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Episode 132: Why Curation is like Spicy Vodka Sauce, with Chris Feo of Experian
00:45:43
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- [00:00]
Ari Paparo
This episode is brought to you by U of Digital, the Go to training company in adtech. They've launched the AI Accelerator, a hands on bootcamp that gets teams actually using AI for marketing and advertising use cases. Most people in our industry still aren't confidently using AI, even for basics like better email or smarter research, let alone creating content or analyzing data. The AI Accelerator changes that. It's participatory, immersive and it's being used by teams at Diageo, Disney and MediaOcean with tremendous results and industry AI Leader Scope 3 is now the exclusive sponsor of the AI Accelerator. This program is legit Go to u of digital AI and use promo code market for 20% off or email contactof.digital for group rates. This podcast is brought to you by audiohook, the leading independent audio dsp. Audio Hook 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. Audiobook 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 welcome to the market podcast. This is Ari Paparo. I'm joined today by Eric Italian Beef Franchi. Eric, how are you? What's. What's Italian beef like from Chicago? Is that what we're talking about here?
- [02:00]
Eric Franchi
Okay, so you need to come out to Jersey and we're gonna get a sandwich and it is going to be hot roast beef in gravy, fresh mozzarella with even more gravy poured on top. Yeah, that's gonna be our lunch.
- [02:15]
Ari Paparo
I didn't know Jersey was a thing with this. So this is all coming off of Eric's other podcast. I'm just his side piece. He has a real podcast with Joe Zappa where, I don't know, you have to listen to it. It was pretty entertaining. And the ital phrase was. Was dropped.
- [02:34]
Eric Franchi
It was an ad read. It was the funniest ad read, I think in ad tech podcast history. Zappa, he's. He's a. He's a wild guy. And we did it for Media Ocean. It was hilarious.
- [02:44]
Ari Paparo
And then in other ethnic origin news, I will not explain why I'm saying this, but I will just tell people out there. I am 100% Jewish. If anyone does not think I'm Jewish, that is Sephardic erasure. All right, let's move on. And that'll be a mysterious comment for the four people who know what I'm talking about. So today we have Chris F. From Experian, Chief business officer of their business group at Experian. I've known Chris for a long time. I'm interested in hearing his story about Experian. Because when I hear data, I just think of this sort of like undifferentiated blob of stuff. I have a hard time getting my hands around what is data and why should I care? You've known Chris for a long time, haven't you, Eric?
- [03:26]
Chris Feo
Yeah, for sure.
- [03:27]
Eric Franchi
Well, all the way back to the Tapad days, which was a great acquisition by Experian.
- [03:32]
Ari Paparo
Yeah, it's a really important company. I want to hear his point of view on what it's about. Also, there may be some more Italian food metaphors going into this whole thing. So while we're doing housekeeping. So a couple of things here. First of all, we announced our big party, the adtech God Party. They'll happen in October. If you'd like to register, go to adtechgod events.com and you can link out to the party. RSVP. Please do not text me, email me, or call me to get off the waiting list. Even if I had the ability to do it, I refuse to on principle. We do our best to let people in. If you can't get in, you can't get in. And don't email our colleagues either. We're all busy people. It's just a party. If you miss the party, it's no big deal. Just hang out at the Starbucks. It's fun just as much. Okay, secondly, Eric, I'll let you in, but otherwise it's a crapshoot. And then secondly, on the personal note, probably most people know I have a book coming out. And I just sent an email this morning, Thursday morning, that I'm doing a reading on August 7 at the index Exchange New York office at the World Trade center. If you're interested in hearing from me, reading, little signing, et cetera. We'll be selling books as well. Please rsvp. You can find the link probably on my social or@aripaparo.com and I hope to see you folks will probably be hearing a lot more about this book moving forward.
- [04:52]
Eric Franchi
That's amazing.
- [04:53]
Chris Feo
Hey, can I ask you a quick question?
- [04:54]
Ari Paparo
Yeah.
- [04:55]
Eric Franchi
What are you going to Be reading. What's the reading? What can we look forward to?
- [04:59]
Ari Paparo
You know, probably there's this chapter about header bidding that's like the epic chapter. It's probably the longest chapter in the book, so I think I'll probably. And Andre is in that chapter quite a bit, so that'll probably be where I focus the reading.
- [05:13]
Eric Franchi
Oh, yeah, you gotta do it. He's there, right? You're doing a Q and A with him?
- [05:16]
Ari Paparo
Yeah, I'm doing a Q and A with him. And it might come up how he got his start. If you don't know his origin story, it's pretty entertaining.
- [05:23]
Chris Feo
It's amazing, actually.
- [05:26]
Ari Paparo
So that'll probably be part of the reading. All right, with that, let's jump in and talk to Chris. All right, well, I'm excited to have on today Chris Feo. So I've known Chris for quite a long time from tap ad days or maybe even before. Chris is the chief business officer for Experian. Chris, thank you so much for being here.
- [05:44]
Eric Franchi
Yeah.
- [05:45]
Chris Feo
Ari, Eric, thanks for having me. Looking forward to it.
- [05:48]
Ari Paparo
So Experian is one of those companies that's sort of big, sprawling, complicated, or maybe it's not. You can. It's probably. You understand everything about it. Why? What is it like? What is the TLDR on Experian?
- [06:01]
Chris Feo
Yeah, it's a great question. Admittedly, it's probably taking me the four years post acquisition to figure it out myself. Obviously, Experian, known in market from a consumer perspective as one of the three credit bureaus. I think what the broader market folks don't realize is in many ways, Experian is a holding company across North America, Latam, Europe and apac. And then there's business units that make up the total revenue within each region. So markets operate bureaus, markets operate the consumer business. And when I talk about the consumer business, if you see us with Travis Kelsey or the Purple Cow on TV or sponsoring Mike Tyson and Jake Paul, that's the consumer business that exists today. We've got an auto business, a health care business, and then marketing services. And so I oversee marketing services as the chief business officer. And that's really the role that we play across identity, audience outcomes, and now curation across the ad tech ecosystem.
- [06:58]
Ari Paparo
It's the advertising stuff.
- [06:59]
Chris Feo
The advertising stuff.
- [07:01]
Ari Paparo
So I can't let it go by that you just kind of shoved in there Purple Cow. So that Travis Kelsey I got. And then you just said purple Cow. Can you explain what purple Cow means?
- [07:12]
Chris Feo
One of our first kind of large TV campaigns, probably 10 years ago was John Cena and a purple cow. And that creative rank for a long time. The origin behind it still unknown. Some British play on humor, but it worked out really well. And here we are, I think more interesting was the first time my mom called me and said, wait, don't you work at Expedia? And I said, no, that's Experian, mom. I thought so. And I saw them sponsor a boxing match with Jake Paul, and I was like, great. And I finally made it, you know, 16 years into my career.
- [07:47]
Ari Paparo
So Experian is effectively a data company in the advertising world. So I've always shied away from having data companies on this podcast because it's always like, I have data, you have data, and there's not much else to talk about. Give us the pitch on why data is interesting.
- [08:01]
Chris Feo
For us, data means a multitude of things, right? We have data about identity. And so when we think about the world of identity, it's who's Ari, Chris and Eric in the real world, how can we both identify us as consumers and address us in the offline world? So things like name, phone number, address, clear text, email, we have that for the full U.S. population. And that's our, what we call our identity spine. We then have a digital version of that identity spine, which is again, another form of data that's the legacy tap ad business. As you're familiar, how do you find and address a consumer when they're across channel and cross device? We have data that's shared with Experian and compiled from an audience perspective. And that's mostly used for profiling, enrichment, targeting. Right. Prospecting and upsell retention, et cetera. That ranges from intent and behavior to core demographic to what type of cars in your driveway? Because we have every DMV record updated monthly. And so for us, data is meant, like I said, a multitude of things. But obviously Audigen being the most recent piece to the Experian and Experian marketing services family around things like contextual and real time signal from consumers across their publisher footprint and how they engage with content and websites.
- [09:23]
Ari Paparo
Yeah. So you acquired Audigen. I think that's what prompted us having you on that was already been a couple months, maybe six months. I'm sort of close.
- [09:33]
Chris Feo
End of year.
- [09:34]
Ari Paparo
Yeah. So what was. So what was the deal? Why'd you buy Autogen?
- [09:39]
Chris Feo
If you, if you go back to the combination of identity and audience where the bulk 95% of our revenue comes from, we've been seeing a continuous change in the ecosystem, Right. You have change in signal, you Have ID deprecation or not deprecation, depending on how you look at it. Privacy. And from our perspective, we've been best in class at building data products that we deliver. And our clients predominantly build product and service on top of. Right. Whether you're a DSP or an ssp, another data provider, and we don't see that going away. But as we see the ecosystem changing, the notion of static data, right. A segment that I created a day, a week, a month ago to target a consumer or to engage a consumer, that is going to change. And I think a byproduct of the signal and identity that I mentioned, the notion of AI and really I think the overarching theme around performance and performance media, we thought there's an opportunity for us to take a different approach. Instead of just sharing data out to the ecosystem in a file based approach or an API based approach, Audigen gave us the opportunity to create real time data utilizing the breadth and depth of our total footprint in ways that we historically haven't been able to. And so that was the original thesis. We've seen a number of synergies above and beyond that, but it's changing how we share data and the role that we play in the ecosystem. From an audience, targeting activation, eventually outcomes in measurement space.
- [11:12]
Ari Paparo
Right. So data velocity is part of it. Like how fast can you move from a signal to usage? Is that kind of what one of the things we're getting at? But what about this idea that the data is more effective when it's at the publisher side, the SSP side, than the DSP side, Is that true? That's something I've been talking about a lot, but I'm not sure if it's actually true.
- [11:36]
Chris Feo
I think it depends on how you are truly asking the question, I think of analysis to I'll use tomato sauce like Carbone. If you've been to the restaurant and you have the spicy rigatoni, that sauce is incredible. It's freshly made and you have all of the ingredients together. But I could also go to any grocery store and have that spicy rigatoni sauce now in a jar.
- [11:57]
Eric Franchi
Right.
- [11:59]
Chris Feo
Our challenge and our belief was that we were jarring up our segments and putting it on the shelf of a platform. And then that platform would make decisioning and depending on the campaign and the creative and the KPI, it would work or it wouldn't work. And the feedback loop was missing for us on the real variables that was defining performance and success.
- [12:21]
Ari Paparo
So it's like you're like going into the Carbone Kitchen and jarring it up right there.
- [12:26]
Chris Feo
Is that jarring it up right there? And making it available in real time. Right. For the DSP to make a decision on. And so I don't look at it as, is sell side activation better or worse than buy side activation? I look at them complimenting each other. The DSP has an immense amount of value in the overall ecosystem and value chain. We think we can provide more value to the deals that they're looking at and the dynamics of both the audience and the inventory that they're buying against and taking some of that onus on versus historically just being a recipient.
- [12:58]
Ari Paparo
All right. And then when you're. You're pounding flat the veal, how does it feel in the data world?
- [13:05]
Chris Feo
I don't, you know, it's not often someone stumps me. I'm not sure how to answer that one. So can I pass?
- [13:10]
Ari Paparo
Yeah, pass on that metaphor. The. We're having an Italian themed podcast today.
- [13:18]
Chris Feo
I mean, I am half Italian, half Greek. Somehow my last name means ugly in Spanish, but that's a separate story. Just say, you know, as the resident.
- [13:25]
Eric Franchi
Also part Italian, I'm highly offended by this jarred sauce thing. We need to move off of it.
- [13:31]
Chris Feo
Yeah, Chris.
- [13:33]
Eric Franchi
So the acquisition was very successful. We were an investor, we were psyched about it. My impression is the post acquisition, like go to market integration has also been like, quite successful. Is there some sort of metric that you can point to and if this isn't public information, you know, totally fine of like how, you know, legacy Experian plus Tap ad is going to market with Audigen and is this now like a consistently combined offering or is it still siloed, if that makes sense.
- [14:05]
Chris Feo
It does make sense. At this point, I'd say we're just starting to really tap into the synergies on how we go to market. If you look at Audigen's core customer, right, their buyer profile, 60% of their engagement, their revenue comes from traditional agencies and advertisers that they're building deals for. And then those deals are running across their preferred both supply and channels. We as Experian have large relationships with holding companies. We historically haven't worked with the Mindshare Nestle team. I'm not even sure if that's the right combination, but that's just not been our customer. We've always worked with the Choreograph inside of WPP or the Analect Omni inside of Omnicom, et cetera. So where we're starting to see kind of economies of scale and Synergy is really how do we go to market collectively so that the identity and the audience data that we've made available to our customers can also live and coexist inside of how they're executing media across the agency and account teams. We're definitely starting to pick up some momentum there. You also look at on the other side of their audience business, they have a ton of success with how their data is distributed across platforms or other data is made available to DSPs that are looking at curation as another differentiation and an opportunity to potentially have access to sensitive or more restrictive data sets without taking on all the onus and the responsibility. And so those are areas where again some of the synergies are coming together and also some of the data that experience had access to that we haven't been able to easily unlock by parking that inside of a platform we're now making available. But candidly, if this is a, we'll go to a new category. If this is a sports reference, a baseball game, we're in the second inning at best. We've got a long way to go to unlock the full potential. But the path to get there is very clear.
- [16:03]
Ari Paparo
Do brands single source their data partnerships? Like if you look at these big data companies, you and your competitors, I guess TransUnion and some other folks like that, is it typical that a brand gets loyal to one source of data for consistency or do they multi home both?
- [16:23]
Chris Feo
And that's a. I don't feel like that's a cop out answer but it really depends on their strategy. What we see is so if I look across my total portfolio of the business, we've focus it on three channels. We have our advertiser channel, our ad tech channel which is all of the usual suspects and then audigent or kind of activation and curation being the newest our advertiser business, we work with 300 direct brands today. The applications of working with those brands. Ari, to answer your question, a lot of it is around enriching the data that they have today around their customers or their prospects. Almost every marketer in the world has some sort of erm. But it's usually incomplete or outdated. And so we'll know more about their customers, the address that they live in versus the address they have, the email address that's missing or incomplete. And so from an identity standpoint that's a big big area. And once you have that foundation of it's your identity data that's fueling their understanding of their customers, it's an organic next step for them to Utilize our audience data, they will start to multi source. If there's components of the audience data that we don't have or that are unique to them categorically, but you generally see a lot of alignment. If identity is the starting point, if audience is the starting point, they're just picking kind of a hodgepodge of what makes sense for them based off of their needs.
- [17:45]
Ari Paparo
Yeah, it makes sense to sort of choose an identity provider and stick with it because you don't want two different versions of identity throughout your systems.
- [17:53]
Eric Franchi
Right.
- [17:53]
Chris Feo
Which has been interesting and fun for us because if I go back 12 years ago when we started tap ads, I think actually 13 years ago, unless you were the largest brand in the world and you already had a data science team and you were forward thinking enough to have cloud based infrastructure, an identity graph didn't really make sense. You wanted it as a service. Ask a question, get an answer and then have that answer show up in a channel or an environment. That makes sense for me from a media targeting standpoint. The number of brands that have invested in identity both with their hat on as a marketer, but a lot of those brands also have monetization plays. If you look at the Walmarts and the Ubers of the world, as soon as they switch into monetization, they want to own and operate these data sets end to end and then push the decision they want to a channel of record that makes sense for them to create a profit.
- [18:42]
Ari Paparo
All right, let's talk about curation again, because I'm obsessed with it. So to what extent do you think curation is taking away some of the power or the importance of the dsp? Because the story I've been telling is that the DSP has been traditionally where the advertiser or the agency chooses all their data and creates profiles and things like that for execution. And it's really complicated and doesn't always work that well. And curation kind of does it for them. It just hands them a deal ID that already has the data baked in. Do you agree or disagree with that assessment?
- [19:17]
Chris Feo
I agree in part with the assessment. I think it depends on what type of data is being packaged and made available. So if you look at categories that are extremely sensitive, health care and pharma, as privacy and regulation changes, there duration is a way for that data to be shared and for DSP to still make decisioning, but from a data provider and a consumer perspective to have a little bit more control. And so we see that in an area where, yes, sell side curation, activation, whatever you want to call it is certainly playing a role and starting to take on some of the responsibility from a decisioning standpoint. But when you come back to like frequency capping and cross channel optimization, targeting measurement, that is still all happening inside.
- [20:05]
Ari Paparo
Of the DSP for the most part, to some extent. I mean, I think that, I think that if you listen. So I wrote this newsletter this week that I kind of dashed off Sunday night in a half hour and suddenly everyone's talking about. So that's how it is with newsletters. You work hard, no one reads it, you throw something together, everyone thinks it's really meaningful. But anyway, the point being it was about how AI and curation, a combo is really bad for DSPs because the AI vendors are saying, hey, we have this agentic agent, you don't even have to worry about targeting, we're going to do everything for you. Then it plugs in on the SSP side with data and targeting and the DSP is a dumb pipe. How does that strike you? Agree, Disagree.
- [20:43]
Chris Feo
I mean, when you're a dsp, you're not looking at a single supply source, right? You're looking at all of them simultaneously. And so one of the value props of Audigent, selfishly, since we're going down this path, is their ability to curate cross 15 SSPs in real time. That obviously looks and feels like some of the capabilities of a buy side platform of a dsp. Even so, we still see the deals and as you mentioned, like the plumbing for the creative to the actual delivery. Right. It's coming through the DSP and the deal IDs that are, that are structured. Do we start to see some change there in the composition of how these deals are coming to fruition? Could it potentially create some conflict? Yes, but we really look at the DSP so as extremely complementary in the equation. We may have a different approach just given how we've built our solution and distributed it across the buy side as well as the sell side compared to some of the other either companies or concepts that you're referencing. But I could certainly agree in principle where you're going, it's just not there in practice.
- [21:44]
Ari Paparo
Right. Lastly, do you have anything to say about Experian's efforts in AI or anything going to be announced soon?
- [21:51]
Chris Feo
Yeah, I'd say keep an eye out for what we're up to. Audigent has obviously been at the tip of the sphere for us there as a company who sits on an immense amount of data, which I've articulated a few times over, and some of that data Historically being hard or difficult to unlock in partnership with compliance and other teams, we look at AI as an application layer that may big asterisk next to maybe allow us to evolve what types of data directly or indirectly can be in market.
- [22:26]
Ari Paparo
Right. I'll get an ad that says, hey, Ari, I see you just bought a new car. Do you want any tomato sauce?
- [22:33]
Chris Feo
That could be it. To be clear, that spicy vodka sauce.
- [22:36]
Ari Paparo
We haven't tomato spicy. All right, Chris, you've always been a good person to be friends with because you picked up the tab on a number of my meals and I appreciate the Carbone reference.
- [22:46]
Chris Feo
We've probably been to Carbone at least once together in our lives.
- [22:50]
Ari Paparo
I believe so. All right, well, this was awesome. We're going to take a break and come on back with the refresh news of the week. We're in the summer doldrum, so there's not that much news, a bunch of trend stuff. But I think there's some interesting tidbits will hit on. So we'll be back.
- [23:10]
Unknown
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- [24:07]
Eric Franchi
All right, welcome back, everybody. Welcome to the refresh, AKA the news of the week. So it is the last week of July, so it is a little bit of a lighter time out there. But there's a couple of kind of really interesting things that happened this week. Google earnings and some more news out of Google. A bunch of interesting data dropped around AI Search, which is obviously super relevant for our business in a number of ways. But I think maybe the coolest thing that I came across this week was that newsletter you dropped, Ari, about how curation and AI could kill DSPs and some of the reactions. So I think it's newsworthy. Let's talk about it for the listener who didn't read it. Could you summarize the piece?
- [24:50]
Ari Paparo
Yeah, sure. So the summary was essentially that the DSP is a complicated piece of software, has A lot of things it does and a lot of functions and a lot of value drivers and some of those are starting to be eroded. And as we just talked with Chris about, the data element has already been eroded to some extent by curation. Programmatic guaranteed is another erosion of the dsp. The DSP doesn't want to be a dumb pipe, but like everyone else wants it to be. And what is clear to me when I watch the or hear from vendors who are offering agentic AI solutions for advertisers is that those solutions are saying, well, we're going to do all the kind of targeting and optimization for you. And that's really, you know, it's almost like you're taking the engine out of the car. Like that is a really big piece of the DSP value prop. And while, you know, there's nothing to say DSP can't have an agentic AI, the difference is that if you take the main value prop out of the DSP then you flatten the value chain between the SSSP and the DSP. They don't both have to do this thing. And it, it sort of begs the question about whether you need that extra hop, which is part of a long term Trend of the SSPs competing with the DSPs and the DSPs going to the supply side. So it's just another kind of lever in that overall trend and that overall space.
- [26:11]
Eric Franchi
What were some of the takes that you thought were particularly interesting that people patched up on?
- [26:16]
Ari Paparo
Well, it seemed like it was sort of an idea whose time had come because I think I was kind of the first person to put it in writing. And then everyone was like, oh yeah, of course, yeah, obviously that's what we're thinking too. I even got an okelly LinkedIn post which is always, always a fun thing because he has such reach basically. I mean, this obviously dovetails really well with his strategic vision for Scope three. And it's definitely an interesting situation where, you know, you have people like Casale at Index Exchange pushing curation so hard and then he has allies like, you know, o', Kelly, but also like Heimlich at Chalice and other people like that who are also pushing so hard, saying like, we're doing all this cool stuff for advertisers and, and then downstream you have buy side ad tech vendors like MediaOcean who are also on board with this. They also want to disrupt the DSP because they think if it's going to be just a ad serving and measurement solution, why not use an ad server instead of A dsp, it's cheaper and more suited for purpose. So, yeah, there was a lot of agreement around it. Obviously whenever you use the word kill, you're being hyperbolic. Nothing ever dies, everything evolves. But it's an interesting angle to look at.
- [27:29]
Eric Franchi
Yeah.
- [27:30]
Chris Feo
I mean, I think as we were chatting about, the direction of travel certainly suggests that Ari could be onto something. When that comes to kind of fruition, I think is probably what we're all curious into. What kind of scale does that take place? Because conceptually, again, I could, I could get behind it. There's a lot of momentum and movement I would need to take from our advertisers and agencies work and their workflows and their teams. It will take time if that hypothesis comes to fruition.
- [27:59]
Ari Paparo
One of the stories here is, Chris, you said just a moment ago in the first half that one of the things DSPs give you is access to lots of different inventory. And that's really the important point that is like, if a DSP is valued by its customers for that reason, then curation's like a sideshow. If a customer thinks of open web inventory is a big blob, they could get anywhere. Then why you don't need cross supply. Which means that the more distinct pockets of inventory a DSP has access to, be it like hedged gardens, walled gardens, et cetera, the more valuable they potentially are.
- [28:37]
Chris Feo
I mean, don't underestimate how difficult it is to scale a deal on just one SSP and hit the KPIs of a performance advertiser. Right. Again, from our, from our perspective, you know, we are constantly ab testing the 15 or so SSPs that we have to figure out. You know, can there be more concentration and at the end of the day, yes, obviously some of the SSPs will see more delivery and more spend, but it comes back to the performance. And so having the fluidity to optimize the user, the campaign across all of the inventory sources within the, you know, price that's required is really important, not something to underestimate the challenge there. And obviously the DSP has been an expert at that for some time and frequency. I think that's the big part too. If you're going to run cross SSP, those SSPs need to be able to speak to each other right through the, through the deals so that you're not actually Targeting Chris and Ari 3 for 24 times per hour or whatever the setup is.
- [29:33]
Eric Franchi
Chris, I like your take on this.
- [29:35]
Ari Paparo
Right.
- [29:35]
Eric Franchi
So we're super long. This category of early agentic AI and particularly this custom algo category. And some of these businesses are growing as fast as any business I've ever seen, but it's still early. They're still relatively small relative to the size of TTD and just how much is flowing through that sucker. Right. So it's like, you know, you wonder what this trajectory looks like over time and when, when and if it truly does have an impact. One public comment that I thought was, like, actually, like, very interesting and we should link it in the. In the newsletter on Monday is, is Paul Silver from miq. He had a very thoughtful take around, you know, basically like, don't count the DSP out because of, you know, where they sit in terms of just like credit and cash flow. Right. They're taking payments, they're holding, and they're paying the supply side, which is like super, super important. And that's going to be a difficult thing to, to unseat.
- [30:34]
Ari Paparo
Yeah, I don't, I don't know that the DSPs have any unique ability to, to hold stuff on their balance sheet, really. Anyone with a big enough balance sheet can do that. It's unpleasant. So it could be that just. The DSPs are used to having that unpleasant negative cash flow in their business and other companies don't want to compete with them because they would have to also have negative cash flow. So I don't know. I don't know if that's really a moat. And if it is a moat, you don't really want that to be your moat.
- [31:00]
Eric Franchi
All right, well, bloat is moat was Paul's take. Let's see if it truly becomes the case. I liked it. I like to just say float is moat.
- [31:09]
Ari Paparo
Yeah.
- [31:11]
Eric Franchi
All right, let's get into some news.
- [31:12]
Chris Feo
Google.
- [31:13]
Eric Franchi
Google reported last night crushed earnings revenue up by 14% to 96.4 billion for the quarter. So big net profit was up from 23.6 billion in Q2 of last year to 28.2 billion this quarter. The growth is coming out of Google Cloud, YouTube and the core search business altogether growing at double digits. Specific to this audience, there's one thing that did not grow at double digits, Ari, what was that?
- [31:43]
Ari Paparo
The network business. Down $90 million year over year.
- [31:46]
Eric Franchi
Yeah, down $90 million. Why is that happening?
- [31:50]
Ari Paparo
We don't know. The network business is a mishmash of a lot of different businesses. It's, it's gam, it's DV360, it's Google Admob, it's other stuff. And we think that the mobile side is growing fast, which would mean that the display side is shrinking fast for the whole thing to be flat. And I think it's just more evidence they need to spin that shit out. Come on, let's get on it. Let's get a spin out going. I have an announcement that you may have seen this morning. I don't know if you folks have seen this.
- [32:25]
Chris Feo
Moments like this.
- [32:26]
Eric Franchi
I wish it was a video podcast.
- [32:28]
Ari Paparo
All right.
- [32:28]
Eric Franchi
Well, did it?
- [32:30]
Ari Paparo
Well, so, yeah. So I have a GoFundMe to help me acquire ADEX. Our goal is a million dollars, which probably isn't enough for adex, but, you know, it's a start. And I believe as of the recording, we have about $35 pledged. But two of the people who've pledged are Jonathan Belloc and Sam Cox, who are the architects of adx. So if they're behind me, I don't see how I can lose. And it's going to be very exciting. We're going to give people log files, we're going to change the name of the product very often. We will cease doing any account management just to continue on the trend of Google's existing account management strategy. And, you know, I'm really the right future owner of this, so please donate on my GoFundMe. You can find it on LinkedIn and on X.
- [33:17]
Chris Feo
Consider the fund to now have $70. I will skip Sweetgreen today and contribute.
- [33:22]
Ari Paparo
If anyone contributes $100,000 or more, they get a free book.
- [33:28]
Eric Franchi
How does GoFundMe work?
- [33:32]
Chris Feo
Do we have fractional ownership at the end of this or are we just donating?
- [33:35]
Ari Paparo
No, it's just a donation for the greater good.
- [33:38]
Eric Franchi
And what happens if you don't, like, use the money to buy adex?
- [33:45]
Chris Feo
Do you have the right to do something else with it or we get our money back.
- [33:48]
Ari Paparo
Yeah, I'm going to put in an offer on Magnite, then Pubmatic. I'll go down the list.
- [33:54]
Eric Franchi
So poor Chris's money is just going to be sitting there, not accruing any interest in GoFundMe, and Ari's just going to go after every asset.
- [34:03]
Chris Feo
If Google's guaranteed to be invited to a Luma event. Now that Ari's a big buyer and.
- [34:07]
Ari Paparo
The market, I am, and I would really buy anything that Google wants to spin out. If they want to give me Tag manager, I'll take it. I'll make it work. I've got some cycles. It's time to get moving.
- [34:19]
Eric Franchi
Every bit counts, everybody. Okay, back to the news. This is an interesting thing that came out in Ad Week. This week, Google, who to date has been kind of sparse in terms of the licensing deals that they've been doing. They've got the big one with Reddit and that's fueling a lot of their results for sure. They're starting to explore licensing deals with publishers finally. So according to the story, they are looking to recruit 20 national news outlets as part of a licensing pilot project. So this is interesting because they're less to the table on this thing. The other LLMs have been doing these deals and everybody's been screaming about Google and what's Google doing to help the pubs? This is the first foray into it.
- [35:04]
Ari Paparo
Are they being sued currently? I don't know if they are. Like the New York Times is suing OpenAI. Right. But I don't know if Google has any big lawsuits against it for AI scraping.
- [35:12]
Eric Franchi
I don't think so. Not to my knowledge.
- [35:14]
Ari Paparo
Makes sense they would do the licensing. I mean, Amazon just did a big deal with New York Times for shopping content and a bunch of other deals are happening. It's kind of surprising that Google is only starting to talk about this. Maybe there have been deals behind the scenes, they just haven't announced.
- [35:29]
Chris Feo
Announced, yeah.
- [35:30]
Eric Franchi
Perhaps one more thing on the Google front. What's going on in Texas?
- [35:34]
Ari Paparo
Yeah, so the DOJ case is been decided, but there's also been the state case that actually predates the DOJ case. It was filed at the end of the first Trump administration, so that's how long it's been going back. It's based in Texas. It was scheduled for August 11th. I even had tickets to fly down there and cover it. And Google slipped out of the knot one more time. They convinced the judge that because the federal case is getting into remedies in September, that the remedies in the state case would largely be moot. So the state case has been delayed again till the spring of 2026. Maybe never to happen, depending on what happened in the federal case. So that is no longer a pressing issue for anybody.
- [36:21]
Eric Franchi
Got it, Got it. Okay.
- [36:22]
Chris Feo
So you're flying to Texas next year?
- [36:24]
Ari Paparo
I am, maybe. Well, I certainly don't need to be in Texas in August, which is a very big positive for my life.
- [36:30]
Eric Franchi
Good for you.
- [36:30]
Ari Paparo
Yeah, I don't know.
- [36:31]
Chris Feo
I heard Texas in August is a thing.
- [36:34]
Ari Paparo
It's hot, man. I used to work in Texas for a bit and the office in August was totally empty and my colleagues would be like, I'm in New York. Why don't we meet there? Because everyone just got out of town. It was so hot.
- [36:46]
Eric Franchi
Amazing. Okay, let's talk about AI search. So there were three different pieces that dropped this week that were all very interesting and like, you know, kind of directionally showing us, I think, validation of things that we've been talking about. Coincidentally, I, I talked to a startup that works with, works with publishers this week and they cited that, you know, across the board content publishers traffic is down year over year, like 20 to 30%. So there's a lot going on here. Part of it is because people are searching differently. So let's go maybe one by one and we can talk about this a little bit more in a broader context. So you found a post from Thomas Tungas I think is the pronunciation.
- [37:31]
Ari Paparo
I think that's the pronunciation. He's a very well regarded venture capitalist who has a very excellent newsletter.
- [37:37]
Eric Franchi
Yeah, excellent newsletter. Theory Ventures. Shout out to Thomas. He had a short blog post titled the AI Search Tipping Point. Basically the takeaway is that more than 50% of searches, according to his math, are AI enabled already. So this is to be clear, encompassing both dedicated LLM searches like perplexity and chatgpt, but also Google AI overviews. 50%.
- [38:04]
Ari Paparo
Yeah, I mean the consumer behavior is where it all starts. And consumer behavior is changing rapidly right now. It's moved from early adopters to mainstream and we're just collecting the data about that. He also had a really interesting article yesterday that I didn't link to in the show Notes where he speculated that real time bidding, he literally understands our industry. He talked about RTB was going to come to AI Overviews and it would be an area where potentially content providers could bid on having their content included in the overviews, which was pretty speculative, but it's kind of an interesting take on how the future might work.
- [38:40]
Eric Franchi
It is for sure. So that was point number one. Point number two came from the Journal. So the Journal had a report that estimated that basically five and a half percent of searches go to dedicated AI. So that is perplexity. That is ChatGPT. Again, directionally this makes sense, right, because you know you're less than 10%, which seems to be the search decline for Google. So these things are growing very fast. To give you an idea of the growth, the desktop browser search for AI like more than doubled year over year. So it's two and a half percent last year and it's 5.6%, like June of this year. So this thing is growing at a crazy rate.
- [39:24]
Ari Paparo
Yeah, that's a huge change in the market.
- [39:26]
Chris Feo
Huge.
- [39:27]
Ari Paparo
After we're on 10 years of nothing changing in the search market except Google Share inching up every quarter. And then suddenly to have new startups that no one had heard of a couple years ago get to 5% on an accelerating time frame, that is a seismic change to the whole environment of the entire web.
- [39:44]
Eric Franchi
I think that's right. The other thing that both of these articles pointed to is there's a little bit of a power law in search. Meaning like there are heavy searchers and there's early adopters. So heavy searchers are accounting for more of the AI results and early adopters. This one I thought was eye popping. They are 40% of the searches for the LLM. So it just like skews the data and forces this acceleration even more.
- [40:11]
Ari Paparo
Yeah, and I did a roundup on this topic. I think I talked about it on this podcast a couple weeks ago. But I'll just remind folks that one of the stats that's interesting is that AI searchers are doing more searching. And so the move from search to answers, it also increases the volume of searches, which is potentially positive for the SEO SEM market. Even if in the short term the volume of clickouts is going down.
- [40:36]
Eric Franchi
Yes, exactly. And then final piece, let's talk about clickouts. So this thing from Pew Research was very interesting. So basically the headline is Google users are less likely to click on links when an AI summary appears in the results. Kind of. Duh.
- [40:51]
Ari Paparo
Yeah, duh.
- [40:51]
Eric Franchi
I think, yeah. But I think also important, I mean basically they, they had 900 US users, all adults, who agreed to share their online browsing activity. And you know, basically like the majority who get an AI summary don't click on a blue link. They don't click out. So this shows you like where this whole thing is going.
- [41:11]
Ari Paparo
But when they do click out, they convert more. Right. The people who click out already know what they're getting. They're not just exploring a link. So again, it's a mixed picture on the effect of, on the outside world.
- [41:25]
Chris Feo
Yeah.
- [41:26]
Eric Franchi
Where's this whole thing going? Like what, what, what is the. Does this data change or maybe validate where both of your guys view on like the open web goes over the course of the next one, three, five years?
- [41:39]
Ari Paparo
I mean, I think that the worst case scenario for the open web is still a possibility, which is that it's effectively disappears. And we get content, we do shopping, we talk to people, all within dedicated apps that are public powered by AI. That's the worst case scenario.
- [41:55]
Chris Feo
Browsers.
- [41:55]
Ari Paparo
Yeah, yeah. So basically you're in Google's world even if you're reading content from a journalistic organization and then the kind of better case scenario is where it's sort of a hybrid, where in that scenario the journalistic organization may get fewer clicks to their website or app, but they still have some control over monetization and licensing and user identity and stuff like that. That.
- [42:20]
Chris Feo
Chris, what do you think? I tend to agree with Ari. I think the consumer's not realizing that they're engaging with Google or insert next AI solution here, especially as audio I think really begins to pick up momentum for how AI is going to work from a search perspective. Ask a question, get an answer, not even typing or exploring content through whatever mechanism.
- [42:41]
Eric Franchi
So you're bullish on audio and voice in this future. Interesting. The text based open web that we all grew up with, I mean it's already evolving greatly and I think it's going to continue to evolve at an accelerated pace. And it seems to me that somewhere around like data licensing, micropayments, just like alternative monetization than just ads is going to be just absolutely paramount in the near future.
- [43:11]
Ari Paparo
Yeah, I think there's a little bit of history to learn from the mobile change transition that happened where, where and I cover this in the book, so it's a little fresh in my mind, which is in the course of less than six months, Google amp launched, Facebook news pages launched and Apple Reader launched all three of them trying to solve the same problem, which is how do you bring the open web into a mobile environment? And they all failed because they basically were all not cognizant enough of publisher needs and advertising needs. And Google, I mean Apple Reader is the only survivor here. Yeah, so as a publisher you had to create your own app, but this was the way to like get your content into somebody else's app. And there may be something similar here where right now we're just licensing data. So OpenAI writes a big check. Reddit gives them all their data. Fine. But there's some world in which Reddit wants to exist in a world where the consumer is participating in OpenAI. They don't just want to be a dumb pipe into the LLM training module and that format has not been built yet and I think there's an opportunity there. Hopefully those three tech giants weren't too burned out on the failures of the micro formats and they'll step back up to the table.
- [44:24]
Eric Franchi
Yeah, totally agree, totally agree. Makes sense. Maybe we'll give a quick shout out to startup. We all know and love Arcspan before we take it off. So Arcspan raised a $5.2 million seed extension. I know Ari is an advisor. My firm, Imperium, we are an investor. Chris, are you an investor in arcsman?
- [44:45]
Chris Feo
I'm not, but big fan of art and crew over there. They've been all the way back from their past lives. They're great partners and customers and just good people. So I'm happy to see them continue to succeed, for sure.
- [44:57]
Eric Franchi
And doubling down on AI and curation. Apropos the conversation today.
- [45:01]
Ari Paparo
Yeah. Just for those who aren't familiar, it's a publisher data tool where they help publishers sort of understand their data, make more of it, potentially do curation, stuff like that. So I like that space.
- [45:13]
Eric Franchi
Absolutely. Shout out to art and team. And with that, I think we got the refresh.
- [45:18]
Ari Paparo
All right. Well, this was an awesome episode, Chris. Thank you so much for being here. This is a great conversation.
- [45:25]
Chris Feo
Yeah. Gentlemen, thank you for having me. It's fun to be on the other side. I've been a listener, so I guess I'll have to hear my own voice.
- [45:31]
Ari Paparo
Yeah, don't listen to your own podcast.
- [45:36]
Eric Franchi
I will think of you both as we make our Sunday sauce this. This weekend.
- [45:41]
Ari Paparo
All right.
- [45:41]
Chris Feo
Yeah.
- [45:42]
Ari Paparo
Thanks, everyone, for listening.
- [45:44]
Chris Feo
Cheers.
- [45:44]
Eric Franchi
Bye. Bye. Thank you for subscribing to Market.
- [45:48]
Ari Paparo
New interviews are added every week at.
- [45:50]
Chris Feo
Marketing and your favorite podcasting app.
- [46:01]
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@adtechgod.com.