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Episode 167: How Infillion Bought Catalina and How it Fits with MediaMath
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A
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A
Welcome to Market Podcast. This is Ari Paparo. I am here with Eric Franchi, and our guest today is Richard Rob Emrich, who is the founder and executive chairman of Infilon. We wanted to have Rob on because he just made some big news when his company acquired Catalina. Eric, were you surprised when you saw that news about Catalina?
- [01:40]
C
I was surprised, yeah. It kind of came out of nowhere. But then when you take a step back and you look at some of the things that we've been talking about in this podcast for some time. Right. DSPs differentiate and Fillion owns MediaMath, obviously. Um, it's with unique inventory, it's with unique data. And Catalina, which we'll get into later on, is an extremely valuable and extremely unique set of data, which puts, I think, Infilion in a. In a pretty interesting space. And I can't wait to talk to Rob about Infilon General. I think it's a little bit of a misunderstood company and, and he had a very unique path and he's a. He's a funny and engaging guy. So I'm just looking forward to having a conversation.
- [02:18]
A
Yeah, absolutely. It's definitely a company most people are not keeping a close eye on, but they have some really exciting assets. And now with Catalina, they also have printers and receipts and kind of an interesting combo. We'll see how that all comes together. So we're recording this on April 2nd. So did you survive April Fool's Day. Did you get fooled?
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C
I did not get fooled. I stayed off the Internet for a bit yesterday, so I missed some of the gags and bad jokes.
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A
The Ivy did you get? No, I didn't get covered. The IV was pretty funny. They came out with a technical standard. I forget the acronym. It had a complex acronym for determining if a food was a sandwich or not. So the meme about is a hot dog a sandwich? The IB Tech lab is taking that on with their technical standard. That gave me a chuckle. Didn't fool me.
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C
Yeah, that's a good one. Missed opportunity by adtech. Did ad tech do anything?
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A
No. He did. He posted to LinkedIn AdTech Hog, which was our motorcycle repair offering from Architecture. In previous years, we did ad tech Dog, which is a domain we own actually, where you can post your dog photos if you're an ad tech. I don't think it's live anymore, but it was live for a while, so that was okay. There's some good ones. The problem is that some people post things that are where you're like, is that an April Fool's? You should just do that. I don't know if you saw, but the state of New Jersey, where you're from, they post an April Fool's joke saying that they're going to allow people to pump their own gas in Jersey. And that just made me angry because, like, yeah, hell yeah, I want to pump my own gas in Jersey, but I can't because. And you're making fun of me through April Fools. That really didn't land well with me.
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C
Now, now that was insensitive.
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A
Very insensitive.
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C
Yeah, yeah. It always takes longer to get gas in your car in New Jersey because by law you're not allowed to pump your own gas. But then conversely, we have some sort of like, tax thing where gas is actually cheaper in New Jersey, so you get a full service experience. And I think in most areas of Jersey it's cheaper. I don't know the reason why. Maybe somebody can, you know, add me on the. On the socials. But yeah, no, that was. That was insensitive.
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A
That was very insensitive. Right.
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C
Yeah, I wanted to do one. I wanted to do something, you know, but yeah, I just, I didn't have the opportunity. I had this idea that you said, you know, kind of getting back into being an operator and I'm joining, you know, insert Intercon Imperium startup as head of adopts tracking 2, 300 by 250s and getting back in the trenches. But I don't think I really appreciate it.
- [04:57]
A
Yeah. The problem is, like, sometimes it's hard to tell. It's hard to tell if it's a joke or not. And, like. And even if it's a really good joke, like, if you said, well, like, tomorrow I'm going to be podcasting from the moon as part of the Artemis Project, there will be somebody in the comments who does not get the joke. There'll be someone that says, like, wow, that's amazing. How did you work that out? And, you know, that just takes all the air out of it.
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C
Oh, my God. Anyway, we should get into the.
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A
All right, let's get into it with Rob Emrich from Infilian and hear about his acquisition of Catalina and the rest of his growing empire. All right. Welcome Rob Emrich, the founder and executive chairman of Infilon. Rob, thanks for joining us.
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D
Thanks, guys. I feel like I am now officially like, an adtech insider after.
- [05:46]
A
After 10 years. 10 years in the. In the. In the dungeons of ad tech. And it's attending this podcast that finally got you in.
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D
It is. It's like I dubbed thee an ad tech insider. So thank you for. For inviting me and for having me, because.
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A
All right, we're done here. You've been.
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C
Thank you.
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A
I'm out. People can now refer to you as Sir Rob. And we're good.
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D
Yes. I think you can bestow that on her, Ari and Eric. Yeah.
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A
All right, well, 10 years later, infilion is kind of an interesting company. Now you own Catalina. That's pretty big news. That's what prompted us to have you on here. So when you go to CVS and the receipt is, like, 2ft long, we could blame you. Is that the situation?
- [06:30]
D
Yes, but only if you're going camping and you need to, like, some fire starter. In that case, that's us. In other words, if you're not going camping, then, no, that's not us. And that's actually. Those big receipts are not us. I've learned a lot about the paper receipts business, but those are not currently part of the Catalina network. It's a separate printer that does color prints. So we are not harming the environment. All right, it's the anti scope 3 pitch, right? Like, while they're trying to fix greenhouse gas emissions, we're just trying to destroy trees.
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A
At least half of our listeners have no idea what we're talking about. Why are we talking about receipts? Why are we talking about printers and color printers? Okay, so let's go back to basics. You bought a company called Catalina, which had A storied history. It had been around. It had been part of Nielsen, I guess, or they had a joint venture. What did you. What did you buy? What do you currently own in Catalina?
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D
Yeah, I mean, Catalina is. I think it's one of the most interesting companies that I'm aware of in advertising and marketing. When we were doing research on it, I found, like, an HBS case study from the 90s. It's really like a fascinating business. Yeah, it got its start, you know, it's thought of, I think, externally and internally as a coupon business. But what it really turned into is an incredible data business. And, you know, sort of the revolution that became. Revolution is a strong word revolution in our little niche that became retail media networks. Sort of the same premise existed at the time, but in the print world, which is that the data that retailers have is incredibly valuable and they were able to use that in a print capacity. It really was sort of like the original retail media network, but it was done through receipts.
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A
Right. The original business was you went to a retailer, you. Maybe you gave them your club card as part of. As part of the transaction. And the receipts, the actual printer would print out coupons that were targeted to you that say, you know, next time you come here, buy some Pepsi and get a dollar off or whatever that was. That was the original Catalina business from, like the 1980s, I guess, right?
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D
Yeah, yeah. I think. I think I'm a little bit older than Catalina, but. But I was walking first. I walked first. Yeah.
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A
So what is it now? You said it transitioned to a data business, but. But. And it went through a bankruptcy or some reorg or something. So it's been through a lot. But what did you actually buy?
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D
Yeah, I mean, we bought the whole company and the value that we see. Maybe. I'm not sure if that's a question that you're asking or, like, why did you buy it? Or what did we buy?
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A
Well, no, yeah, but what is it? What it. What are the products other than the print? They still do the printed receipts. Right. But that's not the core business, or at least that's not the value. So. What?
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D
No, it is. Yeah. I don't know about core, but it's. It's. It's certainly a big chunk of their revenue and a big chunk of their business. Over the past 10 years, they've become a digital business as well, so move it. They've always had those data, but they've started a number of different products, one of which is called Buyer Vision, as an example, and one of the things that you can do with buyer vision is you can target TV or CTV based on those same data. So that's obviously becoming more. More of a common thing now that they've been doing that for quite a while. As you mentioned, they were never owned by Nielsen, but they had a joint venture with Nielsen.
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A
Nielsen Catalina, it was called.
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D
And so that, you know, that was essentially abstracting out the data layer so that other parties could use those data to do targeting.
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A
So the data is really granular because you have SKU level and card level. So you know who the user is and you know exactly the SKUs they bought on, you know, some portion of US households not. Or some portion of physical retail US households. That's the data asset.
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D
I did want to talk to you about some of your buying activity, Ari.
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A
Yeah, just.
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D
I mean, no, sorry. We do. We. We see, like incredibly. We don't see. There are incredibly valuable. Not valuable, but. But detailed SKU level data. And I think probably what's interesting about it is there's a. You know, there's obviously a lot of. Of data that are coming online to be used for targeting and measurement purposes. This is a pretty new set that's different from, for instance, what you can get in Amazon just based on what's actually being bought. Like CPG data is. Is not as common because you're not generally buying toothpaste on Amazon.
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A
Right. And the SKU level is the key here. Like, if you. If you're a credit card processor, for example, you get the total, but you don't know the SKUs, which is fine for, say, QSR restaurants where just the person went to. Red Lobster is good enough of a data point. You don't need to know whether they got the unlimited shrimp or the. Or the salad bar. Right, but at the supermarket, the skew matters.
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D
Absolutely. Eric.
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A
Eric, you don't like my metaphor there? I thought it was a salad bar. Throw you off.
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C
I'm questioning if Red Lobster has a salad bar. That's all.
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A
Yeah, no, I actually, as I said it, I was kind of going. I was doing a crossover Sizzler episode there. Sorry. Yeah, apologies.
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C
Right.
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A
Anyway, sorry. We're getting distracted. You want to hear this crazy story while we're getting distracted? I was in a restaurant yesterday and there was this old lady. No, not the disparager, but she was old lady. And she ordered. She was going to order the chicken salad, and she insisted that the waiter tell her what mayonnaise it was.
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D
And.
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A
And she said she would only order the chicken salad if Ed Hellman's mayonnaise. Now that's. That's brand loyalty for you.
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D
Yeah. Really? That I. That, yeah. Wow.
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C
I respect it.
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A
I respect.
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D
Yeah, you do.
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A
All right, I'm throwing this totally off topic. Okay, here's the real question I want to ask you, Rob. Like, how the hell did you afford this? Like, so Infilion is a, you know, scaled company. You're doing well. But this, this seems like a pretty valuable chunk of data that probably had a lot of bidders. Right. A lot of folks you could, you could say ad tech company. Plus Catalina data would be pretty darn valuable. You'd imagine the trade desk and Yahoo and Cattle and Critio and many other companies were probably interested in this asset. How do you pull this off?
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D
Let me get back to you on that. Look, I think one of the core premises of the way that we've built the business is a tremendous amount of investment goes into, know different, especially, you know, over the last 15 years, tech companies. And when you mix that in with like, sort of the world of finance and private equity and, and venture and the type of expectations that are involved there, you get a lot of weird outcomes where there's a tremendous amount of value that's been created, but it's often, it's often dislocated. And in this case, you know, as you mentioned, Catalina had gone through a few bankruptcies. They went through two bankruptcies and they. So they had a very messy balance sheet. They sold their Japanese subsidiary and they sold their portion of the joint venture with Nielsen and cleared the debt. So it hadn't been available to be bought really for, for a while. I think the other thing that's interesting, the way at least that I see it, is the company needed to be bought by a strategic buyer like us. You know, it had a history of being owned by financial buyers or financial sponsors, but they had sort of picked over the company as much as was able to be picked over. And what was left is really the core value that the market sees, not that a financier might see, which are those data. And I think, you know, I think a lot like, are we lucky or are we good? You know, we've built a platform both corporately as well as through our technology that allows us to buy and integrate something swiftly. And so just given the circumstances and the timeline that they had, we were a natural buyer and they reached out to us, actually.
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A
Interesting.
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C
Yeah.
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D
So I think, yeah, you said, you
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A
said that the joint venture with Nielsen still exists and was bought out by a different Party. Does that mean that Nielsen has the data as well?
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D
They have a different set of data. Like it's a, it's a pretty complicated situation that I honestly don't know all the details for. But, but like it was a joint venture of Nielsen and Catalina Data. And I'm, I'm speculating here a little bit, but I think the idea was generally how do we combine viewership data with purchase data in general. And, and so that was sort of the output. And so yeah, it was bought by a different firm that cleared, that was cleared the last of its real debt and it was available to have a clean transaction, which is what we did.
- [15:20]
A
I worked at Nielsen and they told me I was in charge of the Nielsen Catalina product and I still didn't know what it was. So, so I'll give you some, some slack for not knowing what it was as an arm's length person. So let's talk, let's talk about the synergy here. So another asset you purchased, which I think probably a lot of people are familiar with on this pod, is a Media Math. So, so DSP plus data, that's a chocolate and peanut butter combination, right?
- [15:44]
D
I think so. I think so. I mean, oof. That this is meaty. I don't know where. How do you, how do you want to handle it? I mean that's essentially the thesis of our, of our company, right? Is bringing together sort of all of the necessary tools to buy against outcomes.
- [16:01]
A
But you know, so how do you, how will a consumer, how will a customer of mediamath get a benefit from you owning Catalina?
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D
Right? I, you know, Media Math. Maybe, maybe, you know, I know one of the other questions that, that's sort of on the docket is like what's your story and how'd you get here? Maybe it, maybe we can sort of do the quick timeline and I, I'll answer the question that way if that's right.
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A
Yeah. Great.
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D
Cool. So the question I have in front of me is what's your story on how we, on how you got here? You've been doing this for 10 years.
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A
That was supposed to be my introductory question. I just skipped it.
- [16:37]
D
Okay. So, but I think this will answer your question in, in, in a way that makes sense of sort of like what the vision is here. So I founded the company in 2011. Be. End of 2011, beginning of 2012. The original idea was as a rewards based advertising company. I don't know if you guys remember. Keep at that. Do you remember that from like a long time ago?
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C
Scott Kernet, Yeah, about that ad ad
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A
keeper that then eventually turned into Keep.
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D
Oh, it did keep. Okay. No, I'm thinking of the one. It was like K, I, I, P.
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C
Oh, that's the other one. Yeah, yeah, yeah, yeah.
- [17:17]
D
There was a company called Session M that was in the same space.
- [17:20]
C
Yeah, of course.
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D
But yeah, yeah. The idea was rewards based advertising and at the time most, you know, social was a really big opportunity. So we started buying ads and this was sort of when I first started to realize there was a problem with advertising, or at least programmatic advertising. We started to buy ads directly through Zynga through an SDK that we had installed. And this was on browser based Facebook to sort of put it at a time and place. So we were buying directly through zynga through an SDK and then we also started buying through SSPs. And the, the conversion rate dropped by like a factor of a thousand. And I did not understand why. I mean, I was new to the sector and new to the, the, to the industry. So I just, it didn't make sense to me. If this is the exact same inventory, which it was, how is it possible that one, you know, buying directly is a thousand times more effective than buying through an ssp? And I'm looking at the Lumascape and I'm looking at all these different flowcharts and I'm like, holy shit. There's something like this just doesn't make sense. That led us to pivot the company from rewards based advertising into creating a mobile dsp. And at that point we changed the name of the company to the Mobile Majority. And the thesis at the time was. Yeah, you like that?
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A
It's kind of an interesting name. Yeah. What was, what was the old name before that? You didn't tell us the old name?
- [18:41]
D
Payday. P A, E, D, A, E. It was like a consumer focused company where you would earn rewards.
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A
Payday. Payday. But without any wise.
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D
Exactly, without any wise.
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A
All right, I'm gonna withhold my judgment.
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D
It's not my strong suit. All right, I apologize.
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A
Okay, so you changed it to what? Mobile majority.
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D
The Mobile majority.
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A
Okay, great.
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D
And the idea was like, that was when the world was becoming mobile. And it was like, how do we create a mobile dsp?
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A
Sure.
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D
So when did you start Beeswax?
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A
We started in 2014. So we were. The mobile. Only DSPs were on decline. That was. Seemed like a bad sector at that point.
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D
Yeah. You guys, I think you probably did a. Well, I know you did a better job than we did Most of our revenue at that Time started to come from political advertising. Okay, which was really interesting. And we partnered with a company that did direct mail. So the, that was where the location thinking started coming from, is that direct mail is really about a household. If we were able to do better location targeting, we could get better outcomes. So the vast majority of our revenue at the beginning of the company was in political advertising, actually, which is interesting and it's a very difficult space. I think that's also where our path diverged from like a normal startup path because we didn't raise institutional capital. We raised capital from the partners that were running the political advertising firm. Then to get to your, to more of your question of how does media Math fit together? 2016, we bought Gimbal from Qualcomm. And that was the first acquisition that, that I had done. It was a very, very, very complicated acquisition. It was a carve out. But the reason I'm bringing that up is because the general idea was we have a dsp, a mobile DSP that we had built. Mobile especially location really matters. And when we looked at Gimbal, what we saw was one of the largest sources of location data that wasn't yet being used for media buying. And so like going back to the idea of sort of bringing in the way that we would think about it, demand and data into the same platform. That was the first time we did it and it worked.
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A
And Gimbal was like a location based measurement and analytics company at the time.
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D
It wasn't really about measurement and analytics. It was more about the actual infrastructure. So it was like it's, it's, it was used by, it still is used by retailers who install it in order to understand what their customers are doing when they get in the store, when they're outside the store uses. It was Qualcomm's initiative to combine their, their Bluetooth and also their GPS technologies into one business. And then they, they, they, they divested. Well, they, they spun it out in 2017, I think it was 2017. Sometime around then we bought the media business for Drawbridge. And the idea behind that was, okay, now we have this incredible location data. How do we begin to use this not just on mobile, but across, you know, an omnichannel buying experience. And I'm bringing all of that up because I think that's when it started to occur to me. You know, I, I think of ad tech from then and still as a, as a supply chain. And I started thinking through supply chain problems and how do you solve supply chain problems? How do people think about those types of problems. There's called the theory of constraints, which is about sort of optimizing a supply chain. And the best way to think about it is if you're trying to optimize the output of a factory, you, you, a factory is only going to go as fast as the weakest and slowest machine inside of that factory. And so my idea at that point was how do we begin to own all of the relevant machines inside the factory to make sure that we can guarantee the outcomes on the other side of it or deliver the best outcomes. And that was where, like, at the time, I think there was still a think, still a lot of thinking that each of these pieces that I see as point solutions in a very, very, very complicated infrastructure or ecosystem for the open web needs to exist on its own for some reason of neutrality. And I understand the benefit of that, but I also don't think it really serves our customers all that well.
- [23:06]
A
Right, so you're basically saying, like, let's create a complete stack, like the whole factory, and you're sort of piecing it together with a dsp, a mobile data carrier, measurement, and one thing, another. So then you bought what, Truex?
- [23:22]
D
Yeah, well, you know, I think an important part of the story Too is in 2018, we wound down the bidder in our platform and we started, we became one of the larger customers, API customers in the trade desk, which is a great platform. I just think that's sort of an interesting piece of the story. It was very expensive at, at the scale that we were at at that time to run our own bidder. In 2020, we bought Truex and Truex. You know, now if you start to think about it, like, how did those two things, how does Truex fit within the rest of the, the company that we had already begun to build? There were a lot of really interesting direct supply connections with Truex, you know, to CTV properties. And they also have their own creative technology that does interactive ads. So, you know, again, going back to the factory metaphor, we can add those two machines into the general factory.
- [24:14]
A
And Truex, for those those who aren't familiar, is a kind of like a ad network slash, like custom format company that's very deep with connected TV publishers and broadcasters and got acquired and reacquired a couple times.
- [24:28]
D
Yep, that's right. It got, it got bought by Fox and then Disney bought Fox. Yeah, and then they divested of it in, I think it was 2020.
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A
So. So let me ask you, in this whole thing, like, there are other companies who I Won't name who in the ad tech sector who sometimes people describe as like, like the collection of unwanted toys there. You know, it's like, hey, ad tech company, you're about to fail. Let's buy you for nothing and like, do something with it. There are a couple of them out there. Why are you. Not that.
- [25:01]
D
I think some of it has to, like, I think it's a great question and I think that's sort of like the thing that I think about. Like, why are we not that. How do we not become that? Eric has heard me say this in private before. I don't know if this is going to be such a fun story and it'll take a long time, but I go through this sort of the competition between General Motors and Ford when those two were competing against each other. Maybe I'll forego that for right now because it's a long, it's a longer story. But I think the answer, Ari, is what is the plan? Right? Like when those assets are put together by a financial party, like a financial sponsor, whose desired outcome is to simply increase the profit and increase the revenue in order to increase their enterprise value and sell, they stay as disparate, unconnected assets. For us, what we're trying to do is put it into one platform. And in order to do that, we've had to create a taxonomy, almost an ontology of how all of these things work together. So that's, you know, we talk a lot about composability as our approach to making sure that we don't become that platform of unwanted assets. Because there's a lot of incredible technology that we have as part of our stack. I mean, Media Math is a military grade dsp. It is like, I mean, really a tremendous amount of time and effort and thought went into that. And it's an incredible piece of technology.
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A
We're creating new line items to go after the Strait of Hormuz at this moment.
- [26:30]
D
Exactly. Yes.
- [26:32]
C
Yeah.
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A
The, the bidding is starting as we speak. Take cover.
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D
We're going to try to get the DoD as a, as a customer right now. So. But, but, but no, I mean, I do, I think, I think that's an example. Right. And I look at like just the way that this is. This conversation is not meant to be a conversation about modern finance, but modern finance's goals are not necessarily aligned with the goals of the customer. And I think that we, we see when I say the customer, I mean what the advertiser is trying to get. So when we see something that has a tremendous amount of Value that is underappreciated for whatever reason. We look at that as an opportunity now to add it to what I call like our platform of compounding greatness. And that's the idea. In the same way that like a Buffet talks about compounding for his balance sheet, I think about compounding in terms of the efficacy of our platform. And so now it is robust enough that we can begin to add things to it that really move the needle. And I feel like that's going to accelerate rather than decelerate.
- [27:35]
A
So you've got all these products, they're compounding in value, as you said. What's the customer profile? What's the sweet spot of the customer of Infilion versus the customer of the trade desk or Zeta or any of these other folks? Is it brand? Is it agency? Is it small, mid, large? Is it performance? Is it brand? And don't say everything, please. Please don't say everything.
- [27:58]
D
Yeah, yeah. So I think the way that we've organized the company is we have a platform and then we have two business units. One business unit sells media, so, you know that they would just buy media from us. The other business unit sells to resellers, essentially companies who build off of our existing stack. So we support a number of different local media companies that when you buy from them, you're actually using our technology. We have a retail media network practice. We power Walmart Connect outside of the United States right now. So you can either buy media through our platform or you can build on top of our platform. To answer sort of like the broadest level, who are our customers? Once I think your question was, like, assuming you're buying media, who are the. The primary media buyers? For us, we sell a lot to cpg, which is one of the reasons why Catalina was so interesting to us. And I think that as a buyer, you would look at a platform like ours or any of them and say, what are the unique elements that this platform has that are going to help me if I a certain type of a product that I'm trying to market? In the case of us, especially post Catalina, we have a really strong signal for cpg. We also have a really strong signal for pharma and healthcare and a really strong signal for. For travel. So those are three verticals that we're really focused on right now. I think, you know, there needs to be something differentiated and proprietary in your stack to that makes the outcomes better for the customers. And so for us, that has to be either the data, the creative, the supply, or our demand tools.
- [29:30]
A
Yeah.
- [29:31]
D
Hopefully that makes some sense.
- [29:32]
A
Are we going to see a infili and IPO anytime soon?
- [29:35]
D
I don't, I don't think so.
- [29:38]
A
They didn't tell you?
- [29:40]
D
Yeah, I don't, I don't think so. You know, I think it's a, it's. Look, I, we. We're an ambitious company and I think we have really high aspirations. And I don't know that an IPO is. I look at an IPO as just the financing event. Right. And there's other sources of capital. It's very cumbersome to be a public company. And I think that we're all probably aware of public companies that went public too early and they don't have that durable source of profit that the market really requires and they don't quite have enough scale. That's certainly a mistake that I want to avoid. The other thing that I think is different about our company that I'm just really, really proud of because we don't have this institutional sponsor, a lot of our shares have ended up becoming concentrated with our employee stock option pool. So much so that it is over 30% of the company that doesn't include my shares. So we're officially an employee owned company with more than 30% of our shares in the hands of our employees. This is like a bet that I am placing and I don't know if it will work or not, but it's a bet that I want to place in my career, even if it's to my own personal financial disadvantage. I think that the bet that I'm making is can we continuously recruit people who care, people who want to be successful, people who want the company to be successful, and then reward them for their own efforts with ultimately, you know, the equity value that we create. And so rather than trying to raise money from financial sponsors to overpay people or to do, I don't know, to just sort of gain a system. I want, I want the world to work in such a way where people want to be at the company, they believe in it, and they're working harder to help deliver better outcomes for us that ultimately help our customers. And that instead of having a financial sponsor be the only beneficiary of an IPO or a strategic sale or whatever it might be, that our employees receive a disproportionate amount of that. That's the goal. We'll see if we can accomplish that.
- [31:53]
A
All right. That's sounds like a ambitious and interesting perspective. Well, we appreciate all you going through. All of this, I think probably is new Information for most of our listeners because it's an interesting company. It's come about that way. We're going to take a quick break and we'll come back with the news of the week because there's a lot of news going on, as always.
- [32:16]
C
All right, we got a lot to talk about.
- [32:17]
B
K Pop Demon Hunters, Haja Boy's Breakfast Meal and Hunt Trick's Meal have just dropped at McDonald's. They're calling this a battle for the fans. What do you say to that, Rumi? It's not a battle. So glad the Saja Boys could take breakfast and give our meal the rest of the day.
- [32:31]
D
It is an honor to share.
- [32:33]
A
No, it's our honor.
- [32:35]
D
It is our larger honor.
- [32:37]
A
No, really, stop.
- [32:39]
B
You can really feel the respect in this battle. Pick a meal to pick a side
- [32:45]
C
and participate in McDonald's while supplies last this week. And apropos of having my friend Rob on the pod, we got a DSP shootout News. So I'm gonna try to share this. Hopefully you can see this gentleman and everybody on YouTube.
- [33:02]
A
We're gonna get the takedown notice from the Forrester lawyers if you put this up.
- [33:07]
C
Really? I'm not sharing anything from Forrester. I'm sharing something from the Market Texture Advertising database.
- [33:12]
A
Yeah, I know. The Forrester lawyers are a little aggressive. Even though they post things online, they get upset when you show them. No, no, go ahead. Let it come at me. Come at me. Forrester lawyers. Okay.
- [33:23]
C
The latest Forrester wave came out, and Forrester named Amazon Ads as the only leader in omnichannel advertising platforms. So if you're not looking at this on the youtubes, you've got a classic Forrester wave chart here with a couple of interesting companies. Vyant, Stack it Up, Trade Desk, Yahoo, Google and Amazon ads. They're DSPs represented. And Amazon Ads is the only upper right quadrant, which is a big deal.
- [33:51]
A
It is a big deal.
- [33:51]
C
Take what you got.
- [33:52]
A
Yeah. So Forrester in the past has embarrassed themselves with these waves that make no sense, that have all kinds of vendors no one's heard of in weird spots. This is the first time where it has some credibility. There's no one weird on this list. Argue. There's some people who are missing. Maybe Infili Inlet, maybe Beeswax, maybe Ad form, even though they're European only. But it's not a bad list. And the rankings, not that implausible. Let's just say that. And the second thing is Amazon Ads as a leader. Wow. Just a couple years ago, Amazon Ads DSP was just use it if you're selling products on Amazon but don't use it for anything else. And now suddenly it's a broad DSP that competes head to head. It's the number three after Trade Desk and Google by market share and very close. Probably coming up on number two or number one in the next couple of years if it keeps growing.
- [34:47]
C
Yeah, agreed. What's cut off here at the bottom is. So the left axis is strength of offering. The horizontal axis is, I think, something around kind of strength of roadmap. The one here that I would call out is probably a Ms. Is Vyant. Yeah, Vayant. Like in terms of roadmap and what they're doing and putting forward in terms of like, AI and autonomous, I think they're arguably like leading the market in some ways. So to me, that was maybe the one miss here. But yeah, similarly, I don't. Not mad at most of it.
- [35:21]
A
Yeah. A lot of. There's a lot of dialogue online. People love to chime in, like, it's pay to play, it's pay to play, and it's not exactly pay to play. What it is is that if you, if you pay, if you're a forest or custom customer, you get to influence the rankings, like who, what, what is important to the analyst who produces the report. So before any of the surveys go out, you have conversations with the analyst and you, you might say to them, you know, what our customers are asking for is that you have to have retail media data and you get that in the survey and then that benefits you. Whereas maybe a direct competitor doesn't have retail media data and they get dinged. So that, that's the nature of this, like, influence that some people get really worked up about. And, you know, it definitely can move things around a bit.
- [36:07]
C
Let me, let me ask you. Yep. Let me ask you. So, Rob, what's your, what's your take here as the owner of a very notable dsp?
- [36:16]
D
Yeah, I mean, one we didn't submit. So I, I suppose that's why our name isn't on here in terms of, like, the rankings as they sit on here today. I think it's really interesting, you know, one, this is my perception that I'll lay out. It seems to me that, like, there was a period of time where everybody was really excited about the trade desk, in part because of the position they were able to take in terms of fees and neutrality, etc. I wonder, and this is really more of like, I wonder, I wonder if at the moment Amazon is sort of artificially lowering their take rate in order to earn new customers. It's getting them sort of, you know, this position in this particular part of the market. But is that something that will continue after Amazon is able to win customers over to the platform? Because it's not so it's not that easy, especially as you, you blend more and more data and creative and other things with the buying platform to move again. So I guess what I would ask is, is this a short term approach for Amazon to win customer? Like the classic thing of subsidizing a platform in order to get customers and then driving profits later. Again, open question. You guys are the pros on this.
- [37:23]
A
Your margin is my opportunity. That's what Jeff Bezos says. And, and that's not great when you're competing with them. Yeah, I mean if you just write, if you just, you can make this entire diagram really simple which is like what ctv, what is your strength in ctv? What's your strength in retail media and what's your unique data and maybe how's your workflow? And you know, Amazon looks good on all of those. I mean they used to be bad on workflow and now they're better, a lot better on workflow. They've got unique CTV assets because they own, they have owned and operated. They've got amazing data, the best data probably of anyone on the list. I mean Google has great data but is a little more careful about sharing it. They don't have purchase data for example. And then you compare it to an independent like the Trade Desk or Stack Adapt and you say, well, what data do they have that's unique? Not that much. What inventory do they have that's unique? Not that much. You know, workflow might be better, you know, but like how long can you, how long can you compete on that basis?
- [38:23]
D
I have just an anecdote that you guys might find interesting. I mentioned that we power like local media buyers and one of our local media buyers was talking about okay, which other DSPs should we use? And they decided to continue to work with us, but they also work with Amazon. And I just asked them why, why Amazon? And they said we work with you guys because of your location data. It's a local media company, that's why. And we work with Amazon because of the purchase data. And that was as far as their rationale got, but it was that simple for them.
- [38:54]
A
Makes sense. And now you have Catalina. So like, you know, that wasn't supposed
- [38:58]
D
to be another paid ad but. Or an ad but. But yeah, I mean I think it shows that we're in my mind and I don't want to bring this back to us, but I think this is indicative of the direction the industry's going. It makes me feel better that we're doing the right things. You know, certainly it's the way that hearing you guys talk about it, I think it's really.
- [39:16]
A
And it shocks. This is how I started the conversation with you. I was shocked that you were able to buy Catalina because it seems like if you've got a unique data set that's cpg, that's you know, at the SKU level, someone should buy that. Like you know it then you got, you know, we don't know the TikTok and how the deal went down but like it seems like you pulled off quite a coup there. Yeah, thanks.
- [39:35]
C
Yeah, yeah. Well, well done. Rob. My thinking around your question on the long term sustainability of the low take rate is Amazon is also the only company that has the high margin O and O media business that has the high margin AWS and to the extent that they want to use those to fund a low margin dsp, those, you know, there's probably a lot of financial work that can be done to, to support it, but I don't know. These are the cheap seats. Okay, let's go. That was a big conversation. But we got other DSP stuff going on here. So people are doing things. Yahoo DSP launches tools for mid market and performance based marketers. So basically like an easy button where you can launch campaigns on Yahoo dsp. Quantcast and Tatari are going after TTD clients. Quantcast had a pretty aggressive ad referencing the audits. The Tatari CEO like going hard on writing posts. There's a lot going on in DSP land. I like to see it.
- [40:48]
A
There's a little bit of a rush to become the applovin of the rest of the web. I think that's a Yahoo announcement that they're doing the mid market. I think it also is the critio announcement, the critio self service for SMBs. A lot of other folks saying well why can't I take my DSP and simplify the UI and accept up credit cards and suddenly you know, become get the app love and valuation.
- [41:13]
C
Yeah, the question on this stuff always goes back to cac like can you get the dry cleaner? Can you get the car wash? Right? Like that's the real question that no to date company outside of Meta and Google has been able to crack. But you're right, it's the opportunity.
- [41:29]
A
Well there's a second question which is can you get performance? So it's like the LTV and the CAC for this business. Whereas in app and CTV has got the performance.
- [41:39]
C
Yeah, it's true. This trade desk announcement around Identity alliance payouts people were pretty fired up about. Seems like they're changing how they're paying identity partners with a focus on are you driving like incrementality? You gotta take on this one, Ari.
- [41:58]
A
Not really. Identity Alliances is a big mishmash of data. It's like, it's like you're giving. You're selling the trade desk lettuce and then the trade desk is telling you how much it's worth in the salad. I don't know.
- [42:15]
C
Okay, that's a pretty good analogy. We'll move on, man. You're right. Like other platform news happening this week. So a couple that I caught that I thought were interesting. So to your point about everybody going after this opportunity cargo had an announcement like closed beta of something called Cara K E R A so you know, upload brief and then basically get everything done for you end to end in a single platform. I don't know what you might call that. I don't know if you would call it a dsp, although it does have execution. I don't know if you would call it workflow only. But it's very similar to some of the tools. I think even you, Rob, have has it within Infilion where you know, you're just becoming agentic.
- [42:56]
D
It seems like Harry really likes stuff that sort of sounds like his name. It just doesn't start. And I'm like, I'm wondering like if we should have taken that approach with Infilian.
- [43:06]
C
But.
- [43:08]
D
But it's like in terms of like,
- [43:09]
A
it's like Crusty burgers. I was thinking the exact same thing on the Simpsons with Crusty the Clown.
- [43:15]
D
Right.
- [43:15]
C
I did not, I did not anticipate being. This being the road would go down. But it's a good road. Keep going.
- [43:21]
D
Yeah, well, no, I mean to the substance of it. I think, I think they're right on. I mean I think that's. I think that's the right direction and I do think that that's what customers want more and more. So you know, set naming aside. I like. I think that's a great idea.
- [43:37]
C
Yeah. Yeah. Similar critio you mentioned earlier, ari. They launched Go, basically a self serve platform for SMBs where you know, again this might seem to be maybe the closest to going after the Meta and Google universe which is, you know, just Very simply, you know, I think it's like a five click process or something like that. You can, you can be up and running. You know, again, just. I do wonder how you go to market and really scale something like this. It's possible, but might require like significant investment in marketing.
- [44:11]
A
Yeah, it's good to see Criteo being a little entrepreneurial, getting out of their comfort zone a little bit. But yeah, they have to be prepared to spend quite a bit of money and time on acquiring these customers. I mean, you know, you look New York City subways are now covered in vibe ads. You know, that's not cheap.
- [44:28]
C
No, no, absolutely covered and doing a good job. This is one that I thought was pretty neat. So smartly back in the news, I think for the second week in a row, by the way. So smartly acquired incremental. Novals incremental. A incrementality measurement platform. I think it was last week. This week they were just announced as OpenAI's first creative tech partner. So the roadmap is A, just use smartly to tweak creative in real time. But then B, you know, this is according to the article, we'll link to it, start to build like conversational formats that are somewhat like an answer to native advertising on ChatGPT, which is be able to start speaking to an ad. So I like this. This is like innovation from a format standpoint, which, you know, it comes second to providing buying access.
- [45:20]
A
Yeah, I've been, I've been looking for signals as to whether OpenAI will move beyond text only, clickable only ads. Seems to be a good, good sign here. Just a little correction in that the smartly incremental deal was an LOI that was announced for some reason. We're not sure why it was pre announced, but deal has not closed yet.
- [45:37]
C
That's true. It was announced as an loi. I'm hearing like rumors that they're like going to market pretty aggressively already with it, by the way, like offering incremental at low cost. It's something to watch because there's a whole suite of companies, set of companies. Is that. That is their business.
- [45:54]
A
Yeah. Once you cut out the vowels, you can afford low prices.
- [45:58]
D
This is true.
- [46:00]
A
Rob, have you ever thought about cutting out your vowels? Just being like NFL, nfln.
- [46:05]
D
Yeah, look, I. You're.
- [46:06]
C
That's not bad.
- [46:07]
D
That's my takeaway. Yeah.
- [46:08]
C
Yeah. All right. This is not, this is not ad tech, but I feel like we need to talk about this. The largest private fundraise ever was announced this week. OpenAI raised 122 billion on a 852 billion post once led to on a
- [46:32]
A
52 but b not M led by Aperium.
- [46:35]
C
Right. We did not get a piece, we did not get a piece of that one.
- [46:41]
A
Really.
- [46:43]
C
No. Sam, Sam's. He's a little bit slow to respond to my outreach but hey, whatever Sam
- [46:48]
A
seems, Sam seems pretty good at raising money. That seems like a talent.
- [46:53]
C
He is, he is. This is, is like mind bogglingly large and you know, includes some customers, includes some partners. So I think feeds in a little bit to two things which is the first, you know, just like the circular nature of a lot of this stuff but then also just like this is so clearly leading up to an IPO at least from my perspective because how do you do this and have some sort of assurance for liquidity and valuation from here? It's huge. 852 billion posts for a private company.
- [47:25]
A
There's been a lot. There's a couple of things here I'd point out. One is that $122 billion raise isn't nearly enough for the amount of data centric capacity and investment that they're planning on doing. They're losing just a huge amount of money, their burn rate is astronomical and they have these commitments to with Oracle and the commitments with Nvidia and commitments to Microsoft and it's really complicated what they've done. Sort of off balance sheet and like no one knows if this is all going to work out or if it's going to come tumbling down at some point in the Future. So that S1 will be something people look at very, very carefully and by
- [48:03]
C
the way those companies, they all invested in this round so Amazon, Nvidia, Softback, Microsoft, they're all investors in this late money round. Ro, what is your take on this one?
- [48:15]
D
O I mean I've whenever I see these like super late stage deals I always wonder what the terms are of them. Like do they have a liquidation preference and like because it's a private company deal it's a. I don't know. That seems to me like the, the easiest way to make sure that it's not a bad deal for the, for the last money in but I, I don't know the terms of it.
- [48:36]
A
Obviously there, there was reporting around this that there. I don't know if it was confirmed when they finished the raise but the company, the reporting was that they were guaranteeing a 15% coupon to the investors which means that it's preferred with a Escal, effectively an escalating preference of 15% a year.
- [48:53]
D
Yeah, I mean that makes sense.
- [48:55]
A
Right? It's like it's convertible debt basically. It's not. Is it equity or is it convertible debt? It's hard to tell at that stage.
- [49:02]
D
Right. So I don't know, it makes it, you know, I wonder how is it really an arm's length transaction? I don't know if arms leak transactions really exist anymore. So I don't even know if that question matters. But, but yeah, that's, that's what. And I think, I don't know, I don't want to get into pretending like I understand the history of tech super well, but there's also somewhere in, in the middle of an absolute disaster and then just overvaluation at the moment it seems as though that's like, I don't know that this is a bubble popping as much or we will see a bubble popping as much as There just needs to be a correction.
- [49:39]
C
Yeah, that's a good question.
- [49:42]
A
Would you invest, Eric, if you had the capital? If you were, if Imperium was, you know, a much, much larger fund, would you, would you take this deal based on what you know? 122 on 852post, I would love to
- [49:54]
C
take a quick look at the terms on this round around Lick Press and the, and the coupon. It could just be an exercise in like smart financial judgment and also having a sense for when the IPO may be planned could just be like, like a good private. Number one, it could be a good investment and then number two, from a long term perspective I do believe that OpenAI is like an extremely important company with a lot of upside.
- [50:19]
A
Right. Well at 852post you have to believe that it's a trillion dollar company in the near future. Right. The IPO is, it goes to a trillion market cap. I think that's a pretty fair bet unless it collapses. That seems like a pretty fair bet to me.
- [50:33]
C
Yeah, yeah. I mean the big high profile IPOs that are coming, SpaceX, presumably, OpenAI, they're going to be in the north of a trillion range. They're going to be like 1.5 or something like that. So this actually could be like a good financial decision irrespective of some of the nail biting on the numbers. So yeah, I would love to take a look at something like this. Sam, you know how to get in touch with me.
- [50:56]
A
Come on. Yep. The contacts@aperium.com Right.
- [51:00]
C
Something like that. Something like that. Okay, back to earth. Fortunately, mediavine did what sounds like like again recording According to Ad Exchanger, who, who, who made this comment, some deep cuts in head in headcount. Mediavine is one of a handful of like publisher optim, revenue optimization and monetization companies. And the CEO made a, made a post on, on LinkedIn and definitely hate to hear this stuff and hope affected employees find employment soon. This is interesting though, right? Because it's like, like publisher tech publisher monetization in the face of all of these challenges seems to be a category that might be pretty tough.
- [51:45]
A
Yeah. I mean AI reducing traffic to the publishers, that's, that's like a big factor there. I don't know if this is AI. I don't know if there's an efficiency AI play here. But also it's a tough market. There's you know, these folks, there's you know, Playwire and freestar and Raptive. It's like pretty tough competition there.
- [52:10]
D
Yeah.
- [52:10]
C
Yeah. Especially if they're all kind of going after a similar cohort of publishers who are, you know, all under, under pressure. Feels like a, you know, kind of a shrinking pie to an extent.
- [52:23]
D
One more.
- [52:24]
C
BUIS just announced acquiring a sports agency called 160 over 90. I like that name from WME Endeavor for a reported $500 million. I think this is interesting because sports is an incredible market, right? Like 150 billion, I think is the sports market connected to a lot of things like sponsorships and, and in stadium and you know, obviously live tv. But this is largely about creators. Like this is from WME and it's got contracts with, with players. So it is a further leg into creators talent and sports. Kind of hits a bunch of like great buckets. I think this is a neat one.
- [53:07]
A
Yeah. I'm loving Publicis's acquisition strategy. They're acquiring influencer agencies, sports agencies, retail media and in every case it's not really tech. It's like tech adjacent with lots of people involved in relationships. Seems like the future of where media buying is going to. And really just quite a, quite a smart set of acquisitions.
- [53:31]
C
Yeah. Yeah, no, super impressive with that. We probably should end it. What do you think?
- [53:36]
A
You don't want to talk about the KitKat that got stolen?
- [53:39]
C
I mean. Yeah.
- [53:41]
A
Is there an ad tech angle here? What's the ad tech angle?
- [53:43]
C
This. So, okay, so 12 metric tons or 400,000 KitKats were stolen. So literally, what do you, how do you steal that amount of KitKats and like, is there some way via marking that you know, those are gonna start to hit the black market and, and be found and Is there a black market for KitKats? I have a lot of questions. The thing that maybe is, like, certainly advertising, but maybe that ad tech adjacent is it became a meme, and KitKat embraced it, other brands embraced it, and it took over the zeitgeist for. For a couple days. So kind of fun.
- [54:19]
A
Yeah. The stolen Kit Kats.
- [54:20]
C
Chocolate.
- [54:21]
A
Yeah. How do you get them? Are they gonna drive them into Russia or something where they don't have Kit Kats? You know, it's definitely a good question. There's also a related story about the Reese's peanut butter cups getting real chocolate added back because the grandson of Reese's started slagging on Hershey's, the new owner, saying they weren't using quality ingredients. So there's a lot of chocolate news. Yeah.
- [54:42]
C
Yeah. Well, as our. As our resident CPG expert, Rob, we need your take.
- [54:48]
D
I'm like, that number of just, like, 12 tons of something being stolen, I would, like immediately went online just now and looked at, like, is this the enriched uranium that was once in Iran that has just found its way, like, into being disguised as KitKat bars? And this was the strategy to get it out? I don't. I don't. I don't have a take. Besides that, this seems like a. Like a shame. And there's probably a lot of little kids everywhere, all over the world, too. You know, with the gas prices going up, the idea of Kit Kat prices going up also seems too much to bear.
- [55:18]
A
The KitKat people were very clear that there would not be any shortage. Like, they put out an announcement, so that was pretty important. Right. Well, this is why people listen to this podcast, this kind of news. Right. I think we're diversifying. All right, Rob, thanks so much for being here. This is a great episode.
- [55:38]
D
Thanks, guys. It was an honor, really. I feel like I'm on the inside now of ad tech and marketing, so thank you for having me. I appreciate it.
- [55:45]
A
Of course.
- [55:46]
C
You're welcome. We will see you next week, everybody.
- [55:49]
A
Thank you for subscribing to marketecture. New interviews are added every week at marketecture tv. And your favorite podcasting app,