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Episode 171: Dispatch from Possible plus Andrew Casale on Index's cloud computing initiative
00:48:15
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- [00:00]
A
This is adtech God, and I command you to listen to this house ad. So if you're listening to this show, just know that you've really stumbled upon a giant network of content across advertising, marketing, media, publishing, and of course, the people that work in this great advertising industry. So go to market, check out all of our brands. We have multitude of shows from the Brand Forum, the Advertising Forum, the Monopoly Report, the Ad Tech God Pod, the Market, and more. We are bringing more podcasts to our network. We are consistently and constantly bringing on new shows. So check it out. Market or search for any of those brands in the app that you use to listen to this podcast. Enjoy the show and see you all soon.
- [00:59]
B
Welcome to the Market podcast. This is Ari Paparo. I'm here with Eric Franchi and we're both tanned and relaxed and back from possible. Maybe relaxed isn't a good word. How was your possible, Eric?
- [01:12]
C
It was a whirlwind. I had, I think like average of like seven or eight meetings a day. Wow. So, yeah, I was, I was, you know, pretty, pretty busy. I think it was a fantastic event. They say over 7,000 people were there, including, you know, or excluding all the, all the people that just show up. I think, you know, despite spilling into Eden Rock for another location, it still feels like they need more space. And every surface is sponsored. I mean, my goodness, that commercial team just sells.
- [01:49]
B
It was incredible. Everything was sponsored. Yeah, it was a great event. Christian told me 7,500 people, they announced, announced they're going to do Europe in 2027. So there's going to be a Lisbon show in October of 2027. I think it's still a little tentative, but they did announce it and yeah, they expanded to both Eden Rock and the Soho grand on the other side or Soho beach or something. So house. Yeah. And, you know, it's a trade off because part of the charm of possible is that it's not in a convention center, it's in a, you know, interesting, elegant hotel. And the side effect is that the logistics aren't great. You're walking on the beach to get to the meeting and then you have to go to the street and then. And then you're in some weird. You have to get ID to get into Soho House and it's just kind of complicated.
- [02:39]
C
Yeah, agreed. I have, I have two questions for you. Maybe we'll do the first one, which is you had a lot of conversations, I'm sure. What were the key themes that you pulled out in terms of what people were talking about? What Are the priorities?
- [02:53]
B
Well, aside from the obvious AI stuff, I think my sense was the industry is so very clearly maturing, solidifying. There are fewer questions. Everyone knows who the vendors are and what their positions are. And those vendors, those kind of common names we've been hearing for years, I think are solidifying their leads. You don't see as much jockeying about, you know, who am I, what am I going to be in the future? You know, people know who their trusted vendors are on the data side, the transaction side, measurement side. So I think it's like a consolidation of strength within the, within the confines of, you know, what frankly is a leveling off or maturing of the overall, you know, open web ecosystem.
- [03:39]
C
Yeah, interesting commentary.
- [03:41]
B
Funniest thing I saw all week was for those of you who've been to Possible the the soho Soho house is in kind of a weird little corner of the street where it bends in a certain way and has a very, very sharp turned driveway. It's like almost a circle, the driveway.
- [03:59]
C
And it is not a circle. It's like a. It's a triangle.
- [04:03]
B
It's such an extreme.
- [04:05]
C
Yeah, it's really tough.
- [04:06]
A
Yeah.
- [04:07]
B
Yeah, it's really tough. Well, Miami is experimenting with self driving Waymos and a Waymo got stuck in the driveway. Like it was like if a squirrel got in your house, it was just freaking out. It was just like moving back a foot, forward a foot. And the soho staff had no idea how to handle it. They were like waving at it and trying to give it instructions. And that was making the Waymo even more, you know, agitated. And I think they may have a no Waymo policy moving forward at the soho because there's no way those things can get in and out of that driveway.
- [04:41]
C
They just need more data. That's hilarious. I'll say the funniest thing that I saw and then we can get to maybe some of my takeaways was there is a new ad format or a new ad surface. It is a helicopter dragging a screen. There's no other way to put it.
- [05:01]
B
Yeah, I didn't feel good about this. Yeah. Okay, keep going.
- [05:07]
C
I spent a fair amount of time at the innovation stage. We hosted this brand challenge is awesome. It's a startup competition and there was just thunderous helicopters just going back and forth. One was, was carrying a screen that was lit up with some marketing message and then one was, I guess kind of flanking it for security if something happened. So the combined noise of two helicopters at once was like really tough. But I'll tell you what. Everybody looked at this freaking screen because they're like, what is that?
- [05:39]
B
Yeah, not the best use of carbon. I don't think we're going to see any carbon neutral ads when you require two helicopters to show your ad. So ad tech God had a banner on the helicopter. I don't know if you saw.
- [05:53]
C
There's something else. Anyone that did not see that.
- [05:56]
B
Yeah, yeah, yeah.
- [05:57]
C
In terms of my takeaway, it's an interesting observation, what you said, you know, specifically relative to know our corner of the ecosystem. Right. Ad tech and open web. Every conversation that I had, you know, obviously, you know, AI being front and center, it was kind of two things. Number one, everybody is focused on performance and measurement right now and, you know, you know, sort of measurement of outcomes I think was, you know, kind of front and center, which was interesting. And then two, it also feels like this is a continuation from last year. People feel like there's opportunity. People feel like even though, you know, there are established players, like in this age things can shift pretty fast. And I point to Vyant, who now with these acquisitions of tv, T Vision and Iris tv, like they're telling a completely different story. And they're able to measure things, walled gardens that they weren't able to measure before. And that's. I don't want to over rotate on Vians. Just one example. Just feels like there's a continued sense of optimism that like, you know, the chessboard might be laid, but there can be a lot of reset, which was great to see.
- [06:59]
B
Yeah, I wouldn't disagree with that. The other thing was my article from a couple of weeks ago. It's the data, stupid. You know, basically half the people who don't have data came up to me and were angry about it because, like, I do have data. You said I didn't have data. I do have data. And the people who. Yeah, and the people who do have data all came up to me and be like, I sent it to all my team. So that's kind of fun. It's total litmus test on this stuff. So today we're going to do things a little bit differently since we. There's so much news and we're coming hot off of the planes back from Miami. Eric and I are going to just dive in on the news of the week. And then at the end we have a interview. I did Ad Possible with Andrew Casale to talk about his recent announcements of their. Their system for hosting bidders and hosting data in their cloud. I went into a bunch of depth on that technically about how it actually works, because I had a lot of questions and how it relates to the IB standards about atrf. So that'll come at the end of this interview. And for those on video, my conversation with Andrew is audio only, so we'll. So please bear with us if you're watching on YouTube, but otherwise, it should come in loud and clear for the podcast listeners. So with all that said, let's dive into earnings, AI and a bunch of other stuff.
- [08:17]
C
Absolutely. Before we get into earnings, you had two things this week that were very important and very newsworthy that I would just like to quickly cover. The first was you asked if people could stop hugging. And the second was you asked if people would stop wearing blazers or come up with an alternative to the blazer. You had a lot of feelings around some, I think, very relevant conference topics.
- [08:43]
B
Okay, let me. Let me dive in. So I tweeted that we would need to normalize not hugging in business context. And I feel as though I was being an ally to my female friends who are inundated with hugs from random guys in blazers they don't really know. Know very well, because somehow it became standard that if people are of opposite sexes, they need to hug instead of handshake, and I think it's disrespectful to professional women. So I would like to normalize handshaking, unless I actually know you very well and have a warm relationship with you, of which there's maybe half a dozen people in the universe. So, I mean, Eric, you and I are hug bases, but that's about it. So that was my point.
- [09:18]
C
I don't disagree, by the way, with your disagreement, but for some reason, people hug me. Like, I know they come in for the hug every time they come in for the hug.
- [09:28]
B
And the thing about my tweet is, from. From the women in the audience, I got a lot of. Thank you. That's really nice of you to say. And from the men in the audience, they took it as a challenge. Like, they're coming in, like, they're coming in like Lawrence Taylor on a quarterback. Right. Like. And. And that just says everything you need to know about the mentality of these. These goons who work at ad tech.
- [09:50]
C
Oh, my God.
- [09:52]
B
Now, on the blazer thing, I did not say that. That was a comment to my. That was someone jumping on my train saying, oh, we should get rid of blazers, too. I didn't say that. And, you know, my only point was, like, if you get rid of the blazer, you gotta replace it with something else, because a Man's middle aged body is just not suited for full disclosure. You know, the blazer is a nice, like a sheath, it hides the lumpy bits and you know, you either gotta go sweater or something else. Right. And in the Miami heat, you know, you're generally doing like kind, the button down, short sleeve amorphous top, which I, I think is totally respectable. Respectable.
- [10:31]
C
I got some hazing for wearing a blazer.
- [10:34]
B
It was hot.
- [10:35]
C
I wore a blazer. It was hot. I didn't do it every day, but I need, I need pockets. If I'm not, if I don't have a blazer, I need a bag. I don't want to carry a bag. I have glasses, hand sanitizer, gum, notebook, pension, AirPods. Like there's just a lot of stuff when you're out all day long for practical purposes. So Zki is trying to get me to go the Mer route. I'm, I'm quite resistant. We'll tune in for can, we'll see how, how this thing shows up.
- [11:01]
B
Zaski's got the, the merce and the man bun, which is, you know, the combo. He does got to have a man bun, doesn't he? Yeah, he could. You probably. Yeah, I, I think I saw Amanda.
- [11:17]
C
All right, move on to earnings. All right, let's go.
- [11:20]
B
So good transition there.
- [11:23]
C
In addition to possible, the four basically most important companies in tech all dropped earnings last night. So it was a late one for your boy. Let's walk through this stuff because they're super interesting. So first was, I admit, not first, I dropped on 4:30, but first was Meta on our list. Big quarter, so 56.3 billion in revenue, up 33% year over year, increase in ad impressions, increase in price per ad due to AI capex guidance, raised from 125 billion to 145 billion. And I think that had an effect on the stock, but Meta continues to crush it and continues to, I think, be the leader in showing how AI can drive performance in ads.
- [12:10]
B
Yeah, I guess the only. If you were evaluating the stock, the one question you would have is like if the consumer side was ever disruptive, if, if consumers for some reason stopped going to Instagram or started not to, it would all fall apart. Right. And so that, that's kind of the, the implication of it not being 99% advertising.
- [12:30]
C
Yeah, I didn't get through the whole transcript, but Zuckerberg was talking about like consumer interaction with AI and consumer interaction with other AI driven surfaces like glasses for a lot of it. So I think he's Already thinking about that world.
- [12:47]
B
Yeah, yeah. I think they're always. Because they, they are intermediated on their platform by Apple and obviously they have some really tough. They've had some tough times based on that. Zuckerberg is sort of obsessed with leading on whatever the next platform is and he tried virtual now he's trying glasses. AI is a new platform in a sense so he is trying to get ahead of that. But the history is that they haven't been successful at doing that.
- [13:17]
C
Yeah, but they're successful ads. Two other things on Meta before we get into Google. So first was story and digiday that they're considering pushing into ctv. This was something you predicted in our year end episode. It seems like a no brainer and frankly the way the industry is going to. And goodness the return of fan but it might be controversially called man which.
- [13:44]
B
Yeah, you know this is in my, in my understanding this is sort of a no brainer for them. You know they've fan has been mixed results. They obviously pulled out of web a long time ago but the ability to bring small and medium sized advertisers globally to the streaming world is a huge opportunity. We see even Walmart just announced they're in this, in this business of bringing these advertisers to TV and, and Meta is just in an amazing position to do this. And you may say well they don't control the inventory, et cetera, et cetera. Yeah, but it's just such a high cpm, high margin business. It's crazy that they're not playing in it.
- [14:22]
C
Yeah. Or they can buy something. So one to watch the other significant one on on Meta was China ordered Meta to reverse the Mattis acquisition which was a $2 billion deal. It's been four months. Men is already talking about how they've integrated Madison is driving good results with AI and the decision has now been elevated to Xi's National Security Commission. So this is significant from an AI perspective but then maybe not significant in terms of what could happen if you know, they decided to pull out of China which Eric Schufer pointed out.
- [14:59]
B
Yeah, so a couple of things here. So this deal already closed. People have the money in their bank accounts and they're being asked to reverse it out. So it's a big implications to the venture world and to the Chinese venture world. Very negative implications there. Manus has already been utilized for a lot of ad related use cases in Meta. But on the other hand, just yesterday Meta announced their official MCP server. So Manis is not the only route by any means towards automation. Advertisers now can use Claude or whatever they want who access the Meta advertising system, which previously they weren't allowed to. There were some cases of accounts getting banned. So I don't know that this has a direct effect on the advertising business. I think Manus was a really cool investment for them and they were excited about it and they're certainly not happy about it being reversed, but I don't see any immediate implication on their advertising business.
- [15:58]
C
Yeah. And Sufer pointed out, which I thought was super interesting, that because of the second price auction and the diversification in the number of advertisers and the number of scammers in China, even though it's a $20 billion market for Meta, if they decide like, hey, like, you know, it's, it's dangerous for us to be operating here, you know, sustainably, like it might not impact the business too much.
- [16:21]
B
Yeah. But he does point out that virtually all of their hardware is built in China. So to the what we said previously about Zuck investing in glasses, et cetera is in a lot of jeopardy if he gets into a pissing match with China.
- [16:33]
C
I doubt he will then. Okay, let's talk about Google. Google 109.9 billion in revenue, 22% year over year growth cloud. I think I put 20 exclamation points in the docket here. Up 63% to $20 billion. Printing money search is up 19%. So much about Google losing search, YouTube ads, slight miss at 9.88 billion. The only thing that was down and it was like, oh, by the way, because this is just so small is the network revenue. Little old ad tech down from 7. 3 billion to 7 billion. Their capex forecast is monstrous as well at 190 billion. Cloud is mind boggling. Up 63%.
- [17:20]
B
Yeah, this is, it's got to be AI, right? I didn't listen to a transcript, but yeah. So you get Gemini in Google Cloud services. GCS is considered at par with Amazon at this point, I think, for the most part. And so. And Amazon is selling other people's AI, not its own AI. So I think there's a lot, a lot going on here and I don't think we have it in the notes, but you know, Microsoft and OpenAI just renegotiated their deal so that OpenAI is going to be available in other clouds. So I think that potentially is kind of the break that Amazon's been waiting for.
- [17:55]
C
Yeah, Andy Jassy had a post on X and it was very intentional. He said something around Interesting news. So we'll see where that goes. We'll take the next few. Again, continuum of the story. Microsoft 82.9 billion revenue, up 18% year over year. Cloud up 29% to 54.5 billion. So again, this is AI spend. Amazon 100 181.5 billion up 17%. AWS up 28% to 37.6 billion. A 15 quarter high adds up 24% to 17.24 billion. So we see where this stuff is going. It's going to the cloud, it's going to AI spend.
- [18:39]
B
Yep, yep. It's. These companies are, with the exception of Meta, who is only ads. These other companies have all have two horsemen in the, in the race, the cloud and the ads. I mean, Amazon obviously has retail, but like, like I. We don't really care about Amazon retail, do we?
- [18:56]
C
No, I mean to the extent that it's got the retail, you know, footprint to, to run ads, I guess for, for this podcast, but it is just monstrous. These companies are getting bigger. All right, let's talk about some announcements. You know, big, big week of announcements possible. We won't nearly be able to get into all them, but a few things that I think show, you know, some signal on where the world is going. So in no particular order, Pinterest, who closed the TV Scientific former investment of ours at Imperium in February, officially launched Pinterest and TV Scientific. So they're integrating the Pinterest data, which is like super interesting data. I think it's like very valuable. It's like mid funnel of 600 million users off platform into CTV. So not unlike what you were saying with Meta, which is just this obvious opportunity. They're doing early tests, they point to a 27% lift in outcomes per $100 spent. So it's like really exciting stuff.
- [19:55]
B
Yeah, I got briefed on this. They took me to breakfast, which is nice. Sometimes people, some people, times people pretend I'm a journalist and I appreciate that. So Jason Fairchild gave me the briefing, basically. So this is to be clear, Pinterest data into TV Scientific, not the opposite. No, no, I just want to be clear because I think people could think this is like, oh, Pinterest advertisers can buy T tv and that's not really what's going on. It's a TV scientific. Advertisers can use Pinterest data. First step. I think it's telegraphed that the opposite will be true, you know, so Pinterest has an ad manager with hundreds of thousands of advertisers at some point they could buy tv. But that's not what this announcement is. This is kind of a first step.
- [20:35]
C
Yep, yep. The other one that I thought was interesting related, not necessarily pure play on CTV was PayPal ads. So PayPal launched their ad ID. So it's a deterministic ID built on 400 million. PayPal and Venmo accounts like 25 billion transactions per year and it's free to partners. And they launched on the usual suspects. Magnite, Pubmatic, Taboola, so on and so forth. I think this is a good one to watch as well as we kind of think about the new forms of data commerce being maybe one of the most valuable.
- [21:10]
B
Yeah, it reminds me a little bit of when LiveRamp made their ID free to partners. The business strategy being you use the ID and then when a customer wants to, you know, target or onboard or use attribution, that's when the fee comes in. In PayPal's case, I don't know if they're going to charge a fee on a use case more so they're likely to sell media to their existing huge base of customers.
- [21:40]
C
Two similar announcements, one on the buy side, one I guess, you know, on the, on the sell side. So TTD launched basically integrations in commerce platform. So PacView, where I'm on the board and sky, also a commerce media company. So TTD DSP is now manageable within these other interfaces. These are I think going to go live next quarter and it's cool. It connects like upper funnel Programmatic alongside retail and search and walled gardens. I love this.
- [22:13]
B
Yeah, I think it's. I kind of am a little skeptical. It's like incremental, it's like one UI and you get the campaign side by side. But they aren't in any way deduplicated and they can't be because the channels that PACU and Sky work with don't provide back any user level data or impression level data even for that matter. I don't believe as a result you're not going to have, you know, frequency cap adjustments, I don't think. My guess is you don't have budget adjustments. You're really just seeing it side by side. And I've seen these sort of partnerships before. Nice. Not game changing.
- [22:46]
C
I'll push back on that in one way, which is these are being exposed to primarily like performance and lower funnel marketers who are looking to grow into mid and upper funnels. So I think this is actually quite good for TTD because it gets an exposure to A customer base that is just thinking and buying with a different strategy than their normal kind of Fortune 500, Fortune 1000 opera centric marketers.
- [23:15]
B
Okay, so you see this deal as a, as a TTD customer acquisition strategy.
- [23:20]
C
Yeah. Or growth strategy.
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B
Okay, that's interesting. That's not the lens I was taking. I was thinking about it more like a, a workflow enhancement for common customers.
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C
Yeah. At its best I think it's growth and again I'm kind of looking at this from a pacview perspective where I'm on the board. But I'll get some answers to those questions. I'll come back on it. The other one similarly was Walmart. Walmart had a couple of announcements around Connect select which is. We'll talk about Connect select first. So it's basically a curated CTV Marketplace in Walmart DSP. It's got inventory from all of the OEMs and streamers and as well as SSPs like Magnite Index, PubMatic and it's targeted at SMBs. They're going after the Universal ads, the TV Scientific, the Vibe, the mountain. So many everybody going after this market and meta too.
- [24:13]
B
Yeah, it's a full rush. God bless. It makes sense that Walmart would do this. I'm rooting for Walmart a little bit. I think Amazon DSP and Walmart DSP ASP should be peers and you know, Walmart's got a long way to go to, to get there. No fault of their own. It's a tough market but I'm rooting for them.
- [24:33]
C
Yeah, don't forget they have Vizio which I think over time, you know, if they, if they execute could be the real monster here. The other thing was Walmart also, you know, basically had the same announcement as TTD in terms of integrating into pacview and Sky. These are I think a little bit closer to the Walmart universe of shared customers. But I think it's just interest how DSPs are integrating into these commerce media platforms.
- [25:00]
B
Yeah, I think it's natural because you've got the open web they traditionally bid in is flat. So you gotta go where the money's going.
- [25:08]
C
Yeah. Which is commerce media. So other one on the just like kind of feature and platform rollout that thought was worth touching on was Magnite. So they rolled out a whole suite of Agentix solutions. So first was like a springserve AI mediation and buyer agent. Buyer agent rather. So they're doing tests with Kepler and MIQ using Disney inventory. And the other was I saw Mafi running around, he was super excited A lot of the features that they've picked up with streamer around CTV. Creative generation for SMBs are becoming built into the platform, I think alongside the buyer agents. So Magna is running hard at AI. It's really impressive.
- [25:52]
B
Is Mafi still wearing that hat or has he switched to a magnite hat yet?
- [25:56]
C
No, he wasn't wearing a hat. He was not wearing a hat.
- [25:59]
B
He usually wears that bright, bright pink hat.
- [26:03]
C
It's retired. He's product or SVB of AI product for Magnite.
- [26:10]
B
He's become respectful. So yeah, the Magnite Magnite announcement was impressive in its breadth. They didn't just do one AI, they did a whole bunch of them. But re reiterated what my thesis on Twitter about this, which is that it's again, a single point AI, similar to what PubMatic has announced. So they say it's buyer, but it's really buyer on their platform. We're still not seeing any, any investment in AI where a buyer agent and a seller agent who are at arm's length are negotiating. It's, it's still single point, customer to destination, and I believe that's a much more promising area to invest.
- [26:53]
C
Agreed, Agreed. Also quite complex. And the final one was just a monster fundraise kind of out of nowhere. So yeah, Touch, which is in cvp, which is a category that was super hot and then, you know, kind of went dark for some time. Raised 150 million at a 2.75 billion dollar valuation. There's a Series D led by Goldman Sachs and Bain TD7, which was a trade desk. VCRM invested as well. And if you look at the story, and I encourage everybody to look at the site high Touch AI, you know, they're telling the story around what can happen when you activate customer data using AI from a creative standpoint, from an activation standpoint, the story is very compelling and it's a, it's a big race.
- [27:41]
B
Yeah, huge. They were not on my radar at all. I'm trying to get their CEO on the POD in the next couple weeks so we'll hear from them, assuming we could book it. Yeah, their pitch was not cdp. It was like, hey, we're cdp, but really we're agentic AI, which I think, you know, sign of the times. I'm intrigued. I'd love to hear the backstory on how they got that valuation.
- [28:03]
C
Yeah, exactly. Well, you're quoting 100% growth, you know, year over year for two years running. So the biz has to be, you know, executing at a high level. But I this was a category that I paid a lot of attention to when it was emerging and hot. Most of the competitive set has been acquired and, you know, no longer independent names. So maybe this is, you know, the. The one that survived.
- [28:26]
B
Yeah, I think the CDP world got got disintermediated by Snowflake and others where it was, you know, database plus a bunch of features, and people had the composable cdp, which really meant paying as little as possible for the full package. And it seems to have worked. So there's nothing wrong with collecting all your customer data in one spot. You just don't necessarily need a single vendor to do it all.
- [28:51]
C
Yes, very true. You saw something on UCP you added to Zaka. What's that?
- [28:55]
B
Yeah. So UCP for those longtime listeners is the retail AI protocol that Google announced right at the beginning of the year. And at the time it was unclear if it was going to win or what was happening because OpenAI had released a similar but different protocol earlier in 2025. And now it's unequivocally the winner because we had this week a list of people including Amazon and Microsoft and Salesforce and Meta all adopt ucp. So UCP is the future. What it is is a way for effectively checkouts and discovery of products to work inside AI. And it is, it kind of balances the merchant's desire to control the customer and control the experience with the AI provider's needs for, you know, access to checkout, you know, APIs and things like that. So I think everyone is pretty bullish on this. The consumer behavior is still a little bit up in the air as to how they'll shop using AI, but it's great to have the Rails set and for everyone to agree on how they should work.
- [30:03]
C
Yeah, seems big with that. Should we get into the interview?
- [30:07]
B
Yeah, absolutely. So this is a super interesting interview. It's short. It's me and Andrew on a couch using my phone voice memos. I hope the audio is good and I even stump him on a question. So I ask him some pretty tough questions about how this all works, his containerization project. Is it the future of the way DSPs work, where there'll be, you know, sidecars to the SSPs, or is it just the same old thing that other people have been doing for years? So I hope you enjoy that interview.
- [30:34]
C
Awesome. See you next week, everybody.
- [30:36]
B
See ya.
- [30:39]
A
This is at Tech God, and I command you to listen to this House ad. So if you're listening to this show, just know that you've really stumbled upon A giant network of content across advertising, marketing, media, publishing, and of course, the people that work in this great advertising industry. So go to market your media dot com. Check out all of our brands. We have multitude of shows from the Brand Forum, the Advertising Forum, the Monopoly Report, the Ad Tech God Pod, the Market Texture Pod, and more. We are bringing more podcasts to our network. We are consistently and constantly bringing on new shows. So check it out, market or search for any of those brands in the app that you use to listen to this podcast. Enjoy the show and see you all soon.
- [31:29]
B
All right, this is Ari. I'm here at Possible with Andrew Casale, the CEO of Index Exchange. We're at the beautiful suite on the second floor of the Soho House and we are here to talk about recent announcements from Index Exchange. So, Andrew, how are you doing here at Possible?
- [31:43]
D
Thanks, Ari. Doing great. You know, it's hard to complain being in Miami and South Beach. Weather's great and it's been a flurry of activity so far.
- [31:52]
B
So you've been pretty busy. There was a press release that went out earlier about sort of your containerization project. And the crux of it is that folks can build inside the Index Exchange cloud they could deploy. The bedrock platform was your first partner, and they're deploying effectively a DSP inside your cloud. So I want to hear first, like, what is it? Why should we care?
- [32:16]
D
Well, that's a great opener. I think the first thing that I'd say is that this is not that new. So we're about two and a half years into the vision now. You might recall the press and the announcement we did with Chalice at that time, which was really the first time that we stood up code in a container on top of Index. We didn't call it the Index Cloud at the time because it was so new and novel. And we also weren't certain that it was going to become a thing, but we were really excited by it. But since that point, we've also deployed many other partners, like Empowered Cybids, all in the custom bidding algorithm space. Also a company called Nano. And then more recently in the fall, we deployed a data provider, gracenote, who brought their show and episode level data into a container as well to provide that metadata at the edge. And then most recently last week, an additional application we announced, which was the deployment of the first containerized bidder instance from Bedrock. And so now we have multiple iterations of ad tech running. And we've also come a long way in building out support across the cloud. So thus the announcement I want to
- [33:22]
B
dive in a little bit for our audience on what it means when we say containerization, because having data in the cloud next to a bit or next to an SSP is not new. AppNexus was doing it in the 20089 time frame. At beeswax, we had a thing called augmentation where we had partners. It would put data near our cloud, but it wasn't really packaged as well. So take us through why this is kind of new.
- [33:48]
D
Yeah, it's new in the sense that we are effectively running our partner's code on our compute. And I don't think in the examples you cited it was that. I know for certain it wasn't that. With Beeswax, there's a bit of a difference between near and on. So we also have a notion of real time data providers. We've had that for many, many, many years. And that's the opportunity that partners have to receive real time requests from the exchange with about 5 milliseconds to respond and add data and append data. The challenge with that integration point and any other like it is the requests are still going outbound to the exchange to either public cloud infrastructure or our partner's infrastructure. Their compute is required to look up and associate whatever they're doing with the request in a very, very short time frame. It's expensive to do that at Internet scale. The novelty here, and the reason why we're pretty excited by what's happening, is when you reduce the amount of compute you need just to one enrichment or lookup, it's actually quite nominal compared to the amount of compute required to ingest the entire fire hose and do it at scale. So we're radically reducing the cost of compute to do decisioning, data lookups, and now bidding at the edge. And that's. That's what's new.
- [35:02]
B
Right. So I could speak from experience with Beeswax. The way we did it was we told our partners, you have to be in the same AWS region as us, but the rest was up to you. If you wanted to scale up how many machines, whether spot or reserved instances, how much cpu, that was your problem as a data provider. So it sounds like what you're saying is because it's your compute and your container, those problems kind of go away and the partner can just worry about the code. If you could respond to that and also tell me about the economics, like if I was a new data provider and I wanted to be on your cloud, what would my bill really look like?
- [35:37]
C
Yeah.
- [35:38]
D
So you've Kind of hit at the crux of it. There's two big points. The first one is the ingest and egress problem. The ingress and egress, I should say problem is gone. So if you want to look at the entire firehose, we don't have to transport that data anywhere, which is a huge expense for a bidder or any one of these applications. The second though, is the speed is very real. And in our world, speed is a corollary to the cost of compute. We're not publicly revealing yet the speed of this bidder, but it is blazing fast, which massively reduces the cost of compute as well. To answer your specific question, though, we don't charge for ingress or egress as you traditionally have in a public cloud environment. We do charge for CPU cores, but what we're able to get out of each core per unit of qps is insanely high compared to the benchmarks that we've compared this to. With partners where we're pushing the same QPS into either their own on prem instances co located in the same data center, or to the own public cloud instance where they're doing this in the public cloud. And that's really the additional bit. We process the request so fast we can get more out of each CPU core.
- [36:45]
B
That's pretty interesting. So I want to step back a little bit because the IAB released a standard around this called the Agentic Real Time Framework. I think agent. And then people like Adam Heimlich started adding me about why I was an idiot because I didn't take it seriously and why wasn't I going to write about it? So this is officially my writing about it. So two part question. Part one is, is this related to that? Is this built on that? And the second question is, can we really get rid of the A the agentic in this acronym? Like what does this have to do with agentic?
- [37:18]
D
Happy to. So I'll take that in two parts. The Agentic Real Time framework is what governs the standard behind the custom bidding algorithms of the optimization vendors that really started this containerization party. And then also more recently, data vendors with the specific announcement last week with the bedrock bidder that's using OpenRTB. So the OpenRTB protocol is what governs a bidder. You can almost look at containerized bidder as the same thing as a standard bidder in that we send a bid request with a standard bidder to an endpoint on the public cloud or their own infrastructure. In this instance, we send the same bid request, but to their container, which is cryptographically signed, that runs their code. Otherwise it's effectively the same request in, request response out. As you would typically see with a dsp. With respect to the ARTF and the word agentic, my comment there would be. We're not done yet with where this vision goes. And so I'll give you a window into where I think a lot of us think things go next. If you take a typical bid request, bid response with a DSP which around 200 milliseconds in and out, and you shrink that down dramatically into a world now where we have models at the edge that respond in 5 milliseconds, you have bidders at the edge which respond very quickly. We'll announce win soon. You end up with a lot more time. If you then have an ecosystem of more data providers and more models, you get to a place where there's an opportunity for orchestration in that very, very, very brief moment in time to make really cool new decisions. Instead of calling one model, maybe you call three. Instead of calling one data provider, maybe you call 200. Instead of calling one bidder, maybe you call them all. And maybe they can all be orchestrated together. This is where we think things will go next. And so I would say that the agentic part of ARTF is yet to come. But I also argue the agentic side of what everyone is preaching in programmatic is also yet to come. But I'm pretty sure that the agentic version of the market that is coming will be impressed in level, will be super fast and will be born in this protocol. That's my hot take.
- [39:20]
B
That's a pretty hot take. I'm still objecting to the A in the acronym. So for those of you who aren't super familiar, Bedrock is a sort of a next gen DSP founded by Shane Shevlin in the uk. I think their inclusion in your announcement will kind of raise my eyebrows a little bit because I think, I think this sort of edge computing around DSPs and SSPs has been very commonly used for data. The idea of augmenting data so that you could do curation or you could do filtering, et cetera is pretty common. But bidding in an SSP's cloud is a new thing and so I want to talk about that for a little bit. So obviously a bidder inside your cloud has some advantages around latency and around sort of inventory access. But if you fast forward and you said, well, what if, say, a Bedrock or another DSP did this with multiple exchanges? Because there are other Exchanges out there, last I checked the problem, you start creating new problems like how do you coordinate budget between them, how do you create frequency cap between them? And I wonder what your opinion is of that trade off for buyers.
- [40:29]
D
It's a great question. That was one of the key pieces of the original architecture before this bidder could even go live, which is bedrock. Does bid into other exchanges. They do have their bidder on the public cloud. They were previously integrated into index that way. So part of this design was how do we maintain that construct while also enabling the bidder to live in the cloud and gain all the benefits of it. And so there is an orchestration layer that they designed that allows the bidder to kind of effectively do what bidders do today across region. So if you think of, you know, you know this well, any DSP who has infrastructure on, say, the west coast and the east coast, they actually have the same problem, which is campaign information, frequency capping and pacing need to be synced cross coast. Technically, the problem is a little simpler because we're a lot closer to their infrastructure than the West Coast. The West coast is 70 milliseconds away, we're 10 milliseconds away. So we're effectively being synced in the exact same way. And we could see this scaling quite well to a handful of exchanges. Will it be every exchange? Probably not. But for every exchange, their base bidder will still be able to participate. And so effectively, the same orchestration that allows a DSP to sync all this information across their endpoints is being reused to enable this index cloud instance.
- [41:50]
B
Yeah, if you want to give a ad tech executive, especially in the tech side, ptsd, just say, how do you think East Coast, West Coast? Because I could go off, I could have a whole podcast on this question. Because, you know, Europe, US is easy because you don't have any of the same users. Right. The same person is not in the US and Europe at the same time. But if you're in Kansas, you might be in east coast and west coast at the same time. And it's really unpleasant. I'll get off that hobby horse for a minute. So let's talk about other aspects of this around privacy and whether this is better. I'm kind of giving you a layup here. But like, it seems as though moving data around less is good. And I wonder if, if you have more deep thoughts than that about this, especially as it relates to Europe and their laws about moving data into the U.S. yeah, this was a huge part
- [42:39]
D
of the original vision, which is the bid Request never leaves the building, it doesn't go on the Internet and it doesn't even leave the exchange, which is inherently more secure. Nothing is on the wire, but the other hope was that over time this would also allow for an autonomous bidder to be able to leverage more data that historically publishers tend to hold back from programmatic. So we have a lot of publishers with great first party data that they'll never put in a bid request because they don't want to grow someone's graph. In this particular integration, data can be made available for a bidder that can understand it and use it and the data never leaves. So I also think not only will it be more secure, but it will allow for more over time, liberal use of publisher first party data in a secure construct. It'll ultimately take time to get there, but I think as publishers start to understand this design, they'll see more upside to make their data available than to hold it back. Compared to the original concerns of enriching a third party's graph, I want to
- [43:40]
B
follow up on that. Can your current architecture specifically restrict a member of your cloud from logging certain data, be it user data or publisher data?
- [43:51]
D
This is sort of inherent to the way curation works. So in curation you're not directly sharing data with a participant or a bidder. And so we see that same model applying here too, where if you take a publisher with a great data set who has packaged it into effectively a deal ID or something like that, they're not directly sharing the audience data or information that created that package, but they are making it available. What we hope though is in this scenario we'll be able to not just do that, but we'll also be able to potentially represent the data in a non, let's say human readable form, which will lend itself to also models because the modeling companies also have the potential opportunity to use a lot more points of signal to make really smart decisions and we think this integration will also lend itself to that. So just think of it as slightly non traditional approaches to solving the problem become a lot more possible in this environment. But to be perfectly frank, like this is not invented yet, we're still walking this path, but this is where I think it can go.
- [44:58]
B
It seems like this would also enable a movement towards tee trusted execution environments. We had Jim Payne from CloudX on the show a couple months ago and that's one of the innovations that he's trying to bring to the nih where it's very opaque. For those who don't know, TEE is Sort of a cryptographically signed way of proving what happened inside a black box around the auction. Mechanics. Have you thought about that at all?
- [45:22]
D
This is one of the few topics that I'd ultimately have to punt to our cto. Ray has been thinking and talking about this a lot, but I would butcher it if I even tried.
- [45:34]
B
That's totally fair. Unfair question. I went for double jeopardy on that one. Okay, so in some, like, paint us a picture for where you think this is going kind of in the long term. If you were to prognosticate three to five years out, assuming Programmatic still exists, what do you see this cloud looking like?
- [45:55]
D
I think Programmatic won't just exist. I think it'll be bigger and better in three to five years than it is today. And I think it's innovations like this that'll make that possible. I'll give you a few versions of the future that I see. The one obvious one being I think very few bid requests will cleverly the exchange in five years. There certainly might be, you know, obvious cases, big giants that'll have their own infrastructure, but I think the vast majority of bidders will containerize because there's a huge business benefit. If your number two line item in your company is the public cloud, and we can radically reduce that cost, that's a lot of capital that you can realize back into your business. You know, it's been one day at Possible so far, and I have had a lot of meetings with the about what it would take to containerize their bidder. And there's a lot of interest in it because the costs are real and they're rising. The second one is what kicked off. The portability of models of the custom bidding optimization party was about 5 milliseconds in the hot path. Imagine a world in the not too distant future in a few years where instead of giving a custom bidding algorithm 5 milliseconds, if the bidder is so fast, we can give the algorithm a lot more time. Instead of the algorithm needing, you know, 12 features in a tight memory store to be able to hit that response time, it can have hundreds of features in its store, it can use a ton of memory, it can be slow, but it can make really smart decisions. We then get to a place where I think we can have a whole lot of companies building things that start to feel a lot more like pmax, and it can get really, really fun in our ability to try new techniques at massive scale with a huge Internet firehose with really low costs to start to find new novel ways to drive outcomes at scale. That's the hope that I have for the market, and that's what I think this is all about. This is about finding a way to make this overall market perform better and drive better outcomes.
- [47:44]
B
Well said. Really interesting conversation and an interesting vision for the future of Programmatic. Thanks for joining us. Andrew.
- [47:50]
D
Thanks so much for having me. Yuri, thank you for subscribing to Market.
- [47:55]
B
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