← Marketecture: Get Smart. Fast.
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- [00:01]
Podcast Host (Ad Read)
This podcast is supported by Walmart Connect. Hello, marketers. At Walmart Connect, you'll find things no other retail media has. Not only do they have the most shoppers buying all kinds of things like pet food, salty snacks and coffee makers, they get how shoppers tick and why they click. So they can help build your brand as well as convert the right Walmart customers. Because your bottom line isn't just about views or engagement. It's about the most valuable truth in advertising, that your ads work. So let's spark innovation, let's spark growth, let's spark sales. Walmart Connect.
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Ken
I'll be there.
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Paul Connectin
Will you?
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Ari Paparo
This is Ari and I'm talking about.
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Ken
Our upcoming Market Live conference in New York on March 10th and 11th. We've got an amazing two day agenda filled with top tier speakers and insights you can use right away. Some of the speakers we've announced already include Sophia Koluchy, the CMO at Molson Coors, Lance Armstrong, the General Partner at Next Ventures, Neil Vogel, the CEO of People, Joanna o', Connell, the Chief Intelligence Officer at Omnicom Media Group, Jeremiah Oweng, a General Partner at Blitzscaling Ventures. Of course, we'll have the Startup showcase.
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Ari Paparo
Like we always do.
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Ken
I'll be giving my keynote and we'll have special guests. For a live podcast, you should definitely.
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Ari Paparo
Look at buying a ticket.
- [01:19]
Ken
It's@marketlive.com and we have special arrangements for qualified brands, agencies and publishers.
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Ari Paparo
So go to Marketlive.com. Welcome to Market Podcast. This is Ari Paparo. I'm here with Eric Franchi and we have our special guest, Paul Connectin, who I've known for a long time. He is a marketing person who focuses on ad tech. He is definitely a thought leader in the space. He was the former CMO of Beeswax, so he's got the scars from working for me. You know Paul pretty well, Eric, right?
- [02:05]
Eric Franchi
I do, yeah. Paul. We might call him a serial cmo. He's had the CMO role at a bunch of notable ad tech companies or, you know, vp, Marketing, SVP of Marketing. And he's a real, he's a real systems thinker around marketing. He just doesn't, he doesn't think about like, all right, let's like make this post. Let's do these tactical things. Like, he really thinks deeply about marketing. I think he brings like a very good perspective. So I'm excited to have him on. He's a fun guy. So I'm sure we're going to have fun talking to him.
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Ari Paparo
Absolutely. And so we are Getting ready for Marketing Live, which is coming up in. I can't believe it's coming up like seven, eight weeks. So first of all, you should buy tickets. Market live.com but more importantly, we have the a lot of people's favorite part of the show, the Startup Show Showcase, and we're opening that up. So tell us what's going on, Eric.
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Eric Franchi
Yes, we're running it back for the third time now. The Startup Showcase. Past participants and winners include streamer AI. Mafi showed the world streamer AI at market one was acquired by Magnite. We had MadConnect. When the people's Choice last one, I actually invested in a company I first saw at Market Live. It has not been announced yet. It'll be announced over the coming weeks.
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Ari Paparo
That's exciting. I didn't know that.
- [03:26]
Eric Franchi
Yeah, yeah. ML1, we just wrote the check a few weeks ago. So outcomes are produced from being on stage at marketexture Live. And as of probably this morning, we're making our call for startups. So if you are a startup that is building AI based ad tech, particularly aligned with the theme of the conference around the changing of the consumer behavior. So you're building for CTV or gaming, you're building for performance, you're building for measurability, you want to be a market share laugh. The basically criteria is very simple. Series A or earlier, be an ad tech startup, build for those types of categories. We want to see, you know, something aligned with the theme of the conference. We're going to pick six finalists. You're going to be able to present, you're going to be able to be in front of all sorts of influential people. And we'll pick two winners, the winners by the judges and the winners by the people's champ. I'll be posting, Sonya will be posting. I'll be posting a link on the socials with the form to fill out. Encourage you to fill it out. I, I think we've got a couple weeks for submissions and we'll announce the finalists early February and it's going to be fun. I can't wait.
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Ari Paparo
Yeah, it's great. We had I think 60 applications for five slots last time, so it is pretty selective. There's no fee, obviously, although we expect you to come in person and present and it really is a great way to get your company out there in front of hundreds or thousands of people. So encourage you to look up Eric on LinkedIn. You'll see the forums, you'll be able to apply through that. So please do. All right. With that. Let's get into the conversation with Paul. Very exciting to talk about everything related to marketing in ad tech.
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Eric Franchi
And we're going to talk about OpenAI afterwards, people. So hang on for the news.
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Ari Paparo
Of course. I heard they had a big announcement. They missed our podcast last Friday with their something something ads. Yeah, exactly, ads. All right, we'll be right back. All right. Welcome, Paul Connecton. Paul, it's been a while. How you been?
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Paul Connectin
Yeah, I've been good. And you're one of the only people that I can count on to pronounce my name right. And maybe I'm one of the only guests who's going to know your name is Ari and not Ari.
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Ari Paparo
Yeah, well, you told me it's like connection once and that just did it. So, you know, it's like I used to work for the late Susan Wojcicki and she told me one day it's like Jet Ski. And then I was good. Like, you know, because she has a pretty challenging. She had a pretty challenging name. So you just gotta make it easy for people.
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Paul Connectin
That's right. And for any of the Dutch ad tech people, it's actually Knechten. So if you want to go hardcore.
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Ari Paparo
Wow.
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Eric Franchi
I don't know. Who are the Dutch ad tech people?
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Paul Connectin
I don't know, but they're listening. They're definitely listening.
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Ari Paparo
There was a pretty big contingent of like performance ad networks in Holland. BannerConnect being the most well known and I think Improve, which got acquired by Media Games, is based in Holland. But, you know, I can play that game for a while. So why are we having you on, Paul? Because you are like the fractional CMO to the stars. Right?
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Eric Franchi
Nice.
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Paul Connectin
Why do you think of them as stars?
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Ari Paparo
Why do we have you on?
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Paul Connectin
Tell me why do we do this again?
- [06:47]
Ari Paparo
No. So Paul, as we said in the intro, Paul was the CMO of Beeswax. That's how I got to know you. And since our amazing exit and. And all the benefits that came from that, you've been the man about town helping adtech companies get their message out. So what's the state, what's going on in ad tech world from a marketing and communications perspective?
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Paul Connectin
Yeah, so from a macro standpoint, I mean, I talk to a lot of midsize companies. I talk to some startups. So start. I'll start with startups. Like if you're not. If you're not doing something with AI, it's hard to get any of the oxygen. I mean, Eric, you can probably speak to this better than I can from your vantage point. But it seems like there's like an apocalyptic event and that's a good thing for innovation. But the way ads are going to be transacted, the way publishers exist in the world, the way that advertising will work online is fundamentally changing. And so I think there's a big rush of AI startups and it is very difficult to understand who is real, who's full of shit. That's true. Really, the whole ecosystem, I mean, everybody's on the AI lumascape and I'm sure Terry Kawaja is sick of getting emails saying why aren't we there? You know, we're doing AI. But so that's like Thing one, Thing two is like quietly, there's like a very prosperous, like old school programmatic RTB ecosystem, you know, chugging along and I think the key word there is consolidation. I do work with ID5, they're a great company. They just, they just acquired TrueData a couple months ago to build a more compelling value proposition, you know, and kind of like roll up some of the more classic. It's hard to, it's crazy to call it classic because this stuff is still innovative. But so that's like Thing two.
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Eric Franchi
And then I think there's like, and.
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Paul Connectin
I'm not going to name names in this one because I don't know if they want me to, but there is kind of a shadow part of the programmatic ecosystem that's sort of just like ad networks and they are quietly killing it. You know, you probably know some of them. But like I think and this will dovetail maybe into a later conversation about like what works in marketing in ad tech. But you know, the whole thing around transparency and everything has to be real time. All that stuff is great. But like buyers want to deploy money, they want to work, they want to have a report that can show their boss they look this worked and a lot of times it's not. It's some of the old school kind of ad networking looking things that are getting a lot of that spend and really high margins.
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Ari Paparo
So, so you're creating a marketing plan for one of these companies and you basically have a line that says like kickbacks and another line that says denim Jean parties.
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Paul Connectin
Right? I don't know. No, it's more just that they're deploying the budget themselves and they're kind of taking the risk and they're happy with that and it's not, you know, So I guess one of my, I don't know, hobby horses, pet peeves is like, I mean, I Came up through media math like it's. By the way, I mean, quietly, some of the best alumni of any company ever.
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Ari Paparo
Definitely great alumni network.
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Paul Connectin
Yeah. And I remember that was the first time I got burned trying to say that transparency is the most important thing that buyers care about.
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Ari Paparo
They don't seem to really care about transparency that much.
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Eric Franchi
Much.
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Paul Connectin
I mean, they do. All things being equal, it's worth something. But then at Beeswax, I think didn't we once have like a transparency privacy control or something like that was like there were three things that this is obviously pre my joining we were very.
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Ari Paparo
Big on transparency, but it actually mattered to our clients because they were often work. They were, their business models were often trying to create profits out of trading, so. So they weren't willing to lose any margins to anybody else. Whereas the performance advertiser, for example, talks a lot about transparency. But who cares if it's not transparent if the ROAS works?
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Paul Connectin
Right? Right.
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Ari Paparo
So wait, so let's go back to what you were saying earlier. So ID5 I think is a great example because I'm an investor, Eric's an investor. We've had Matthew on the show a couple times. I can't think of a harder product to market. It's like we're just like, it's an ID and we sell it wholesale to other ad tech and you don't need to know how it works. That's effectively how I would summarize the marketing pitch. Tell me why I'm wrong.
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Paul Connectin
And yet we're talking about it.
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Ari Paparo
Well, we'll talk about anything. This is not a good example. This is not a good case study here, okay? Getting me to talk about an ID is not your KPI for marketing.
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Paul Connectin
This is potentially true. And by the way, I can't take all credit for that. There's a lovely person named Valbona who is their SVP of marketing and I'm sort of helping them on a temporary basis. But anyway, I think the answer does it is because we're talking about them. If you were to walk the halls of CES a couple weeks ago and just mention 95 to somebody, they go, oh yeah, I saw Matthew speak. Or yeah, I talked to Matthew and you'll kind of get that same refrain over and over again. And it's not to devalue what they're doing with the technology because that's inextricable from their value for sure. But this founder led, CEO led influencer thing comes naturally to some people. I mean, look at you. I joke. I joke because Obviously, you know, I needed to be cmo, but I joke that like, why did Ari even need a cmo?
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Ari Paparo
Like, good question. I asked myself that a lot. A lot of our one on ones, that was the only thing going through my head.
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Paul Connectin
And I think, and to be fair to me, I think what I said was we just got to put a microphone in front of you, man, and there you are. So I do think there is tremendous value if you have something to say, if you're compelling, if you are. And I'm going to qualify this in a minute if you know, but if you have something to say and you're compelling, be out there. And it's okay for you to be kind of the face of the brand. It's a huge asset because people like to buy from people they like. I, on almost every meeting I have, I cite this one like Roger Sterling ism, which, you know, he said in Mad Men, which is like, I don't think you understand how much of this business comes down to, I don't like that guy.
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Ari Paparo
Yeah, that's everything.
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Paul Connectin
How many times has the inferior product won, you know, or oh, that sales team is running circles around us. But like our product's so much better. Yeah, well, bullshit. I mean, because your product is the whole experience. Your product is sometimes, how cool is your founder? How interesting is he? How does he make me feel as a customer? Is he teaching me something? Is he. Can I go to my boss and be like, I met with Matthew or I met with, you know, whoever it can. That personal side of it accounts for so much more of the success that these companies have than I think we give them cred credit for.
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Eric Franchi
What a great way to package the that thought up. Which is the product is not just the product. The product is every single touch point which includes, you know, a well known dungeon, kind of like, well, well night, well liked famous founder. And it becomes part of the experience. I never really thought about it that way.
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Ari Paparo
Well, Joe Zappa, your partner on the other podcast, he, he talks about this like founder evangelist thing all the time, right?
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Paul Connectin
Yeah.
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Ari Paparo
Do we think this is an ad tech, is this an ad tech specific thing? Because we all are going to the same conferences and stuff or if I'm selling like, you know, I don't know, AI driven cloud software, do I also have to be evangelist CEO?
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Paul Connectin
You don't have to. Here's the thing. It, it certainly certainly helps. We can all think of examples of companies, again who are quietly killing it or they're, they're doing great marketing with out that advantage, it's becoming more rare, though. We are in like this attention, this attention economy where it really is. If I was a vc, if I was you, Eric, I'd have a hard time investing in a CEO that wasn't personable enough to be able to play this game. I just think you're starting with a disadvantage rather than like Eric, you're starting on third base. The next. If you found another company. And that does make a huge difference. I mean, Brian o' Kelly can, from just saying something, he can make it true. The value of that, I think, is just immeasurable. But I think that one caveat is you really have to ground that in whatever your customer wants to buy. I think the mistake we make is a little crude, but I call it the circle jerk. There is an ad tech circle jerk to an extent where we really get excited about posting about what each other's doing on LinkedIn and X. And again, this is where something like transparency can sometimes be a red herring. Just, just harkening back to media math and not naming names, but like, you need to do the actual work of, or, you know, hire me to do the work of understanding, like, what, what pain are you solving and what do your customers think that sounds like. And then you can go and be an evangelist and tell, tell them about the future. But if you're just going to tell them about what you want them to think and what you want them to hear, unless you're Ari, unless you're Brian o', Kelly, like, you're going to have a hard time at that because you're not like, it's just based on what you think. And I think that is a mistake and that is unique to ad tech that we tend to do. Some companies think they're way smarter than their customers are.
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Ari Paparo
Right. Also customers, there's a pretty broad swath of customers. Some ad tech companies are selling to other ad tech companies, like an ID5 example, whereas agencies, brands, direct to consumer brands, those are all different sort of sub niches and they talk different languages. So, like, for example, I noticed personally that my influence doesn't really resonate with brands. Like, they don't care about the stuff I care about, which is fine. Like, there's nothing wrong with that. But if that's your business plan to get into the L' Oreals and, you know, PNGs of the world, it's a different kind of communication that needs to happen.
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Paul Connectin
Yeah, I would challenge you to the extent that that's true, though I think you uniquely do bring a perspective about the way things worked. At least from my tenure as your cmo, I saw quite a bit more interest from actual people with budgets than, you know, nine out of 10 of the ad tech companies. And look, if you're just selling to other ad tech companies and you're not expanding that circle, that, that's hard, that's hard to make a business out of that. And you're also really high risk because, you know, this whole thing that we got going is like, it's dependent upon the budgets that are coming from the buy side. At the end of the day, it depends on the publishers that they're buying from. We're in the middle, like, that's where we sit. And so you really do have to find a way to be relevant to both of those sides if you're going to have a durable business that's going to grow.
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Ari Paparo
So let's just talk about the buyers. Like, what is, how do you reach these buyers? Agency buyers, brand buyers? In today's environment, is it mostly tentpole events, be it can architecture live, I threw in a plug there, et cetera, or can you, what is it? Media, March 10th and 11th month. Please buy a ticket.
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Paul Connectin
So tickets are still available?
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Ari Paparo
Yeah, exactly. What's the current state of play?
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Paul Connectin
Okay, so I think there's really two main channels that matter right now. The first one is obvious. It's LinkedIn. We talked about that. Like being an influencer and posting on that. I mean, this, you know, we scroll on our phones all day long and like it or not, a lot of these folks are opening LinkedIn. They all have profiles. You know exactly who they are, how you can reach them, you know what they're posting about. You can go comment on their stuff. Like it's kind of a gimme. It's like a big conference that's really annoying that we're all at and we kind of all have to be there. And so the caveat there is, I think you're going to see way more AI slop. It is getting easier and easier as a CEO to be an influencer without actually doing anything and not without having an opinion. I think it's better than not being there. Like if you, you can't just post nothing unless you're like killing it and you don't need any more customers. So, you know, but I think being authentic and having a contrarian point of view, like, I remember you did this weird thing where you didn't even run it by me as your cmo, which was like, you did this, like March Madness Ad tech thing.
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Ari Paparo
Yeah.
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Paul Connectin
Okay. AI is not going to come up with that. It's not going to deploy that. It worked because it was unique. It was your voice, it was interesting. It was kind of stupid, but, like, whatever. Everyone tuned out. Who's going to win Critio or whatever. It was authentic. It had something to say. So I think you do need to have that. And I think that, that if I was a CEO right now, I would try to free myself up so I'd have time to actually write compelling stuff, to have a point of view, to engage people, to go comment on my prospects posts. Like to be present there. That's the first thing. Second thing is the tent poles. I just came off of ces. You weren't there, Eric. You were there. I'm guessing. I don't know if I ran into you, but I ran into like 200 other people in the halls, some of whom don't usually answer my emails, and then some of whom I'm meeting with next week because I ran into them. But that's. And buyers are there. I mean, you walk around, you'll see every major ad agency represented there, you'll see CEOs there, you'll see brands there. Like, it's a big deal. Ken's the same thing. Possible. Very similar market, of course.
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Eric Franchi
Yeah.
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Paul Connectin
The thing that's important, though, is like, okay, so it's a story arc, like ces, okay. People are getting drunk, you're hanging out, you're Monday night you're at this bar. Tuesday night, you're at that bar. You got to kind of figure out the flow of it, but it's like, that's the beginning of the year. They're talking about what their priorities are. So you have a conversation. Then what are your. What are your 20, 26 goals? Like, what does it look like? Then you're going to see them at Possible, or you'll see a market cap, Then you're going to see them at Possible, then you're going to see them at Cannes. Like, B2B marketing is a contact sport. Again, Roger Sterling. Picture him in your head, like, have drinks with them, hang out with them. They'll go, they'll want to buy from you. But listen to what that story arc is on their end and build your conversations with them around, filling in the blanks on that. That it's not just one touch point. You know, you've got these tent pole events, you've got whatever LinkedIn you've got just stuff you're able to share with them. I just Think be as relevant as you can and have that story arc. Don't just, you know, kind of scattershot. Try to, try to say stuff. And again, I can't. I can't stress this enough. Like validate, figure out, talk what I do. I talk to five customers. I figure out what is actually their pain. What do they think about. You base it in that so you're not falling into the, like, we can talk about ad CP all day long. I didn't hear one actual practitioner bring it up or bring up agentic when I was at ccs. They have other priorities. Yeah. Shocking that they have other priorities that are not agentic, despite the fact that I think it's a really important conversation. So it's like grounding it in these kind of like priorities that they actually have, I think is an important caveat to be at these events though. It's usually important. Yeah.
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Eric Franchi
I just want to connect two things that we talked about. So the ad tech universe having this gap in between us and the brands and agencies, I think is real to Ari's point. I think there's work that we all need to do there. And then your point on what really matters. I was at ces. I wasn't hanging out at night. That's probably why we didn't run into each other. But I participated in a couple of closed door events, one of which was from an agency who wanted to have AI startups, AI solutions presented to their brands. And we're Talking about Fortune 50 brands, like the biggest of the biggest. And one of them actually, I can tell you it was at noon research John Hochter, who's amazing and I think is maybe one of the industry's best translation layers in between kind of like brands and all this geeky stuff.
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Ari Paparo
He's coming on the show in February, early March.
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Eric Franchi
I'm so excited. He's amazing. Port co CEO, but he is amazing. Anyway, he's like, hey, just here, quick rounding, show of hands and just brands and us as the kind of stewards of this and the agency. We're in the room. How many people here have heard of at CP before I start getting into it? And two people raised their hands, Eric Franchi and Joe Zawadsky. Room full of brands, room full of agencies. It was very much grounding, like, whoa, like we are so obsessed with this. We think there's so much, you know, potentially here, there's so much to do and they're just like thinking about, you know, my, my next creative, you know.
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Ari Paparo
Right. But that's not that different from the TV world either. Right. You know, you talk about Mad Men and Roger Sterling, like they would bring in these brands from the hinterlands and take them out for steak dinners and they didn't, you know, it was not a lot of in depth conversation about CPMs and GRPs and whatever worked in the 60s.
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Paul Connectin
So let's take a page, let's take a page out of their book then, right? I mean, has it changed? It's changed, but like it's still grounded in that same kind of thing. You're doing business with people. It's a people business.
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Ari Paparo
Yeah, that's the whole point of agencies, is to abstract away complexity. Right. A marketing manager at an insurance company should not worry about ad cp. That should be like pretty low on their list.
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Paul Connectin
Yeah, that's a good point.
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Eric Franchi
Creates the opportunity for the agency.
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Ari Paparo
But Paul, let's talk about AI and let's talk about just like the swirl, I think you called it previously a startup apocalypse. It's pretty hard to differentiate out there, right? Because on the one hand everything sounds the same. On the other hand you have this existential dread like oh, AI is just going to eliminate this entire category, let's say of creative or whatever. So what are you seeing out there?
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Paul Connectin
Well, we all sound the same. Thing is not new. You can date that back to every DSP sounds the same, every SSP sounds the same. And again, I'll just keep hammering this. It's a lack of understanding like what that buyer wants to hear and just sort of like basing it on what we think an SSP ought to be or we think a DSP ought to be or worse, what we think our valuation should sound like. I think with the AI thing it's just such a broad topic. What do you mean? Is it AI, workflow solutions, AI, creative solutions? Are we talking about OpenAI, which I, you know, which is in the news. Like it's, it's such a broad topic and every company is positioned like you don't need to add an AI bot to your product just because like I, that, that kind of thing I just think is a little bit divorced from the, you know, actual like use cases that people are going to want it for. And I, I think there's an opportunity if you can differentiate by just speaking clearly and solving a real problem. Like the fact that you're using AI to do it, I think gives you extra points because that person that you're selling to an okr, that's like find a way to incorporate AI into our workflows. Sure, and that's real. But the problem that you're solving, I think, is the central thing first. Figure that out. And I get it though. You want to raise money, you want to get Eric to write the check, so you gotta tell the AI story somehow. Maybe they're not as sophisticated as Eric, which is worse because then it's like a mainstream VC and they haven't really loved ad tech for quite some time. So good luck with that. But if you're gonna. You can probably get away with calling yourself an AI company and raise a bunch of money. So it's causing this problem. There's a lot of companies that we don't know what the hell they do. They're vaguely some sort of AI wrapper and there's just. There's gonna be a shakeout of that. But isn't that exciting? I mean, that's. That's what it's supposed to be, right?
- [25:43]
Ari Paparo
Eric, do you see any. Any decks without AI in them anymore?
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Eric Franchi
No. Zero.
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Ari Paparo
Yeah.
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Eric Franchi
Zero.
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Ari Paparo
I've seen a couple, like, people send me decks sometimes for like before they send them to you and they're like, hey, what do you think of this business plan?
- [25:55]
Paul Connectin
Not enough.
- [25:58]
Ari Paparo
Put some AI in it.
- [26:01]
Paul Connectin
You should have an eric. An ERIC franchise AI bot that like, reads the deck and then says, like, this is ready for Eric or it's not ready for Eric.
- [26:09]
Ari Paparo
The industry, I mean, the one industry that is absolutely ripe for AI disruption is venture capital. I mean, there's just no reason to have human beings involved in that.
- [26:19]
Paul Connectin
No, that's not fair. Ari, come on. He's right here.
- [26:23]
Ari Paparo
You read the deck, you push out a term sheet. It's an AI capable function. So Paul, my favorite thing, my favorite Paulism is I may not get this exactly right. It's like, do you have a marketing problem or do you have a real problem? Is that the paraphrase?
- [26:39]
Paul Connectin
No, it's. Is this a marketing problem or is this a problem problem?
- [26:44]
Ari Paparo
You explain this to. To us.
- [26:45]
Paul Connectin
Yeah, yeah. So sometimes companies will have a problem. Like I'm trying to think of an example that, that. That sounds like, well, you know, people aren't buy. And, you know, and so we need to do a whole bunch of marketing because they're not buying a product. And my question will be like, is this a marketing problem? Is this a problem problem? Like, why aren't they buying a product? Well, they just, you know, had people heard of it? Yeah. No, when we pitch it to them, it just doesn't land. So, you know, and that may be a Marketing problem, but probably not. Like you're, in many cases, this could be a product market fit problem or this can be your market is too small problem. I know, let's, let's poke fun at ourselves. Like at Beeswax, you know, we made it, we had what I call hand in glove product market fit for a certain type of customer who wanted to build their own dsp. And it was just rock solid. And upon that we had a great outcome. You built a great business. I was glad to be along the ride. But the, our, like, if you wanted to say, okay, now let's, let's expand that to brands. Let's sell to a whole bunch of brands and sell them on the vision of we want to have our own DSP and own everything. You know, transparency and control. That's not really a marketing problem. It was not a problem of getting awareness or positioning it to them. It was literally a problem problem. And you can call that a product problem, you can call that a company problem. But I think like one of the biggest value adds that any good marketing strategist or marketer can bring to you is just the ability to like triage that. Like, is this actually a problem we can stall, we can solve? And I, I sometimes call those story problems because that breaks it down. Like, is this a problem in the way we're describing it to the market? Is it a problem in the market? Like, like, are we just not out there? Or is this fundamentally some kind of structural problem with who we've decided as our customer versus what our product is?
- [28:28]
Ari Paparo
Yeah, at Beeswax, we really pushed hard at these marketer directs and it turned out the dog didn't like the dog food. For the most part. It was not a marketing problem. So that's a good explanation. But I do like that because a lot of folks especially who have had some success in the market, they think the expansion success problem is marketing, when in fact it might just be they've reached the early adopters and they haven't gotten to the mainstream.
- [28:56]
Paul Connectin
Right. I always say, like, if you as a founder can't sell this product to the type of customer you'd like us to market to, that's a, that's a problem. I mean, like, I think the first thing is you ought to be able to sell it on some sort of small scale to understand, like, what do they think the value is, then we can scale that out. But if you need marketing to help get you your first customers in a particular segment, I think that's super duper risky.
- [29:19]
Ari Paparo
All Right. On that note, let's call it. Let's take a quick break. Paul, thanks for those insights. You'll be back with us for our refresh news of the Week, where we have a lot, as usual, AI news. It's always AI news. We should just rename it the AI News of the Week.
- [29:33]
Eric Franchi
That's great news, Chad.
- [29:35]
Ari Paparo
All right, back in a second.
- [29:38]
Ken
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- [30:20]
Eric Franchi
All right, everybody, back with the AI refresh. Only slightly. Kidding. So for this week's news, we have big AI news. We're going to talk about it. We're going to talk about OpenAI, I promise, folks, and we're going to talk about a lawsuit and some CTV news. So let's get into it on Friday. So disrespectful, so disrespectful to drop the OpenAI ads announcement on a Friday when they could have gotten so much attention with the market extra pod. We'll talk to Sam later on. OpenAI announced that they are going to be rolling out an ads product. So I'll walk through it, just kind of get the level setting in and you guys can start to weigh in afterwards. So what's going on? OpenAI is going to be rolling out ads in their free tier, which currently has some limitations around image generation and other things like that. And that tier will have ads paid. Tiers will not. They had a list of principles which I think are interesting and what we'll come back to probably that included things like answer independence. Ads won't influence answers, choice and control, meaning you can turn off personalization, long term value, meaning, and this is a direct jab at Meta. We will not optimize for time spent. We'll optimize for CX and utility tests going to be rolling out over the coming weeks. They showed some mocks of ads in context to conversations. I can attempt to put it on the screen if we want to look at it. And also in the announcement, they tipped that the ads can be particularly helpful to small businesses, obviously, following along the Meta and Google route of millions of customers. Talk about the ads first and then we'll talk about a couple of reactions people had from there. So give me, guys, what's your take?
- [32:09]
Ari Paparo
I think it's been obvious forever that they're going to have to dive into ads. Some folks, like Eric Seufert have been talking aggressively about this. Ben Thompson from Strategiary has been very vocal about this. There's just no way to monetize a very, very large global footprint without addressing the majority of the audience who's going to be unwilling to pay. Right. So that's how you pay for things in the modern economy. There are no exceptions to this rule, with the exception of maybe Apple, but they sell their products, so inevitably there is going to need to be ads. I don't think that they've done a fantastic job of setting this up. It feels a little rushed, feels a little ad hoc, like, let's just get out there and do something. But that's how OpenAI seems to roll on all these issues.
- [32:56]
Eric Franchi
Yep. And here's a. I put it on the screen. Hopefully you guys can see it and the YouTube will see it. An example of the ad. And I mean, it makes sen. Right. It's in context. Somebody's asking for recipe ideas. There's a can of a bottle of hot sauce here. So it makes a lot of sense.
- [33:13]
Paul Connectin
Yeah, I mean, it's AdWords.
- [33:14]
Eric Franchi
Right.
- [33:15]
Paul Connectin
Like, I think the success or failure of this depends on whether OpenAI becomes Netscape, like folks are saying it could, or. I mean, this is really where Gemini is going to kill it. And I think its implication for the ad tech ecosystem has a lot to do with who winds up winning. That Google, having a lot of antitrust scrutiny on it right now gives me a little bit more comfort that if Gemini winds up winning this game, that the ad tech ecosystem as we know it is not just completely dead, but if everyone outsources their decisions on what appliances to buy or whatever to OpenAI, if I'm OpenAI, screw all of you. I'm just going to build this. I'm going to do what every other walled garden did, which is I'm going to build everything I want from the ground up. It's going to be all mine and I don't need you. And so I think that is a massive threat.
- [34:01]
Ari Paparo
So the tricky bit here is that this business likely is very analogous to search, which is there's a lot of variation in the search terms just between the Search terms, the intent, the geography, things like that, which means that there's a scale problem. You need a very, very large number of advertisers and we're talking millions, millions of advertisers before you get to any sort of efficiency in producing the best outcomes for both the advertisers and the company. And really no one's been able to do that except with very few exceptions which is Google Meta and Google and Bing. No, no, Bing is there, Bing's at. But Bing is much less efficient than Google. But they've got the millions of advertisers. And so I think that's part of the reason why in the. You haven't gotten to this yet. But the leaks that is going to be CPM based pricing instead of CPC based pricing, which is what everyone expected, is probably a acknowledgment that these are not going to be very, well, very tightly targeted for a while.
- [35:05]
Eric Franchi
Yeah, yeah, I think that makes sense. So what Ari's referring to is according to the information they'll be charging not even on a CPM on a cost per view basis and asking for a million dollar in spend commitments from brands that'll run over a few weeks. So number one, brands are going to be falling all over themselves to be first here. So they're going to have a line out the door. A million dollars is nothing. And then on side like this is the way you roll it out. You roll it out on a limited basis. You roll it out with very simple pricing. I, I put, you know, there's people piping up about this on, on X like this is some sort of tip of the hand of you know what the product is, is going to be. This is exactly, exactly how Google rolled out AdWords. We were one of our agency, the, the, the predecessor to undertime. We were one of the first buyers of Google AdWords inventory. So when it was just an exc, like blue stripe under the search bar and we bought it for orbit and we bought a few keywords and we bought it. It was either CPM or fixed placement but it was the most ridiculous cpm. And that thing just cranked and we were like okay, no problem. Like however you want to like charge us, we're going to keep doing this. It's just the precedent. Right? That's why Netflix came out with $65 cpms, $80 cpms. This is just how this stuff works. I think over time for sure this is going to be performance oriented.
- [36:32]
Ari Paparo
Yeah, totally agree. Snap. When they rolled out ads, I think it was A million dollar minimum or a Half million Apple Iads back in the day was a half million minimum.
- [36:40]
Eric Franchi
$4 million or something.
- [36:41]
Ari Paparo
Yeah, there's a newness thing. A new ad unit that no one's ever seen will outperform, will outperform wildly because consumers aren't bored of it yet. So this is easy money and probably get a lot of clicks for whoever participates, but it's not the long term vision here.
- [37:00]
Paul Connectin
Yeah, I agree.
- [37:01]
Eric Franchi
Two, two, two final points here. So first, Bach had a, had a good newsletter that he dropped. You know, basically pushing back on the idea of answer independence and, you know, saying like, actually like the best ad product is not going to be completely independent. It's going to be delivering on, you know, what the user wants. I recommend everybody check it out. And then number two, this is kind of connected to Gemini. Ben Thompson said, man, like they could have rolled this out in 23 and it'd be janky and figured it out and had like a fantastic business in 26. Because of the route that they took and the way that Sam Altman talked about advertising, people are expecting perfection. So while I'm of the camp that this is going to be a good product and it's going to work, like there's going to be a lot of people looking at this thing and expecting and wanting it to fail.
- [37:50]
Ari Paparo
Well, Ben Thompson saying they're too slow and then Demis from Google saying it's too fast and it's rushed out or throwing shade at them at Davos. Yeah, we'll see. I think the big question everyone's asking in private is how desperate is OpenAI for revenue? Because there have been conversations about OpenAI going public this year. And then separately there are conversations about OpenAI going bankrupt this year because they have such enormous burn and so much commitments to data centers and going to space and having a device that's been rumored to have an expectation of selling 50 million units in the next 18 months, which are, you know, these are all extremely ambitious swings and revenue would make a lot of those things easier.
- [38:37]
Eric Franchi
You know what they need to do?
- [38:39]
Ari Paparo
Tell me.
- [38:39]
Eric Franchi
Better call Paul. They're not controlling the message.
- [38:44]
Paul Connectin
That's great. I'm going to see that's you're a better marketer than I am there. You're even dressed appropriately for it.
- [38:50]
Eric Franchi
You look like a lawyer.
- [38:52]
Paul Connectin
Right. Well, I'm in London right now, so I had to. It's the most British outfit I own. I can't wait to see what Grok puts together after this. This is going to be Great. Like what are they going to do?
- [39:03]
Ari Paparo
I mean X doesn't seem to care about ads at all as far as I could tell. I mean they make some noise that it's going really well and stuff but like I don't see much going on there.
- [39:12]
Paul Connectin
Yeah, but it's an ego thing. I think if OpenAI gets a lot of credit for doing this, if they execute on it well and it really does drive revenue, you're going to get some like hackneyed, slapped together version of it that GROK will do and like, you know, like, I don't know, they'll be, you know like advertising Nazi paraphernalia or something. Like it'll be, it'll be as bad as that as far as I can tell.
- [39:33]
Ari Paparo
Let me put my logo on the side of a, of a SpaceX rocket. That, that's a good ad slot in, in the Elon world I think the best ad slots the rocket second best is the Tesla dashboard and you have to go pretty far down before you go into the xx.
- [39:47]
Paul Connectin
I think it's the grass. Yeah.
- [39:50]
Eric Franchi
Final point on AI Gemini is not going to be having ads in it. They're going to take their time, they're going to be putting ads everywhere else collecting data and then we will see where it goes.
- [40:02]
Ari Paparo
But everyone's confused about this announcement because there are ads in AI Answers in search which are powered by Gemini. So it seems like a little bit of a ridiculous thing for them to.
- [40:13]
Eric Franchi
Be saying they're keeping this I think is a direct response to ChatGPT having ads. Gemini is the ChatGPT competitor. There's AI mode, there's answers, there's all sorts of things. There's direct offers. This is specifically about like no, we're going to be follow, we're going to wait and see and then we're going to turn it on. Which I think is fascinating and probably the right way to do this just knowing they can react to OpenAI. All right, let's move on.
- [40:44]
Ari Paparo
CTV.
- [40:45]
Eric Franchi
Three things here. So number one, man, this is rough. A judge found Edo. Is it Edo or Edo? Okay, Edo TV measurement company. A judge found that they scraped data From I Spot TV built products allegedly and must pay a big $18.3 million fine and the company has. They are going to appeal for any company. That type of fine is going to hurt.
- [41:17]
Ari Paparo
Yeah, that's a problem.
- [41:18]
Paul Connectin
Problem. That's not a marketing problem.
- [41:20]
Eric Franchi
Yeah, you got a problem.
- [41:23]
Ari Paparo
Yeah, I read some of this. It appears that they had a license to some I spot data but not others. And Then they scrawled it or something. Yeah. So it's not great.
- [41:33]
Eric Franchi
Yeah, yeah.
- [41:34]
Ari Paparo
I don't. I've never run into Edo in the marketplace. The only thing I always hear is like, Ed Norton's big involved, the actor. But I don't really know very much about them.
- [41:44]
Eric Franchi
Yeah. The TV measurement company competes with I Spot and seems like I Spot has had enough of it. We shall see here. Here's one that's interesting. So Netflix doubled their ad business year for year on year three of selling ads to 1.5 billion and they're looking to double again this year. So a billion dollar business in, you know, CT is significant. So it's not like insignificant, but relative to what their potential is. Right. 190 million users, the comps. YouTube is at 4 billion. I think Disney's right around there. And the market size of 40 billion. There's a lot of room to grow here. But so far it's a impressive trajectory.
- [42:33]
Ari Paparo
I think come a long way from announcing sort of a weird deal with Microsoft and trying to rush into the market versus now having a substantial recurring business business that's growing. I think people did expect it to be a bit bigger than that by now, but, you know, nothing to sneeze at. It seems like one bill is kind of. One bill in media is kind of the cut off where you start becoming like a real player, you know, I think Madison Wall tracks who are the top 20 sellers of ads globally outside of China, and this puts them in that list.
- [43:05]
Eric Franchi
Yeah, well, with YouTube, YouTube's CTV business, to be clear, is $4 billion, a market size of about $40 billion. What do you think? Netflix, if they turned on the jets and they really did everything right, could be maybe as a percentage of the market or just like overall it's really.
- [43:25]
Ari Paparo
Tied to how much they push the free subscription tier because they have a model where the vast majority of their customers aren't seeing any ads. So that's really the needle mover. And unlike some of the other ones that have more blended models, the needle.
- [43:42]
Eric Franchi
Mover is actually sports. If you've watched some of the live sports programming on Netflix, the ad experience is actually like really, really. I mean, it's good. They're serving a lot of ass as an ad person. It's good. So to the extent that. We'll talk about this in a second, they continue pushing into live sports and some of the combat sports stuff that they've done, which they found real success with, I think they have an opportunity to really leapfrog on that. And they don't need to worry about the ad tier versus the paid tier.
- [44:11]
Ari Paparo
Yeah, the biggest story in the next couple of years is that the NFL has an opt out of their contracts with all the broadcasters. I think is 20, 29 is the opt out or maybe 28. So that means that negotiations may start as soon as this year for figuring out who's going to own those rights. And that's a really big story for some companies like the CBS and Fox that. That are gonna feel really outgunned by the Netflix and YouTubes of the world.
- [44:41]
Paul Connectin
Yeah, I was gonna just comment that aside from Netflix, I mean, live sports is like one of those things that's like the. It has this immunity to all this apocalyptic stuff happening with consumer behavior. There's a company called Minute Media that's doing great, great work in that. Both an ad tech company and they're also a publisher and have a bunch of O and O, and their focus is sports. And it's like one of the, like, you can't get an AI summary of the Super Bowl. You want to watch it. Like, you don't want to see two robots playing against each other. So that is an interesting model for live stuff. Entertainment sports, like that stuff is pretty durable and generates a ton of revenue.
- [45:14]
Eric Franchi
It is. And this is another one, you know, we'll roll into the next one. So Paramount, there's an announcement, it hit ad week last, I think it was yesterday or the day before, where Paramount is going to be rolling out Programmatic guaranteed in live sports starting this weekend with the UFC fight on January 24th. So they're doing two things. Number one, they've got this just guaranteed fixed placement that they've been using across all things Paramount, not just for sports, but you can just have a fixed placement and just be the first advertiser on the stream. And then the other side of it is they're making PMPs available for biddable buying for live sports across all the major DSPs, DV360, TCD, Amazon, Yahoo. I'll remind you guys that UFC is now, via Paramount, fully streaming. It is the first league, the first, you know, like rights owner that is fully streaming. And they're experimenting with like modern ad tech practices to like fully monetize this thing. So if we think about the path might be fully streaming for NFL, I would say watch what Paramount's doing with their UFC deal, which was $7 billion that they bid for, because ultimately it's going to be, you know, very much driven by ad tech.
- [46:37]
Ari Paparo
Yeah, I think programmatic Guaranteed is a really good fit for live streaming, whereas normal RTB is not. The infrastructure, both on the sell side SSPS and the buy side, DSPS was just not built for the concept of live streaming where you have, you know, a single event that could use all your pacing, all your frequency caps, half your budget for a campaign, you know. You know, most setups in DSPS are aimed to prevent that from happening. You do not want to do that. And so Programmatic Guaranteed, sort of you referred to it as biddable, but it's really not biddable. It's like it's using the RTB pipe so you get everything in one spot, but it's not biddable. It's guaranteed, which is a really good use case.
- [47:23]
Paul Connectin
If the rights to UFC were 7 billion, what are the guesses on what the rights to NFL are going be to be?
- [47:28]
Ari Paparo
Well, NFL is the number one sports product around the world. It monetizes vastly more than any other, any other, you know, form of sports. And it's going to be in the, you know, I don't know, I don't know what the current number is, like 40, 50 billion a year or something like that. It'll probably be up from there.
- [47:49]
Eric Franchi
Yeah, I did a quick search. It is 110 billion million a year, is that right? Yeah, something like that.
- [47:57]
Ari Paparo
So the trust.
- [47:58]
Paul Connectin
How much of that's going to go to a perium companies for powering all that is the question, you know.
- [48:04]
Ari Paparo
The question is how much of it's going to be biddable? Right, because like every time a single NFL broadcast moves from a, what you call a traditional broadcaster to eat to a walled garden, a whole bunch of ad tech people die. Yeah, Thursday Night Football that like murdered a whole bunch of folks in blue blazers. They all just drop dead.
- [48:32]
Paul Connectin
Do they get buried in the ad tech tuxedo?
- [48:36]
Ari Paparo
They do. It's a mass grave, unfortunately.
- [48:39]
Paul Connectin
You guys need a cartoonist. You need to hire whoever used to do the attic stage of cartoons to draw Ares crazy images that he's building in our heads with this.
- [48:47]
Ari Paparo
I'm just thinking of the most, the dark. It's such a dark, you know, a whole bunch of like, you know, middle aged white guys in blue blazers go into a mass grave off the Croisset in Cannes, like with a plaque that says they used to sell biddable ads and then Amazon took the rights.
- [49:07]
Paul Connectin
All right, you're going to put that into ChatGPT and generate an image after this and make that the image for this podcast.
- [49:14]
Eric Franchi
We are definitely, definitely not going to do that. Who you got this weekend end guys? Gai versus Pimblet and ufc.
- [49:23]
Ari Paparo
Oh, I thought you're talking football. Like, what?
- [49:25]
Paul Connectin
I don't hear what you're talking about, Aaron. He's talking about wrestling or mma. Mma. Fastest growing. Fastest growing sport in the world, right?
- [49:36]
Eric Franchi
Yeah, absolutely. Yeah, absolutely.
- [49:40]
Paul Connectin
I'll check.
- [49:41]
Eric Franchi
I'll check back with you guys in 2027.
- [49:43]
Ari Paparo
I've never. I've, like, literally never heard of either the two names you just suggested. Like, I just not. Not on my Right.
- [49:51]
Paul Connectin
I'm sorry, is Hoist Gracie still. Still fighting? Is he.
- [49:55]
Eric Franchi
Ho. Is not fighting in the UFC anymore? I didn't think so, but he's still. Yeah, he's. He's still rolls. I see him on it on Instagram all the time.
- [50:05]
Ari Paparo
I'm rooting for Sam Darnold, the former Jet, just so he wins the super bowl and makes the jets look even worse than they do now.
- [50:12]
Eric Franchi
Amazing. Guys want to call you here.
- [50:14]
Ari Paparo
Let's give a shout out to Gamera.
- [50:16]
Eric Franchi
Sure, absolutely. So Gareth Glazer, friend of. Can we say friend of the pod.
- [50:23]
Ari Paparo
Yeah, maybe a frenemy of the pod. I mean, he hates ad tech, so, you know.
- [50:28]
Eric Franchi
Okay, all right. You stole the punchline. So Gareth Glazer, longtime ad tech practitioner and founder. He founded rtk, which was acquired by Magnite. He has a blog and he's got his screen name. Gareth hates ad tech. And it was announced this week that he has a new ad tech company called Gamera and Aperium, a specialist ad tech fund. And TTD's TD7, the corporate venture arm for the largest independent ad tech company, both invested in this guy who says he hates ad tech. Gareth doesn't hate ad tech. Gareth hates what's bad about ad tech. And he is a missionary on trying to fix it. And I'm so excited.
- [51:11]
Ari Paparo
What does it do? What does Camara do?
- [51:14]
Eric Franchi
Think of Gamera. So I. The origin of the name. I'm sorry, it's like there's some sort of like, like niche content, like, I don't know, like a movie or something like that. What Gamera, the startup is doing is they're building, like, signals for the open web. Think of it a little bit as kind of like next generation of Sincera. What you might have done if you wanted to go long here in an age where, like, buyers need, like, more high quality signals to both identify quality inventory, but then identify performant quality inventory, he's building that. So implementing directly with publishers, building a set of unique signals. His mission is to, like, take money from Meta, Google and Amazon and bring it to publishers. And he showed me some incredible data that shows, if you do this right, like, the Open Web can be as performant as Walt Garden. The thing about Gareth, which this is a pattern that I. That I haven't seen too many times, but when I've seen it, it's turned into, like, something is he challenged my thinking so much on a category that, like, you know, all of us are questioning. And he came with data, he came with receipts, he came with passion and such a contrarian approach that we were very compelled.
- [52:30]
Ari Paparo
All right. He's part of the App Nexus mafia. Hard to bet against some of these, like hackers that popped out of App Nexus. Got the training under Bach, or training is a broad word, but a lot of successes. Triple if sincera, et cetera. So that's always a good bet. Yes.
- [52:51]
Eric Franchi
Right.
- [52:53]
Ari Paparo
I'll take it. All right.
- [52:57]
Paul Connectin
Yeah.
- [52:57]
Ari Paparo
Well, thanks, everyone, for listening. Paul, thanks so much for being here.
- [53:00]
Paul Connectin
Thanks for having me. Thank you for subscribing to marketecture.
- [53:04]
Ari Paparo
New interviews are added every week at.
- [53:06]
Eric Franchi
Marketecture tv and your favorite podcasting app, Sam.