But before we get into all of that, Mark Dixtra had some pretty big news. We're recording on Thursday morning and we just dropped another acquisition, our fifth acquisition in the last 12 months. This one is a pretty well known website called Adland tv. Eric, had you ever heard of Adland before today?
- [01:44]
Eric Franchi
Yes, I've heard of Adland. I have to be honest, I haven't spent much time on it. So tell for the uninformed like me or mildly informed like me, what's Adland and why'd you buy it?
- [01:54]
Ari Paparo
Adland is really interesting. It's a old school website. It's been around since the 90s and it is a repository, a blog of ads. So it has been run sort of as a collective group blog, but mostly run by this woman named Osk. That's her name, she's Swedish, so ask with a little umlaut on it. And she has been collecting ads, video TV ads, print ads out of home, ads from people around the world as well as controversial ads. Ads have been banned elsewhere and reporting on them for almost 30 years. And the site went dark earlier this year. She decided she couldn't do it anymore. She had personal issues and she just shut the site down and everyone freaked out because this incredible repository was gone. And I swooped in with my team and we bought it and rebuilt it and it was live again at Adland tv and it's free. So I'm pretty excited.
- [02:51]
Eric Franchi
Yeah, that is so cool. Congrats.
- [02:53]
Ari Paparo
Thanks. I'd suggest everyone sign up for the free newsletter there. So you get notes about new ads that we find in Ad News. We're also creating new content. Like for example, we have a article we just posted with classic arcade game ads from the 80s and 90s, like the old Atari ads and stuff like that.
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Michael Walrath
Nice.
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Ari Paparo
So we're gonna be compiling it into sort of digestible chunks that we hope people enjoy. And the business model is gonna be submissions. So for those in the creative world, they often wanna feature their newest creative. So we're charging a small fee for new submissions and hopefully that won't be too burdensome and we'll get some good stuff.
- [03:30]
Eric Franchi
That is awesome. I'm gonna spend a bunch of time on it later today.
- [03:33]
Ari Paparo
Definitely. Check it out. Adlon tv. This week's interview we recorded last week, it is with the one and only Michael Walrath. Michael Walrath is the CEO and chairman of yext, which is a pretty interesting company on the border between AdTech and MarTech, especially as it relates to retail. And he has this incredible history as the founder of Right Media, which was the, I'd say, the pioneer in ad exchanges and the ad exchange revolution that probably most listeners on this podcast are pretty familiar with. Did you work much with Right Media back in the day as part of Undertone and stuff?
- [04:10]
Eric Franchi
We didn't know, but we had conversations with Mike and team early as they were launching it, because prior to Undertone we were an agency, so we were a big media buyer. And this is when Mike was basically the rep for the DoubleClick ad network. So we were there during those days that Bach has been writing about pretty frequently with his sort of history of ad tech. Let me tell you, I'm so mad at myself that I missed this interview. There's a handful of people that I've been wanting to be interviewed by Architecture, and this is the one. And again, what a week to go on vacation. So I'm looking forward to sitting here and listening to this one.
- [04:48]
Ari Paparo
We didn't talk too much about the good old days. We talked more about the modern stuff, but. Oh, good.
- [04:53]
Eric Franchi
Yeah.
- [04:53]
Ari Paparo
For those of you who do want to hear a little sound bite. We didn't talk about this in the interview, but I know it elsewhere. So DoubleClick had a network called the Sonar Network, which was effectively like the Long Tail Network. And Mike Walrath was single handedly responsible for 40% of the revenue of the Double Click Network.
- [05:11]
Eric Franchi
Yeah, he was our rep. And the.
- [05:13]
Ari Paparo
Way he did it is pretty interesting, but we'll go into that into a separate podcast. All right, this has been quite a long intro. Let us dive into the Michael Walbreath interview and then we'll be back with the refresh and the news of the week. All right, Michael Walrath, the chairman and CEO of yext. Michael, thank you so much for being here.
- [05:30]
Michael Walrath
Ari, great to be here. Thanks for having me.
- [05:32]
Ari Paparo
So probably a lot of folks know you from your hardcore ad tech days at Right Media. We'll get to that in a moment. Let's talk about yext. How did you end up as chairman and CEO and what is YEXT exactly nowadays?
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Michael Walrath
So YEXT today is the leading digital presence platform. What that means is that we have a number of really innovative products that help you manage your data, deliver that data across listing syndication, across reviews and reputation management, management, page publishing, social compliant, social compliant texting, and most recently a AI intelligence agent called Scout. What it all does is it helps you as a marketer understand where am I visible, where am I not visible enough? How am I doing against my competition? What can I do about it?
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Ari Paparo
Yeah, I always thought of it obviously for its original product that back in the day is like fix your addresses online. It was such a simple like tip of the spear kind of thing. Is the market largely multi location retail or is it broader than that?
- [06:32]
Michael Walrath
Today our primary market is, it's much broader than multi location retail. It's anything that has a local footprint or a local intent signal. So it varies. I mean the, and where the company started, retail and hospitality were, were huge. It has evolved. Our largest vertical is now financial services. That includes insurance agents, financial advisors, things that have, that are less about. I have a storefront and I want somebody to walk through them but still have this very deep local signal around it. Healthcare is a very large vertical for us as well. Dentists, doctor's office, physicians practices, there's all this complexity around. I have this building where dozens or potentially hundreds of people practice and I need to manage all of the content, you know, hours of operation, scheduling, who's working where, which days are they doing surgery in this one and the other one. All of that complexity is around sort of a localized question that consumers are asking.
- [07:29]
Ari Paparo
It's a classic sort of business that's valuable because kind of no one else really wanted to do it or could do it. Seems, I mean that's a cynical point of view, but the idea of like, oh well, I'm going to make sure that everything is correct across the Internet. It seems like a crazy like, hey, let's fix the ocean kind of problem.
- [07:47]
Michael Walrath
Yeah, well, it was interesting, right, because if you, if you go back, right, you know, we're entering a third era of like, how people find things online. So initially we had kind of the old you. And I grew up with AltaVista and Yahoo and kind of Ask Jeeves. Right. And, you know, it was pretty terrible, but it was better than, you know, the yellow Pages or the encyclopedia. And so Google obviously changed all that. But along the way, we also had this other thing happen that, you know, I think is maybe slightly underappreciated, which was the mobile. The fragmentation due to the mobile device. So really the genesis for YEXT as it exists today. And you asked me how I got involved in the company. The initial company was a pay per call marketing service, which had a little bit of a local angle, but it was. We were really repurposing bulk phone numbers. We were marketing businesses like car repair shops and gyms. And then we were charging on a per lead basis by transcripting the phone call. This is like in 2007, 2008.
- [08:43]
Ari Paparo
I remember visiting Howard in his office and when that was the business and it felt like a boiler room, just a lot of people with headsets.
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Michael Walrath
Yeah, it was. And the. And the technology was, for its time was really impressive. You know, the famous TechCrunch 2008 demo where he got up on stage and he called an auto shop or a gym or something, and, you know, it was risky, but it worked. And then the call was live transcripted on the screen while he was doing it. You know, it turned out that was an interesting business, but it wasn't a business that was going to scale. And so I invested in the company in 2008, and in 2010 we kind of saw where this mobile fragmentation was going. And we had burned through a lot of capital and decided that we needed. Needed the capital. So we sold that business to IAC and we poured all of the money into YEXT listings. And what became YEXT listings, the. The sort of genesis of that product was you have a problem today with your name, address, phone number, sort of critical business information not being findable. But that problem is about to get a hundred times worse because every application on the mobile device is going to be a Geo Aware directory.
- [09:47]
Ari Paparo
Right, right.
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Michael Walrath
And that exploded. And it was one of those problems that no one had really thought about. And I think Howard had the vision to see that that was coming. And it launched the company and really took us through the ipo.
- [10:01]
Ari Paparo
Okay, so it's very interesting to frame this in terms of the consumer moving to mobile. So consumers are moving to AI. What is the challenge now?
- [10:12]
Michael Walrath
Yeah, well, so we talked about the. So the first phase of search was the sort of dinosaurs. The second phase was Google eating everything. So as this mobile revolution was happening, Google was just dominating search. I was running the search business at yahoo from in 2009, 2010, 28.
- [10:29]
Ari Paparo
That must have been fun.
- [10:30]
Michael Walrath
That was really fun. And, you know, but it's really interesting. Right? So the problem we had back then was we, we were providing a lesser consumer experience with a more monetized page. And Google was eating our lunch because they could take all the monetization off the page. They could put one link at the top and we'd have three or four. And so every month what we saw was, you know, we had to make this choice, make money or erode our share. And, you know, that has continued really unabated for most of the last 15 years until we started to see the cracks over the last couple of years.
- [11:03]
Ari Paparo
Well, hold on. It's interesting because over the last, say, six or seven years pre AI, Google has been rapidly increasing its ad load with no effect on its market share. But how does that comport with. Yeah. That your belief that having too many ads hurt Yahoo?
- [11:19]
Michael Walrath
Well, it did. And the problem is, is that, you know, for the last five, six, seven years in particular, Google had. There was. There was no alternative. You know, Bing and Yahoo and some of these others really never got to parity with Google's experience. Right. And so even though they've been ramping up the monetization, there's really been nowhere else to go. What's changing rapidly and has been changing rapidly over the last two years is now consumers have other places to go ask questions. And it's. It's the thing. Right. So. So the problem Google has today is they have this $200 billion search business and they wake up every morning and they say, well, are we delivering this kind of magical experience using AI, generative AI and a. And a grounded, you know, sort of a way to ground answers, or are we monetizing? And so far, what they've done is something that I think is very clever. They have taken the unmonetizable queries and they've delivered AI responses to them. And then they've turned around and said, look, these are monetizing just as well with AI as they were without AI as they were in traditional search. That's because they're very smart about knowing that this one monetizes and that one doesn't. There's a huge difference between I need an emergency plumber now and do I need a plumber to unclog my toilet?
- [12:30]
Ari Paparo
Right, yeah, I've noticed that as well. The AI outputs are often on the queries that are, you know, kind of technical or not very monetizable. So what is the. There. There are quite a few startups that are talking about AI for SEO or AIO or whatever. It is the idea that marketers need to put their correct information, the best information into the AIs. How are you and your customers thinking about that problem?
- [12:56]
Michael Walrath
So I think that is at the root of a lot of this. So in a lot of cases, people are talking about the wrong thing, as it turns out. And look, I'm thrilled to see that there's a lot of startups who are attacking this space in a lot of ways. We've suffered through this sort of valley of no one was interested in how do you distribute content, how do you do this? Because the playbook on how do you influence what Google shows was very sort of set. Everybody understood how to run those plays and it wasn't particularly interesting to the C Suite. I think now what's happening is you see this, like all these new players arising and there's going to be more, and suddenly the C suite's really interested in, well, what does that thing say about me? Where we sit today, Largely the tactics that you're going to. So a lot of these startups are measuring a global brand impact of AI visibility or AI sentiment. And the, the tactics today are going to be very much the same thing, which is you got to have good pages, you got to have good content, it's got to be structured, it's got to be schema, you got to have all the right tags and all those other things. And so there's intelligence there. But what I think people aren't talking enough about is what happens today. These, these AI experiences are tolerating the fact that the web is built for human beings. And in a lot of ways, you know, if you think about the genius of Google, a big part of it is they were just kind of like a middleware layer that took the human Internet and structured it in a way that allowed their search engine to deliver the, you know, kind of the right answer to the right question. What we fundamentally believe will happen is that the Internet needs to be kind of rebuilt in a lot of ways for machines. The AI does not want to, certainly, as we move into a more agentic landscape. It doesn't want to visit your site, it doesn't want to suck down all your images, it doesn't want to navigate your dropdown boxes, it doesn't want to do any of those things. What it wants is a very lightweight, structured data file that tells them exactly where you are, exactly what you sell, what's in stock, when do you open, which third party delivery services you use so that the consumer experience can be, hey, I want Mediterranean food for lunch today and I want it on my desk at 12:30. Go.
- [14:58]
Ari Paparo
I mean, back in the 90s we called this the Semantic Web, which was a little bit of a head fake in the history of the, the Internet, where people wanted to change HTML to have XML with markers and stuff like that. Do you think, as it relates specifically to the local problem, that the data will flow to other aggregators like the Yelps of the world, and then Yelp and other aggregators will be the source of truth for AIs or do you think the AIs are going to open up, or maybe they already do open up APIs for data ingestion from folks who want their information indexed?
- [15:34]
Michael Walrath
I think it'll be both, right? I don't think there's one or the other. I think the world we've been living in and you know, this has been the big debate, right? It's been very difficult for yext because what, you know, the whole citations debate, you know, we've suffered over the last three or four years, five years, probably from competitors who've effectively taken the position of, look, if you update your information with Google and maybe a couple other publishers, then that's enough, right? But you know what's funny about that is that if you do any localized search on Google, you're going to get the local package and then you're going to get all the publishers who aggregate that data, right? So below that local pack, you're going to see, you're going to see Yelp and you're going to see TripAdvisor, you're going to see all those things. Those are citations. And so I think in a lot of ways citations aren't going away. All these AI experiences will continue to ingest that information and use it as a means to verify the information that's being provided potentially more directly by the business itself. So whether that's direct APIs, like the sort of connectors that YEXT maintains across hundreds of publishers today, or whether that's something like model context Protocol or something like that, there are going to be really Interesting ways where you can distribute the data directly to the AI, but you also have to think about the nature of the content that you're distributing more broadly to make sure that it's kind of structured in a way that the AI wants to take it down.
- [16:52]
Ari Paparo
Right. And do you think the world of a marketer is going to get more complicated because you've gone from, you know, n number of endpoints that are mature. Like, you know, there's no. No one's creating a new Yelp or a new Google, but now they are like, now you have perplexity and OpenAI. There's like five new major consumer destinations for information, and who knows how many there'll be in the future.
- [17:17]
Michael Walrath
Yeah, I think we wind up with vertical, you know, versions of these things. You know, my guess is that there will be more than we think over time. And at the end of the day, that's about, you know, where the consumer asks the question and gets an answer. And so, yeah, the world for marketers is getting more complex already. What I think is going to be a huge tailwind here is when marketers realize that all marketing is local marketing and that the level of complexity around all the different inputs around content creation, this is no longer about, like, name, address, phone number, distribution. Right. It's now like, that's minbar, and you have to do that. But social is content and content is data. Right. Reviews are content and content is data. Pages are content and content is data. And so this all starts with, do you have your data in a position where you can replicate it for human beings and for AI and you can deliver it to the world in a way where whether you're pushing it or it's being pulled, it's structured and understandable. That then extends far beyond just people who have storefronts or these local markets. Because understanding why your competition is winning is a localized problem. Right. And it's going to be different in different localities. And, you know, the example I use is, you know, Bud Light had their big marketing snafu a few years ago. And you know, the reaction to that marketing campaign, which was polarizing. Right. If you visualize it on a map, what you would have seen was that there are a lot of places where that campaign landed really well and then a lot of places where that campaign landed really poorly. I think what became clear was that for Bud Light, that campaign landed particularly poorly in the areas where they were strongest. And that was a problem.
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Ari Paparo
Yeah, that was working against your marketing strategy pretty aggressively.
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Michael Walrath
The piece that I think a lot of people have trouble wrapping their heads around is the level of data that's actually available at the location level, whether it's a retail store or whether it's just a place where your product is sold. Right. For Nike, it's primarily retailers, right. They have Nike stores, but mostly their product is available through retailers. The depth of that information and the amazing things that you find when you start to dig into that data. So we're looking at a data set the other day for an urgent care provider. And what was remarkable about it is that we can pull down today 150 data points about, you know, each location for this urgent care provider and understand how are they, how are they ranking relative to competition, how are they showing up on AI relative to competition at the sidewalk level? And what was most remarkable about this, and I'll stop after this, is that, you know, we looked at two urgent carriers that were about 10 miles apart from each other, and you're pulling down how many reviews do they have, how many photographs do they have, how fast do their page load, how many words are on each page? And like, 150 other other things. And the shocker was the visibility strategy required by those two. Same corporate, same marketing team, same locations 10 miles apart were completely different. One was losing rank because it didn't have enough photos and the velocity of new reviews weren't high enough. The other one was losing rank because their pages didn't have enough content on them. And a couple of other factors. And so you can begin to imagine as a marketing team who might have tens of thousands of these locations, Getting to that level of understanding of why visibility is successful or unsuccessful at the location level is sort of this unbelievable unlock.
- [20:53]
Ari Paparo
Yeah, I mean, everything is local in the end, you know, you brought up a subject that's maybe a little off topic, but precise location data had sort of this heyday when the iPhone became popular, and then it's really been in decline because of privacy reasons and both Apple and Andro restricting it, which is very reasonable to do. Can you give us some characteristics on what the current market is for precise location data? Do you use it in your business at all? And how liquid is the market for either buying that data or using it?
- [21:23]
Michael Walrath
We don't today sell, particularly buy or sell that data. We bought a company in February called Places Scout, which does a really good job. And the reason why we bought it was it probably best in class at gathering detailed location information, you know, particularly as it relates to SERP rank and reputation. But one of the things that's really interesting is that you kind of want to normalize out the distance, you know, from, from the location. When you think about like, you know, that as effect as a metric for how well you're doing in rank, I think in some cases, too much precision on the location side can actually be a liability. If I walk from fifth Avenue to Tribeca, right. Midtown to Tribeca, and every hundred feet I do a search for coffee shop, there's going to be a huge bias to whichever one is closest to me if I have my location settings on. But that doesn't really help you as a marketer to understand what you should be doing. So what our data science team has done some incredibly good work about is de biasing the location distance on a lot of this, like this fire hose of data that we're getting so that you can actually break it up and say, look, that you can't control, but here are the things you can control.
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Ari Paparo
Well, when you say debiasing, does that mean ignoring or is it treating location differently if you're in, say, Oklahoma versus Manhattan?
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Michael Walrath
Yeah, I mean, I'll be the wrong person to get into the very detail.
- [22:45]
Ari Paparo
Do you want to whiteboard this a little bit?
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Michael Walrath
Yeah, that won't go well. But my point is that as a marketer, you need to know what's actionable. Right. And the way you. And again, we're talking about a level of granularity that marketers have never been able to visualize before and never been able to actualize. One of the things you can't control is how close is this person to my business. So therefore, you know, you need to normalize or, you know, kind of debias the data at some level for that. And, you know, that was, you know, based on your question for this particular use case, you know, this precise location data is not that important. It may be really important for like place or AI and things like that, where it's like, you know, where is the foot traffic?
- [23:26]
Ari Paparo
So to finish off the conversation, let's talk adtech first. Yeah, you have an amazing background in ad tech. The founder of Right Media. What did you learn from ad tech that's different or helpful in your current world?
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Michael Walrath
Yeah, I mean, obviously I had an amazing run there. What I learned from ad tech was if you can learn to swim around in the data comfortably and understand what it is that your clients are struggling to accomplish by sort of backstroking through all the data, then you can do really interesting things. So the reason why we created Right Media was because we understood the nuances and frankly, the weaknesses of ad decisioning and we're able to evolve a platform that did that fundamentally differently, that benefited our customers. Now there's all sorts of disappointments to the way that I think that world evolved. I think we thought we were building a cleaner, safer, better world for buying and selling advertising. And I suspect by creating all this liquidity and sort of ability for, and taking away a lot of barriers to entry, we might have actually achieved the inverse.
- [24:31]
Ari Paparo
And that's all sort of in the short term, right? So like the way I see it is there used to be ad networks and there's all kinds of bad stuff going on. And then, right, media created the ad exchange and that accelerated the bad stuff because you didn't have time to build the anti fraud and all the other stuff. And then over time the industry brought in tools and techniques to monitor stuff that wouldn't have been possible in the ad network world. It's only possible because everything's liquid.
- [25:00]
Michael Walrath
Right. And that's created a whole nother set of challenges that, you know, we have some good friends who are working on solving as well. So, you know, my ad tech journey in a lot of ways, you know, as a participant, ended in 2010 when I left Yahoo. You know, it's funny, I think if you'd asked me in 2007, you know, even 2008, like, what would I do with the rest of my career? I would have been like, well, of course I'll stay in ed tech because it's the thing I love. And it wasn't until I left it that I realized that like I was in love with the problem, the challenge and the, the sort of, the pace of it. But you know, I've, I've found, you know, sort of similar opportunity to solve really hard problems here and in other projects in my life. So I'm a little disconnected from that kind of ad tech world these days just because I focused on other things.
- [25:46]
Ari Paparo
Okay, last question. If you had Magic Wand back in 2007, 8. How would you have fixed Yahoo?
- [25:54]
Michael Walrath
The simple answer to that is is that in hindsight it's really obvious. What should have happened is they should have left me alone and let me build Trade desk inside Yahoo.
- [26:03]
Ari Paparo
You know, you would have gone by side. Sorry, I have to push back on that a little bit because, right, Media wasn't really a buy side tool, it was an exchange. I mean, I know you had buy side features, right.
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Michael Walrath
What I'm saying is that, you know, our vision there was always that you could build a tool that was both buy side and sell side.
- [26:21]
Ari Paparo
Right.
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Michael Walrath
You know, the core vision of Right Media in the beginning was if you were going to be an ad network, you had to really bring value. Right. Like we said, that's not really how it evolved. And a lot of ad networks came who, who just, you know, their value was they could move faster and be more aggressive and were willing to do things that others weren't willing to do. What happened at Right Media, or I'm sorry, at Yahoo, was that all innovation basically came to a screeching halt and it became a platform for Yahoo to sell sort of under monetized inventory. That's fine. They paid for it. They had every right to see it that way. I think there were two main things that in my world at Yahoo that I would have done differently. That was one, and the second one was you had to have the will. The company lacked the will to say, look, if we ever want to compete and hold market share or gain market share against Google, we're going to have to monetize less. Right. And that was just as a public company that was struggling with growth, I think that was a bridge too far. I, I think, you know, it is really interesting that that's the exact position that Google's sitting in today. And I'm sure they're having that conversation every day inside the company. And the question is, do they have the will to give up a lot of that or a significant portion, I don't know exactly what it is, of that $200 billion search business, or do they become a victim of kind of their own playbook?
- [27:36]
Ari Paparo
All right, that's a fantastic way to close this conversation. Michael Walrath from yext, thank you so much for being here.
- [27:42]
Michael Walrath
Thanks for having me, Ari. Appreciate it.
- [27:44]
Ari Paparo
We'll be back with the news of the week under the refresh. This podcast is brought to you by audiohook, the leading independent audio dsp. Audiohook has direct publisher integrations into all major podcast and streaming radio platforms, providing 40% more inventory than what could be accessed in omnichannel DSPs. What's more, audiobook has full transcripts on more than 90% of all podcast inventory, enabling advanced contextual targeting and brand suitability. Audio Hook is so confident that in addition to CPM buys, they offer the industry's only pay for performance option, where brands can scale audio and podcasting with peace of mind, knowing they are only paying for outcomes. Visit audiohook.com to learn more. That's audiohook.com.
- [28:31]
Eric Franchi
All right, we're back, everybody. With the refresh and another massive week of news led by Google. So, as everybody who is not living under a rock heard this week, Cookies are staying in Chrome. After all, after five years of back and forth sandbox drama, all this stuff. Let's get into that in a second, but first I just want to circle back to the massive news of last week, which was Google being declared a monopoly, Google's ad tech being declared a monopoly, or you've been on this for many months. I just want to get any additional perspective, thoughts, takes that you've heard or had over the course of the past week since the emergency pod and the news dropped.
- [29:18]
Ari Paparo
Yeah, I wrote in my newsletter some of the thoughts about what the remedies might be and all the nuances to the breakup. There hasn't been any new news dropped in the past week. I think people were largely expecting the judgment that came out. The really interesting thing that has my head spinning is the interrelation between the search and the ad tech case, and particularly now with the sandbox news, how Chrome fits in. Because in a sense the Chrome news is more important than the ad tech news to the future of media. And I think that this sort of. I don't want to use the word arrogant, even though it is arrogant. It's more like dictatorial power that Google has over the Chrome browser, which is the primary medium through which we see the Internet has thrown into stark contrast the stakes of the search trial and its relevance to advertising, more so than whether DFP has spun out or not.
- [30:18]
Eric Franchi
Let's get into Chrome in a second. Two things just that I've been thinking about as it relates to the antitrust stuff. So first was from a conversation I had with Joe Zawadzki earlier this week, because everybody's got a take on this stuff. Everybody is trying to predict what will happen for our little world of ad tech. And there's a lot of different takes on this. He raised a point that I thought was interesting, that I hadn't heard before, which is this. In an age of activist shareholders, in an age of some companies having ESG guidelines, could we see some pressure on the marketers themselves, meaning pressure on the CMOs to knowingly be spending a significant amount of money on a convicted monopolist, a known monopolist, and will that perhaps be some sort of black swan of money shifting because people are going to start getting into trouble? It's a very orthogonal way of thinking about it, but it's a point that. And it's very josie, but it's also Very Josie that I hadn't thought about. And I'm just like, whoa, maybe this could actually cause something to happen.
- [31:28]
Ari Paparo
What are they going to switch their budgets to Meta, who's about to be declared a monopolist?
- [31:33]
Eric Franchi
Yeah, right.
- [31:34]
Ari Paparo
I don't think being a monopolist has moral approbation the way certain other things do. I don't think people shy away from monopolists because they're considered morally wrong. I think it's more that they're considered a social bad, social negative. So I'm a little skeptical about that. I think more practically you might see the current attitude of marketers, which is largely described as you can't go wrong with Google changing, but not for moral reasons, more for practical reasons, which is that is part of the value prop of the Google stack is its massive unification on buy side and sell side and lack of discrepancies and all that stuff. If you throw that into uncertainty, where let's say 1,000 employees are going to be spun out, half the tech is going to be spun out, and all the remaining people at Google are going to spend the next two years of the roadmap on low value projects, then you might have some real questions about whether that's the right place to be.
- [32:34]
Eric Franchi
Exactly right. Is Google Google anymore at that point, which I think is the right take. So that's interesting. The other thing is now We've got almost 30 years after us versus Microsoft around Internet Explorer and we've got the benefit of seeing what happened. And you could make a case that the Internet is a better place post Internet Explorer. Right. With all sorts of innovation on new browsers. Obviously it led to, you know, to Chrome and everything like that. But if you take a long term view that was very positive for the Internet and then perhaps we can take a similar long term view maybe 10, 20, 30 years from now. We don't know exactly what things will look like, but maybe this is a parallel with what we saw then.
- [33:24]
Ari Paparo
Yeah, this is one of those deep thoughts I've been having that I'm having a hard time articulating exactly. In that the monoculture is bad. The monoculture of Chrome, of Google Analytics, of dfp, they're all bad. But we're having a hard time criticizing them because in many cases the products themselves are really good. So you could say Chrome is a perfect example because Chrome is definitely the best browser available right now. The investment Google's made in chromium and the ability to use that browser open source is just incredible. And we all are thankful frankly, for the effort. But it would be better if they didn't have a monopoly and other people were more experimental and other people had more control. And this is different from IE because I think at the time Microsoft was seen as having a not ideal product outlook and investment outlook in ie. Whereas we all think Chrome is quite good. And I think let's spend a little time on GAM and DFP and talk about that. Because when DoubleClick was acquired by Google, DFP was a very old, very difficult to use product that desperately needed investment. And Google did that investment. And you can say GAM has got a lot of problems, but GAM in, let's just say 10 years ago, let's say GAM in 2014 was wildly better than GAM in 2008, just five or six years earlier because of Google's investment. So once again, I think most listeners to this podcast and most people in the world of advertising would think the monoculture of dfp, the monopoly, the government found monopoly, judge found monopoly of DFP is a very bad thing. But the investment and the current state of DFP is a testament to Google's level of investment. And it's great that they did that.
- [35:20]
Eric Franchi
I think you articulated that very well, but it's still very hard to wrap your head around.
- [35:24]
Ari Paparo
It is. Let's talk about Chrome a little bit more though. So a lot of folks, especially with regards to Sandbox people are saying, well, they did their best, we needed to get privacy. It didn't work. And that's where I really reject this situation because I feel as though Google really pushed this roadmap for Chrome in a direction that only made sense for Google because their version of privacy, plus the benefits of advertising and in different hands, or if there were multiple options, you could have much better outcomes. Like you could have some consumers move to a fully privacy centric browser like Brave, which they still can, but they're just not really. Or you could have very commercially oriented browsers that give you discounts and coupons as you surf around the web. And you could have a lot of different options. But the fact that Chrome is maintaining its monopoly is stifling those innovations.
- [36:20]
Eric Franchi
Okay, that's a great meta comment. There's so much here, Right? So let's talk about privacy Sandbox. There's a lot of old articles about just covering and so many. There's one that talked about the level of investments that some ad tech companies were making in privacy sandbox because they believed it was the future Autogen Raptive Index Exchange, other companies, again we can put this one in the newsletter if you think it's interesting. But there was millions of dollars of investment or low single digits annual revenue equivalents being put towards Sandbox and that just blew up.
- [36:59]
Ari Paparo
Total waste of time.
- [37:00]
Eric Franchi
A complete waste of time. Trey Tatone I think had the best take on this. Subscribe to Isma's Letter under the market heading. But also on the other side of it, because publishers and ad tech companies were forced to do all of these experiments, were forced to think about identity, were forced to, I think, push themselves beyond the cookie. You can also make an argument that the past five years outside of Sandbox was not a waste of time at all. Publishers are better off. Publishers have identity partners. Publishers are now in the middle of benefiting from curation, arguably. So was it really a waste of five years or are we better in some ways on the other side of this specifically to open Web Programmatic, the kind of desktop browser stuff?
- [37:50]
Ari Paparo
Yeah, I think that's a fair argument. The industry is much less cookie dependent than it was five years ago, even though the percentage of traffic with cookies is probably about the same. So you're right, it sort of kicked people's asses. I think people are more likely to use alternative IDs, alternative methods, you know, getting consumers opt in. All these sort of things have progressed over this time frame. With that said, it's not an excuse for Google sending us on this incredible wasteful wild goose chase.
- [38:20]
Eric Franchi
Definitely not. I'm just trying to, I'm trying to look at this, you know, from a high level and you know, think about where we are today. The other thing that's different five years later and Matt from ID5 had a really good post and he pointed this out, is how much time, even though the amount of cookie traffic is the same, how much time consumers spend in cookied environments, he quoted it as basically 15% of online time. Right. So it's less relevant than it was five years ago to a great degree because of CTV and commerce and, and mobile and all of these other areas that have grown.
- [38:57]
Ari Paparo
Yeah, that's true. And it's the most relevant to the news industry and journalism who largely exist in what sometimes called the open web world where they don't have logins and they are reliant on traffic. That's ephemeral. And that business has not improved over the last five years. It's declined and it's declining because of traffic, but also because of monetization. And they're the ones who would have gotten hit the worst by the cookie deprecation, so they get a little bit of a reprieve. But nothing that's currently on the roadmap of anyone solves their problems.
- [39:30]
Eric Franchi
This is correct. Okay, that transitions us well into some AI stuff. But before we do that, what else should we talk about as it relates to Chrome and cookies? Like, nothing's happening. The big moment, the big ATT moment that we were all expecting and speculated on. It's not happening.
- [39:50]
Ari Paparo
I'll make a couple second order points here. First is there is a lot of anger in the advertising community and I feel as though Google doesn't understand that. The Google folks are like, ooh, whoopsie, cookies are back, it's cool. And the folks who spent the time on this are really angry. And you mentioned Trey in his email just yesterday. He dropped Ratchet, explained. He called it the biggest waste of time in ad tech history. I think a lot of people feel that way. Second point I'll make is that this definitely feels as though it's regulatory influenced this decision because they're under this intense scrutiny of the ad tech antitrust trial in dc. Sorry, the search antitrust trial in dc where they're in the remedies phase and Chrome is a big part of that. And if they were to continue getting into this fight with the European cma, the UK CMA about, well, here's the screen we're going to show and people are going to opt out, that would have gone directly, I think, as evidence to their control. And so I really think that two things are linked. And they just wanted this problem to go away for six months. And that's why this decision was made, so you could read that as like, well, regulation, Antitrust has an effect. Well, maybe sort of. I don't know. The whole thing is kind of so messy that I don't know. Make a good book, I guess.
- [41:12]
Eric Franchi
Yeah. Another good book. What's the future of Chrome with Google as its owner?
- [41:18]
Ari Paparo
I don't know if it'll be spun out, but something's gonna happen. I don't think the status quo is acceptable to the regulators. Maybe you put Chromium in a nonprofit and then make Google, Microsoft and all the other users of Chromium into licensors that have to pay. And then each surface point of the tech can do their own monetization and their own policies. It's maybe an idea, I don't know.
- [41:40]
Eric Franchi
Yeah, no, it's a good idea. This leads us into what I thought was a very interesting comment that was made. So OpenAI said publicly that they would buy Chrome if they had the opportunity. Could you imagine if OpenAI owned Chrome?
- [41:58]
Ari Paparo
It would make a lot of sense that the technology wave that AI is bringing should disrupt a lot of the consumer behaviors. That's what's happened in previous waves. The iPhone changed all these behaviors that were present in the desktop environment. And AI should change web browsing in some pretty fundamental ways. And it'd be very interesting if they had a web browser, whether it was Chrome or not. On the other hand, the more skeptical point of view is we could put this in the same category as perplexity bidding on TikTok. These folks have incredibly overvalued equity and they're just using it.
- [42:32]
Eric Franchi
The future of search, the future of AI is existential to Google. We've talked about this over and over. If OpenAI had Chrome as their relationship with consumers, that would be the existential moment that Google would do anything to avoid.
- [42:48]
Ari Paparo
Fair. I think that's very fair. I think that OpenAI feels like it's going to be a big threat to Google in general. This also comes on the news, I think it was last week that OpenAI said they were looking to build a social network. Yeah, yeah.
- [43:03]
Eric Franchi
Which I think is a good experiment for them. Like we've talked about a couple of weeks ago with GROK and X or XAI now owning X. XAI now has a proprietary real time data feed that is like super, super valuable. OpenAI, they've got the licensing deals with publishers that I think over time proving to be really, really useful, valuable to them. What they don't have is something that is, you know, social and connecting consumers. Right now it's just every consumer interaction is in a silo. What happens when consumers are interacting and OpenAI owns the data. So I think that makes a lot of sense. Building a social product that's successful is super hard. But to your point, these companies are worth a lot of money.
- [43:46]
Ari Paparo
I think it's also worth noting this is another crossover episode with the meta antitrust trial. Because one of the lines of argument in the whole meta conversation is that social networking isn't social anymore. That when Facebook was founded it was all social. And then Instagram and Twitter had the one way graphs, follower graphs, which were much less social. And then TikTok said, who cares who your friends are, let's just give you interesting content. And the reason I bring this up is because in the context of AI, that's really the end goal is to show you content you're interested in. You don't need to have a profile and friend all your people you went to high school with and stuff like that. It's very, very old fashioned. All you have to say is, I'm a Knicks fan and suddenly OpenAI can give you something to read every day.
- [44:31]
Eric Franchi
It feels like it's playing out. You don't like any of my posts anymore?
- [44:35]
Ari Paparo
Maybe I don't post anymore.
- [44:39]
Eric Franchi
Anyway, one more interesting thing on OpenAI that we saw this week was, or last week, I thought it was this week they were shown natively integrating Shopify into the checkout, which is really, really interesting. So break that one down for us.
- [44:57]
Ari Paparo
Well, yeah, so the new thing in the AI world are these. Oh geez, I forgot the acronym. It's like MrP MCP. Yeah, why don't you explain what MCP is? You know the acronym.
- [45:07]
Eric Franchi
No, you explain MCP.
- [45:10]
Ari Paparo
MCP is like the hooks that lets AI do stuff. So if some of the early demos of agents in the AI world showed them, you know, booking a table, an open table for you and your friends, when you just said, I'm in the mood for spicy food in Midtown. Right. But that was really unrealistic, honestly, because the AI was just like using the website and trying to figure things out and it didn't have the benefit of the structured data that those companies already have. So the new thing is that these structured sort of gateways are being developed for major systems that allow, they're intended for AIs to use them. So it can still have think of those apps, right? Yeah, they're sort of like apps, but built for AIs. So the AI can still do its neurological thinking about how to book you that hotel or that restaurant, but it doesn't have to fumble around the website and find the button and log in. All those things are streamlined and I think this is an example of that that would allow OpenAI to take an action, in this case buying something in a scalable way.
- [46:19]
Eric Franchi
Why I think the app analogy is interesting is like without the apps, your iPhone, it's kind of just a really good phone. With the apps you can then take the action that you were looking to take, whether that's listening to a song or booking the flight, booking the hotel room, taking some sort of action. So the model, context, protocols, mcps, that's really what they're looking to achieve with the AI stuff. So in the case of Shopify, it is not just find the product, it's complete the transaction with the product, which keeps you on ChatGPT and I think could be like really, really like a new architecture moment is at hand.
- [46:57]
Ari Paparo
It is a breakthrough as agents become real. I don't think agents really are real for most consumers. Even the most advanced consumers aren't booking these fanciful flights and restaurant reservations using AI.
- [47:11]
Eric Franchi
All right, let's talk about some ad tech. Why people listen to this podcast.
- [47:14]
Ari Paparo
So listen to it for us, man. We're the stars.
- [47:19]
Eric Franchi
This is true. But we got to talk about ad tech, so you tell me how big this is. It feels like this is kind of big. Magnite is merging Spring Server, which is the CTV ad server that they acquired and super, super valuable, into the ssp. So basically combining them into one, this feels important. This feels like it could have, you know, like a real lock in effect. But obviously given your background, I want to get your take.
- [47:47]
Ari Paparo
Yeah. So SpringServe, not Spring Server. Although I like the name Springser. My bad. Yeah, Sorry, Joe. Yeah. I don't know if this is a big deal or not. It's hard to tell with these sort of press releases about product movements. But I will say that SpringService is proving to be one of the best acquisitions in adtech. It really moved Magnite into a incredibly powerful position in the video market. They're still competitive with Freewheel, which is dominant among the traditional broadcasters. But SpringServe both opens up liquidity among traditional sources of video to their buyers, but also is the ad server record for many OEMs and other non broadcaster companies in the CTV ecosystem. And so it's a strong position, probably the number two player in CTV video world after Freewheel. And investing in publisher ad serving while Google's under scrutiny is probably a good idea. So overall this seems very strong. And the mystery is always why did IIS buy Publica and what's going to happen to that asset? Because that's a stranded asset that that really needs some muscle behind it.
- [48:56]
Michael Walrath
Who could acquire Publica?
- [48:59]
Ari Paparo
Anyone in the exchange world index would probably love to buy it. Or maybe Pubmatic, who are a little weaker in the video space. Triplelift. Those would be obvious ones. Or an ad serving company like Kevl, or maybe one of the SSAI companies like Amagi. There's quite a complicated video ecosystem out there. A lot of companies, some of which you may not have heard of, that would be probably really interested in that.
- [49:26]
Eric Franchi
Is Publica. Publica at parity in terms of the product as springserf?
- [49:32]
Ari Paparo
I don't think so. I think Publica is a little bit more of a Exchange product and less of an ad server product. I think you can use it as an ad server, But I think SpringServer is a solid video ad server and Publica is more of a yield management tool for video.
- [49:49]
Eric Franchi
Just riffing for one more second on the springserve acquisition. I don't remember exactly. I don't think the price was public.
- [49:55]
Ari Paparo
It was cheap.
- [49:57]
Eric Franchi
Yeah, yeah. It was like a mid eight figure deal. That was right.
- [50:03]
Ari Paparo
Yeah, yeah. I was just doing the math in my head how many eight figures were. I was doing little commas calculation.
- [50:10]
Eric Franchi
It's Thursday morning. It's like when you said oh, define mct. I was like, wait a minute, brain gears turn anyway and it's created arguably billions of dollars of value. I can think of maybe there's one other modest sized deal that had such an outsized impact and I think it's invite media. I can't think of another one that you'd put in that category of the impact that it had relative to the price.
- [50:36]
Ari Paparo
Yeah, I think SpringServe was sort of a fluke where Mech Knight had invested in a previous B round and they got some rights to a first call on the equity, I think SpotX.
- [50:48]
Eric Franchi
Oh, SpotX. And they acquired SpotX.
- [50:50]
Ari Paparo
Yeah, I think it was effectively a. I don't want to call it a mistake, but I think the SpringServe team gave away too much in a funding round and then they were left with no choice. They didn't do badly. I think they probably made some money, but it was certainly undervalued.
- [51:05]
Eric Franchi
Yeah, yeah, for sure. We're investors in their new company and I think they've learned a lot of lessons and they're doing great.
- [51:11]
Ari Paparo
And Publico is way overvalued. It was reported, I think a 250 million for like 30 in revenue or something like that.
- [51:18]
Eric Franchi
Yeah. Anyway, okay, one more ad tech thing and maybe this is ad tech adjacent, but I think this is interesting and also timely given some of the moves that we've seen this year in the out of home category. So gstv. I know you've seen the docket, but before this week, could you tell me what GSTV did?
- [51:36]
Ari Paparo
No, but if I knew their full name I could tell you.
- [51:39]
Eric Franchi
Yeah, Gas Station TV. What a great name to acronym like Gas Station TV versus GSTV. So it was acquired by PE and apparently valued at 500 to 600 million dollars. So let's call it the high end 600 million dollars. Basically digital out of home ad network transaction earlier this year. Vistar Media, $600 million digital out of home transaction. Like this is the story of the year in a Lot of ways. Digital, out of home.
- [52:11]
Ari Paparo
Yeah. It doesn't have some of the negative dynamics of ad tech because you have stickiness. You have a physical device that is hard to move, that people don't want to move, that generates revenue for the gas station franchisee. So it becomes just a cash flow business. And that's pretty attractive, especially to PE. Whereas everything else we talk about, SSPs, DSPs, blah, blah, blah, those are all replaceable at a whim. And you always have to be capturing that business. This is a media business that has a sticky consumer.
- [52:46]
Eric Franchi
Yeah. Gas stations aren't going away anytime soon.
- [52:49]
Ari Paparo
Well, you never know. I mean, that's probably a risk to the business, is that gas stations do go away.
- [52:54]
Eric Franchi
But some of the best gas stations are. Gas is just one thing that they do.
- [52:58]
Ari Paparo
Here's a question. This is specific to you. Like, do they have any gas station TV's in Jersey where you're not allowed to pump your own gas?
- [53:07]
Eric Franchi
I wouldn't know. I don't pump my own gas.
- [53:09]
Ari Paparo
When's the last time you pumped your own gas? Like, are you just, you know, do you even know how it works? The nozzle? As a lifelong.
- [53:15]
Eric Franchi
Of course. Of course. I guess I venture out of the great state of New Jersey once in a while. But. Yeah, so I would know.
- [53:24]
Ari Paparo
All right. People around the world have no idea what we're talking about here.
- [53:28]
Eric Franchi
For our friends overseas or otherwise not familiar with the nuances of the tri state area. New Jersey has a very strange law in that you can't pump your own gas. It's maybe the only state, if not one of the few states in the United States, somebody pumps your gas for you, and it's weird. You have to sit there. You're a control freak. It's not so much fun, but it's odd.
- [53:55]
Ari Paparo
Do you tip? How much do you tip?
- [53:56]
Eric Franchi
You can't tip because you pay with a credit card.
- [54:00]
Ari Paparo
But they don't have a tip screen.
- [54:01]
Eric Franchi
No, the tip screen hasn't made its way to the New Jersey gas station ecosystem.
- [54:08]
Ari Paparo
I thought you had to tip. I didn't know that.
- [54:11]
Eric Franchi
You spent too much time in New York City. Coffee bars, my friend.
- [54:15]
Ari Paparo
All right. I have to tip for everything.
- [54:18]
Eric Franchi
This is true, man. Maybe I should be tipping. And like, this is a Larry David moment.
- [54:24]
Ari Paparo
They're gonna put sugar in your tank. There's that rich VC who doesn't tip. Let's put some sugar in this tank.
- [54:32]
Eric Franchi
No wonder why my car is all messed up anyway. All right, this has gone in a weird direction. Are we gonna see Apostle next week.
- [54:40]
Ari Paparo
Both myself, Ad Tech God, and Jeremy Bloom from MarketExter will all be it possible we have a party on Tuesday. Don't ask me for tickets or it's on Monday. Don't ask me for tickets that sold out. And even if it wasn't, I don't even know how to get anyone in. But I'll be there, probably. Will you be there? You'll be at our party, right?
- [54:58]
Eric Franchi
I'll be at the party, yeah.
- [54:59]
Ari Paparo
Are people like in your DMs asking for tickets and stuff?
- [55:02]
Eric Franchi
Yeah, yeah, they are.
- [55:03]
Ari Paparo
They are.
- [55:04]
Eric Franchi
That's why they're all going to you next.
- [55:05]
Ari Paparo
Yeah, yeah. I'm not a good source for tickets. I'm not going to hook you up. I'm just telling you right now.
- [55:12]
Eric Franchi
Anyway, we'll be on the ground next week. We'll see a lot of people there and we will talk to you later on in the week with a recap.
- [55:19]
Ari Paparo
Absolutely. Thanks everybody.
- [55:20]
Eric Franchi
Bye bye.
- [55:22]
Michael Walrath
Thank you for subscribing to marketecture.
- [55:24]
Ari Paparo
New interviews are added every week at.
- [55:26]
Michael Walrath
Marketecture TV and your favorite podcasting app.
- [55:38]
Ari Paparo
Thank you for listening to the marketecture podcast. New episodes come out every Friday and an insightful vendor interview is published each Monday. You can subscribe to our library of hundreds of executive interviews at marketecture tv. You can also sign up for free for our weekly newsletter with my original strategic insights on the week's news at News Market tv. And if you're feeling social, we operate a vibrant Slack community that you can apply to join at adtechgod.
- [56:05]
Michael Walrath
Com.