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Marketecture: Get Smart. Fast.
Episode 182: Brian Quinn from AppsFlyer on the Billion Dollar Investment from Google and Meta
00:44:31
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- [00:00]
A
Foreign. Welcome to the Market Texture podcast. This is Ari Paparo. I'm here with Eric Franchi and our guest this week is Brian Quinn, the president and GM of Apps Flyer who's been on the show before. We're excited to talk to him because they just raised a billion dollars. Eric, do you raise a billion dollars very often your portfolio companies throwing around the bees.
- [00:31]
B
That is rarefied air in ad tech as we know. There were two announcements that caught everybody both by surprise and had everybody talking again. The first was Vibes acquisition by Walmart Connect. The second was this. So I can't wait to talk about this one.
- [00:46]
A
Yeah, and the fact that they raised it from effectively strategics. So Google Meta. How often do Google and Meta co invest? It might be the first time that's ever happened. Plus throw in, throw in Unity and Maloco while you're at it. It's, you know, this has been the year of mobile, right? You know basically, you know, basically you got liftoff ipo, you have Applovin, just killing it, ripping. I'm missing someone like, you know, there's been more than that. So it's really exciting time for the mobile market. So I spent yesterday in my house, it was really hot in New York, 95 degrees. And I decided to do a little, a little vibe coding, right. As I tend to do. Right. So the end result of my semi retirement is that we now have a MCP server for architecture. So what does that mean? So my pet project has been MAD db. The URL is MAD MAD D B AI. And that is a directory of, I think we have like 150,000 news articles and 5,000 ad tech companies and another, you know, 7,000 ad tech people in this directory. And it gets updated with AI every day. So now there's an MCP server. So what does that mean? Eric, are you MCP ing much? Are you into it? Yeah. What's your favorite, what services do you use MCPS with?
- [02:14]
B
So at Apperium, so on a professional level, we connect some of the needed parts to run a fund to Claude. Okay, so we connect Affinity, which is like a purpose built CRM for investors, to cloud. We connect Carta, which is our back end for all administration and company data to cloud via mcp. And it is like, it's unbelievable, right?
- [02:40]
A
It blows you out. You can ask questions about your own data. Well, so I just built this yesterday. It's got like literally two people have ever used it. It's pretty cool. So, so I, I used it to, I said, I said to Claude using MADB. I should ask Brian Quinn from AppsFlyer, what question should I ask him? And it came back, did you see this at the bottom of our show notes with these questions?
- [03:06]
B
Yeah. So good.
- [03:06]
A
It's like you know the one billion dollar bet from your own frenemies. You required one billion dollars. Four platforms that are also channels for AppsFlyer. Ask why the walled gardens are suddenly funding independent measurement and how he manages the conflict of being paid by the platforms he's supposed to objectively grade. So that's the first question that Claude wants me to ask. That's a good. Pretty better question than I come up with. Also, it's got. One of the things is it's got links to all the articles because the source material is publications that we want to drive traffic to. We're not claiming the copyright on any of this content. We're just linking out to the articles. So you could ask it about a company, you could ask about a person, you could ask it about a trend, you could just say what's been trending in ad tech and retail media for the last two weeks? And it gives you answers. I would highly recommend you have to register at maddb, which is free, and then you connect your MCP server and then you just ask it questions and you get very in depth ad tech answers. It's kind of like having me in a little box in your computer.
- [04:02]
B
That's all we need.
- [04:04]
A
So, Eric, you try it out and give us a review next week.
- [04:07]
B
We'll do.
- [04:08]
A
All right. Appreciate that. All right, so let's get on with it. So Brian Quinn, the President of GM of AppsFlyer, will be with us in a minute, so stay tuned. Brian, thanks for joining us on architecture.
- [04:20]
C
Thanks for inviting me. Good to be here.
- [04:22]
A
Yeah. So this is your second time on. On the show. I believe it's true. All right, so not yet getting a blazer, but you're getting there.
- [04:29]
C
When do I get my blazer?
- [04:31]
A
I think three is our blazer level or robes. It's a joke we love to tell over and over again, even though it's not very funny. So. So you're in the news. AppsFlyer was in the news because a major funding round before we go into that, for those not as familiar. What. What is AppsFlyer?
- [04:51]
C
So we're a platform that helps advertisers do measurement. We started in the mobile app space. We expanded to web and CTV and PC gaming platforms. So you can think of us as sort of providing measurement and attribution and engagement services for performance Advertisers, Right, right.
- [05:11]
A
So we used to know your sector, it was called MMPS for a while and then there was a lot of kind of turnaround and some companies moved in and out. But you're effectively the largest company in that segment now.
- [05:24]
B
We are.
- [05:24]
C
And we started calling ourselves a modern marketing cloud. We sort of outgrew the MMP moniker, but probably most familiar in the space, you know, is, is that term is still, is still used.
- [05:35]
A
Modern marketing cloud. Mmc. Are you trying to get people to adopt that acronym?
- [05:40]
C
That's what we're doing here, aren't we?
- [05:41]
A
All right, good luck with that. I'm an acronym skeptic. But the reason we wanted to have you on the show, besides your, you know, good looks and charm and whatnot, is that you just kind shocked the world with a billion dollar funding round. And it was interesting because that's a big round for an ad tech company and especially a big round for an ad tech company that's not a transaction company. You don't buy media or sell media the way like Vibe or some other companies do. And finally the source of the money, it was not a private equity deal, it was not an ipo. You actually effectively got money from your partners and customers with Google Meta, Unity. And who am I missing? I'm missing somebody.
- [06:22]
C
Maloco.
- [06:22]
A
Maloco as the funders. What is going on here? Give us a story. More details the better.
- [06:30]
C
So you know, I think we have been, you know, in the market for a while evaluating all options. Public markets, private markets, private equity funds, growth equity funds, strategic investments. So you know, we spent a lot of time sort of looking at, you know, potential ways to capitalize and fuel our growth. You know, at the end of the day, I think we fortunately are sort of, you know, coming from a position of strength here. You know, the business is growing. Well, we've been profitable for a long time. So when you're in that position, sort of raising is more advantageous. You know, I think at the end of the day we found investors who have a very, you know, a shared vision for what we want to do to build omnichannel measurement, multi platform measurement for the AI era. Each of these investors like so Maloco, Google Meta and Unity are all minority, non controlling, non executive or sorry, non exclusive investors. So it gives us ability to stay structurally independent and have shared ownership across these investor ecosystems. So no single investor has or together have control of the business. That was important to us. I think it's critical to our ecosystem that measurement stays independent. We're Effectively the referee of the mobile economy. And I think our investors recognize that the independence of our business provides advertisers in the entire market a lot of value. So we were able to bring a few of them together to raise some capital. This allows us to accelerate our product ambitions. It returns capital and liquidity to investors and shareholders and employees and it keeps what we do independent and it allows us to continue to develop capabilities that we believe serve the whole ecosystem. So this is in a nutshell, the deal we just did.
- [08:36]
A
Yeah, independence, a key word here because my first reaction was like, oh, this is like if Nielsen got bought by the big three television networks. And then I said to myself, no, it's not like that because in this case they're also not the customers. Right. Google's not really the customer of AppsFlyer. The customer is the advertiser, the game company and things like that. So what is going through the head of the investment team and Meta that says we're going to invest in this company that's downstream of us, that is measuring us, even though we do our own measurement and we're one of the biggest, most powerful companies in the world? You know, how, what, how important is it that you remain independent in this deal?
- [09:20]
C
You know, I think that, that the, these platforms who we've partnered with for over 12, 13 years, who we've developed privacy, safe measurement products and solutions with, they know us very well. There's a lot of mutual respect from an engineering perspective. There's a lot of shared vision, as I mentioned, from independent measurement. You know, I think they recognize and many of these companies see us as an optimization signal for their own advertising business though along the way advertisers would prioritize the results from an MMP or AppsFire because we have a full view across all media companies around the truth. Right, right.
- [10:05]
A
This is an important point.
- [10:06]
C
And you know, along the way these platforms recognize that with all the first party data that they have, their advertisers actually look at AppsFlyer data as a source of truth. So they began optimizing on that signal. So through the infrastructure of Postbacks and how mobile attribution works and we're kind of sending signal to perform attribution. The ability for AppsFlyer to send a postback with very rich signal about what happened across web and TV and mobile and inclusive of fraud protection and calculations of ltv, all that gets packaged for these walled gardens, that becomes their optimization signal. That's very, very important signal they can't get on their own.
- [10:50]
A
And this is the case. I'm sorry to interrupt but this is the case even with a company like Meta that does so called like self reporting. So they're charging customers based on their perception of what got installed but you're there giving them data that's more valuable for the optimization. Is that sort of a simplified view?
- [11:09]
C
Yeah. And I think you know they recognize that not only is measurement important to keep independent, you know, effectively like the referee of the game if you will, but the importance of having signal that the advertiser recognizes a source of truth for their own optimization I think is very valuable and I think that's a big part of kind of how they see us.
- [11:34]
B
Brian, as a person whose day job is investing. I was like very, I was blown away by this deal. It was just like so unique and the names involved, the scale to the extent that you're able to. How does a round like this come together and are there any stories or anecdotes of like, like who called who first and you know, just, you know, just anything you can share because this is just like so different.
- [12:00]
C
I'd love to share. I'll also remind you the deal's not closed. Right. So we signed the deal a few weeks ago, it's not closed. So I'm not able to share much kind of more beyond what we've publicly shared. But I would say it's like through this process I think we gain a lot of understanding of the relative importance of partnerships like this and the importance that the entire market sees in sort of protecting the neutrality of, of of measurement.
- [12:31]
A
It was interesting that there are no private equity firms involved. This seems like a write up their playbook. The. Any thoughts about that?
- [12:41]
C
We talk to private equity, we talked to growth equity. You know I think there's a difference between looking at our business from a financial asset perspective and looking at our business from a strategic alignment that serves a market that serves advertisers. And I think that probably is the deciding factor here in terms of why we brought together strategics in a group of non controlling interests.
- [13:07]
A
Right. So there's one company name that hasn't come up yet that's very important to this deal which is the number two MMP in the market which I believe is Adjusted which is owned by Applovin. So Applovin being the scary 500 pound gorilla in the mobile install space right now first I guess they're probably a partner of yours also. But is that accurate to say that Adjust owned by Applovin is your number two competitor?
- [13:35]
C
Yeah, I think Distinguishing those two businesses, if you will, is important. Right? So Applovin is a phenomenal business. A great partner of ours. A lot of our advertisers and clients advertise on Applovin. We measure a lot of media. We have a great partnership. Years ago they acquired Adjust, which I think is the second largest MMP by market share. We compete with Adjust in the market. They do a lot of good things in their product. I have a lot of respect for that team as well. But yeah, so we compete head to head with Adjust. I think it's very different though. I think this deal happened several years ago and I think a lot of advertisers might look at that and say, okay, that is a conflict of interest to have a single publisher, a single network own an independent measurement business as opposed to saying, okay, we're going to bring together a small handful of investors in a sort of a minority stake to protect neutral investment. So I think there's quite a difference here in sort of how these, how this is playing out. But what you said is fair. We compete with Adjust and we're partnered with Applovin.
- [14:51]
A
It doesn't take like a strategic genius to put the, put the dots in a line here, which is Applovin is gaining market share in the app install business pretty rapidly, I think, and all their competitors decide to invest in a bulwark against that or against, against the neutrality being lost on measurement. It seems like that's one way to tell this story. Is that, does that ring true to you?
- [15:19]
C
We are open to investors, additional investors in additional rounds. Applovin could be one of those companies. We are really trying to work with everyone here, not preference any of these businesses. So you could look at this acquisition years ago and point to saying, okay, was that good for the industry? Was that good for advertisers? You know, maybe as a case to sort of justify what, what we're doing here, you know, but beyond that, I think, you know what I was saying earlier, you know, these guys are seeing the importance of independent measurement, shared interest here and, and, and good for our business to accelerate our roadmap and capabilities.
- [15:56]
A
All right, so let's talk in general about mobile marketing a little bit here or the general space that you play in. So the cliche or the perception is that it's still all game advertisers, advertising on other games. What extent is that breaking down? And you have your kind of services being utilized by mainstream brands, you know, commerce brands, folks who are selling things directly to consumers.
- [16:24]
C
I'd say the Gaming sector is, is less than a third of our revenue.
- [16:31]
A
Oh wow.
- [16:31]
C
And client base.
- [16:33]
A
Right.
- [16:33]
C
So while that was true in the early days and games, which are apps, that is their business. They are big spenders and you know, a big, big. They drove the industry in many ways. They're very sophisticated advertisers. So they really pushed companies like us to evolve. But no, you'd be very surprised. You know, really any consumer app category is working with US enterprises. Particularly in the last couple years there's been a shift with the advent of chatbots and LLMs. You see open web traffic really, really get squeezed and you see apps as being an owned and protected service that clients see a lot of very rich data, first party data that they can, that they can, you know, use and understand the client, the customer journey. And so we actually see big enterprises which are not mobile first companies doubling down on their app strategy and investing in tools like AppsFire. So the majority of the revenue doesn't come from games.
- [17:36]
A
Yeah. Well, let's talk about commerce because I think almost every major commerce site has an app and they, and applovin is talking a big game here about, about driving commerce revenue. So I guess it's two part question. How, how much are the retailers and commerce companies getting into this game and secondly, do they care about people installing the app or they just want to move some products?
- [17:59]
C
Yeah, probably our largest vertical and it's got by far the biggest growth that we see in the near term. So it's a priority for us. E commerce, retail, brick and mortar. Your question sort of depends upon is it a mobile first advertiser and is it a brick and mortar that's got an app? Is it omnichannel? Are these guys advertising on TV and have a web presence and each of those kind of carry different marketing strategies. We see a lot of E commerce. Newer companies look at using the app as a tool for customer acquisition. We see other companies who acquire customers either through brick and mortar or through web and then bring the app as sort of to drive, you know, a higher arpu, a higher revenue per user.
- [18:47]
A
Right.
- [18:47]
C
To you know, you know. Yeah, more stickiness, more ltv. In those cases we see more the app is used more of a remarketing and a retargeting surface. So a lot of different sort of like strategies here as it relates to sort of, you know, marketing. But we have capabilities that serve sort of all this. So this is a big growth area for us. And, and I like as our roadmap evolves to be more omnichannel different measurement methodologies and sort of feeding the AI era and we'll talk about that. You know, this is a huge category for us.
- [19:25]
A
Kind of last topic I wanted to cover was like the on again off again merging between in app and ctv. It's, it's something that some people say oh yeah, they're the same thing, just different screens and other folks, you know, say it's totally different. You I think AppsFlyer did an announcement Roku recently and I think you know, it's been a lot in your marketing materials. So you know what, what is the same, what is different and what's the opportunity there?
- [19:52]
C
I think the opportunity is large. I think it's been slow to manifest and for really the promise of performance CTV to come true. And I think it's multifaceted. It's not just a measurement problem. Right. I think you know, the idea of a big rich screen in the living room capturing this attention, 1530 second spots with all the AI creative available and CTV media kind of transacting like mobile media, the targeting, the measurement, the digital kind of nature of it. I think there's a big promise when I talk to the heads of CTV companies it's still single digit percentage points the amount of performance media as opposed to brand. And I think, I don't know that it's purely a technology problem. I think a lot of this is who's buying that media. You know, remnants of sort of the linear and kind of broadcast days influencing that agencies versus direct brands. We are quietly one of the largest measurement companies in the CTV space. Most measurement comes with the actual company selling the CTV inventory, grading their own homework which in mobile the world has come to know. Okay, that's not the ideal outcome for an advertiser. So I do think that the opportunity is massive to drive performance on CTV and I think the world will need an independent measurement business to do so. Our customers are really pushing us that direction. But again I think, you know, there's a question of, you know, operations in, in marketing departments and agencies of, of sort of who's buying that the ability to look at what type of ad creative and copy drives performance, the ability to connect a user. Right. A lot of common flows we see is I see media on a tv, I go to a website, I might check it out, I might sign up for an account. Later on I end up in an app environment. Maybe I'm a customer, maybe I'm not. If I can't, if an advertiser can't connect those dots confidently and know what business results drove from that media investment. It's going to be very hard to invest in that from a performance mindset. Brand is totally different. But, you know, our advertisers are performance advertisers and they need to see that journey and have confidence in it to be able to sort of reinvest. And I think there's a big opportunity. But, you know, admittedly it's growing slower than I think any of us thought.
- [22:20]
A
Well, yeah, so the advertisers don't generally have SDKs because they're not asking people to install an app on a tv. So you have to take like a log from TV exposures, then see if someone installed an app later or did something in the app, which is important. Right. But it's not as. Not as direct. Yeah.
- [22:38]
C
And like I said, we see web square in the middle of that. So we just launched a big web measurement product which is in a bit, you know, it's interesting. Right. This is not like a web is nothing new. And there's been kind of web attribution and web measurement in a way, but with all the things that are happening on web, signal loss there, the introduction of LLMs, there's a huge opportunity there. And a lot of mobile advertisers also are on mobile web and desktop web and need the ability to see users across both those platforms. And I see web sitting squarely in the journey between TV and apps. So I think there's more to that picture that's more sort of omnichannel, if you will. And once you have all those kind of piece parts, I think this is really going to help see the acceleration in this space.
- [23:24]
A
Yeah, absolutely. It all seems to be coming together. It's interesting that the web world and the app world have been so separate and there's always kind of this, which will become more like the other one. Debate or battle. So any idea when this deal is likely to close? Timing?
- [23:40]
C
No, I can't say I can sit working hard.
- [23:42]
A
Real estate agents, you stand by to give Brian a phone call. Investment advisors, et cetera. Well, let's take a break there. We have a lot of news this week, including some scandals, as well as a lot of people moving around. So we'll be back in a moment. Oh, hello.
- [24:03]
D
I'm Jeremy Bloom, co founder and CEO of marketing, and boy, do I have news for you. Marketexture Live is back. And if you've been watching from a distance, thinking that looks phenomenal. But a trip to New York is just a bridge or several too far. We've got great news for you. We're bringing market share live to the beating heart of Adland. That's right. On September 23, 2026, market is coming to Chicago. We're going to be bringing the same sold out energy, sharp insights and industry defining conversations to the center of advertising's biggest transformations. From media and commerce to AI tech and modern marketing. This is where the people shaping what's next for the ad industry will be, want to be and need to be. Early registration is live now, so lock in your ticket@chicago.architecturelive.com Again, lock in your ticket at chicago.architecture live.com Disclaimer I live in Chicago. It's not Chicago, it's Chicago.
- [25:19]
B
All right, we are back with the news of the week. As Ari said, we got a scandal to kick things off if you are not on X formerly known as Twitter. You might have missed this whole thing. By the way, Twitter, like everybody's back on.
- [25:36]
A
Twitter's the best. Yeah, I love Twitter. I was the only one left, I thought. And now it's back.
- [25:42]
B
No, Twitter is back. Okay, let's talk about Twitter. Everybody wants to go to Twitter. We'll talk about the scandal. So there was an algo change a few days ago where everything just got flipped on its head and and you went from seeing craziness to seeing your friends again. And it's like the most wholesome thing that I've experienced, I think in 2026. I'm seeing your tweets, my man. It's so good.
- [26:09]
A
I've been tweeting into the ether. No one getting my tweets for six months and I've just been sad about it and just reading all my timelines just filled with like racism and stuff and they flipped it and now it's good again. Everyone should try Twitter again.
- [26:24]
C
And is that why you're calling it Twitter again?
- [26:26]
A
Yeah, it's never going to be called X. No one's called it X.
- [26:30]
B
It feels like Twitter again. Brian, are you, Are you back? Are you back on Twitter?
- [26:34]
C
I'm dabbling. But you know what I'm going to do after this call.
- [26:36]
B
All right, you should. I am following people again. I am tweeting again. It feels good. Unfortunately, it does not feel good for a company named fia, which went viral, I guess on on Twitter X last week. And we should talk about this. So fia FIA is a shopping plugin founded by a woman named Phoebe Gates, who happens to be the daughter of Bill Gates. FIA has been accused by Ben Edelman, who by the Way Ben Edelman has been at this like investigative stuff, it's gotta be for 20 years, right?
- [27:14]
A
Yeah. He's like, if Dr. Fu took some meds, he's just like, he gets the job done. Love you, Dr. Fu.
- [27:23]
B
If you listen, we'll link to it in the newsletter. But Ben is accusing fia, which is, it's a, it's a shopping plugin. You, you, you, it's a chrome extension. You plug it in, you go shopping on the Internet and you, you, you, you get offers or, or they present you offers. So he's accusing FIA of secretly auto firing affiliate links without the user clicking. And it's being done on iOS to dodge like people on desktop. So what's happening according to Ben is FIA is stealing commission credit from other affiliates who'd already earned it from the user. This both violates standard affiliate network rules, probably some like laws, maybe, I don't know. Don't. I'm not illegal. The advisor.
- [28:14]
A
Not great. It's not great.
- [28:15]
B
And Fuse downplaying it. Say it was just like a bug and they fixed the bug. I feel like once a year there's a massive affiliate marketing blow up that happens like it was previously honey. And a bunch of influencers like, man, this playbook just keeps getting redone.
- [28:32]
A
Look, it's, it is the honey story. Almost exactly. For those of you who don't remember, Honey was a toolbar that got acquired by PayPal for like 2 billion. And then it turns out that a lot of their affiliate revenue was basically taking credit for clicks that they didn't generate. And this is effectively the same thing. They're taking credit for clicks they are not generating. I think it's a little worse, but you have to go into the real deep details to get there. A couple of lessons here. Number one main lesson is that last click attribution is really the culprit here. If you give people last click attribution, then anyone can fake it. It's inherently insecure to be able to give credit to last click attribution. And second is that if you're on the Forbes 30 under 40, 30 under 30, you're going to jail, man. It's like a straight pipeline from, from the magazine to jail. And you know, God bless.
- [29:28]
B
There are some people that are saying that Phoebe Gates had no knowledge of this. Why would she do this? She's, you know, the daughter of a, you know, I don't know what the number is if you've got hundreds of billions, but you know, she's got some dough and it was folks within the company. But either way, like the buck stops at the CEO.
- [29:47]
A
Yeah, buck stops at the CEO. She tell who knows what happens but she tells the the team, we gotta get revenue up no matter what, work harder, they do stuff and, and suddenly you're defrauding merchants. Basically. The lo. The losers here there's two losers. One is the merchants who are paying affiliate fees that they shouldn't be and the other is other affiliate networks who are having their commission stolen. There was one little nuance to the Honey story, which was that when honey was doing it, one of the bad things there was that they were actually had their own incentive program to get celebrities and influencers to get people to download the honey toolbar. And they were effectively taking money from those. From those partners of themselves, which was particularly bad. Will any of this matter? Probably not, right? I mean there have been one or two. Ben Edelman made a point that someone once went to jail for this when ebay really put its foot on the pedal and would not give up on one particular scammer. But most likely no one's going to ever care about this and they'll just reverse out the tech.
- [30:54]
B
Yeah, the meta point though is like last click attribution drives this type of behavior, so you need sophisticated measurement.
- [31:03]
A
Another side note that Brian, say thank you, Brian. Any of your customers use last click attribution?
- [31:10]
C
Some do, but you'd be surprised that the evolution in that and incrementality and looking at different attribution models. So it's not purely a last click world. But you know, I think that it's still a big part of the market, no doubt about it. And it drives this kind of behavior. And it does. And this is where good fraud detection and prevention comes in as well. So. But yeah, it's a piece of the puzzle.
- [31:31]
A
So I had a sidebar with friend of the pod, Olivia Corey about this and I asked her like, is there. How would you do incrementality in affiliate. Is it even possible? And the reason it's hard is because you can't do blackouts. You can't tell the affiliates, don't serve our link in the zip code or whatever. And she came up with an interesting idea. I hope I'm not giving away your secrets, Olivia. Which was a SKU level. So you have blackout skus that you don't pay affiliate fees on and then you. And you try to make them as similar as possible to SKUs that you do pay affiliate on and then you see if there's incremental. So I Tip to Olivia for the innovative blackout method.
- [32:11]
C
I like.
- [32:11]
B
Yeah, it doesn't sound like a secret, but that's a. That is the way to do this.
- [32:14]
A
I never heard of it. Did you heard of it? I'd never heard of anyone doing it.
- [32:17]
B
No.
- [32:17]
A
No.
- [32:17]
B
It just seems like extremely logical.
- [32:19]
A
Sure.
- [32:22]
B
All right, there's our yearly path down affiliate marketing, which have no involvement with, but oddly, we are obsessed.
- [32:30]
A
I love affiliate marketing.
- [32:31]
B
All right, let's talk about some studies here. A couple people got real mad mad on these. So eMarketer says that the AI ad market is much smaller than what OpenAI is counting on. So according to eMarketer, ads in LLMs, you know, defined as such, will be a $1 billion market this year and a $5.4 billion market in 2030. OpenAI says they're going to do 2.5 billion in revenue this year in a market that eMarketer estimates to be 1 billion and 100 billion in 2030 in a market that eMarketer Estimates to be 5.4 billion. EMarketer is going after OpenAI. They are saying that the assumptions that are being made here, and unfortunately we don't have OpenAI to give their perspective, and I don't think they've made it, is that you're talking about an extreme shift from search to a new platform. You're talking about OpenAI basically getting all of the dollars of that platform and in their forecast, a new format becoming more dominant than any other in history in a faster time, than any other in history. So they make some decent points.
- [33:48]
A
I don't know. You could take that bet. You could take the bet against OpenAI having 100 billion in revenue.
- [33:55]
B
Absolutely not.
- [33:56]
A
No, it is.
- [33:57]
B
At the end of the day, at the end of the day, there's two factors here. Number one, OpenAI, according. They haven't announced it yet, but according to people with knowledge, they already have a billion users. You already have a billion users. Like that is unprecedented. And then, number two, the ARPU that I think is just being discovered right now across every single query, has to be more than what eMarketer or anybody else is factoring in. I just, I feel it in my bones that this company can be a massive business.
- [34:31]
A
I mean, that 100 billion by 2030 number, that sounds like an awfully round number for IPO prospectuses and reasons. So is it 100? Is it 50? Is it 60? I don't know. But all the signs are that this thing's growing like crazy. The enthusiasm among advertisers and agencies and Partners. The fact that OpenAI is shifting shipping new enhancements to their ads every week, I, I just, I'm pretty bullish on this space. I don't see 5 billion in 2030. That would be a huge disappointment.
- [35:03]
B
Huge disappointment in on the space, by the way, not just for OpenAI. We're giving this to OpenAI. But don't forget you have Google, you have like, you know, other companies, Vertical LLMs.
- [35:15]
A
Yeah, I don't know. In contrast, Google Search makes approximately round numbers. A billion a day. That's just the round numbers. It's really easy to remember. They make about a bill a day. So really it's only going to be 5 billion in 2030 for all of AI. I don't believe it. But we could have Nate on again. I think he's the author of the study, so we should have him on again to defend his work.
- [35:38]
B
I would love to have Nate on. I would love to have Nate on. Talk about this. Brian, you got any thoughts?
- [35:43]
C
I mean, these guys are, OpenAI has a great partner of ours. They are shipping incredibly fast. There's a ton of excitement from the market. I think our position, my position is, you know, the comparability against other channels. Right. So there's a lot of excitement here. There's a lot of great visibility and awareness of brands in LLMs. But you know, I think it'll, the business will drive to these heights if marketers can understand that this is driving real incremental returns over other investments they can make. And I think if, if, if they can crack that, I think they got a shot at these numbers.
- [36:19]
B
Yeah, well said. Okay, second one. And we don't love talking about studies that like companies sponsor, but I thought this one's kind of interesting. So this company called Adstra in partnership with Intermedia Research, they're saying IP based CTV targeting fails three out of four times, meaning only 23% according to them, of residential IPs hit their intended geographic target versus 71% consistency for device level. CTV IDs mostly because of black box. How does this one kind of scratch you, Ari?
- [36:53]
A
I'm skeptical of these actual numbers being this bad. It's really. Yeah, yeah. I know that if we talk about, if you define CTV as in a household with a big screen, then those IP addresses don't rotate very often and the ones that do are known. So one of the things that most advanced companies do is that they identify which provider the IP is from. And some providers are known to rotate more often than others. So if I remember correctly, it's like AT&T IP addresses are not valuable, but Comcast are. So there's sort of a naivete to some of the data where yes, if you just log the IPs and then use them the next day, they may not be that accurate. But if you're applying business rules and intelligence, you're probably getting much better results than this. And there's also the definitional thing like people say TTV and they mean in a bar or restaurant, they mean on a phone, watching Netflix on your phone. And you know, there's a lot of, you know, caveats.
- [37:54]
B
Agreed, agreed. As our measurement guy. Brian, got anything?
- [38:00]
C
No, not, not an expert in this space. I think, you know, the numbers seem low. I just go back to who, who wrote the piece and what's the agenda?
- [38:08]
B
Yes, sir.
- [38:08]
A
And I think almost all of the performance TV folks are using hybrid approaches where they will use IP address, but it's not the entire thing.
- [38:16]
C
Yeah.
- [38:16]
B
Yes. Yeah, that's for sure. Okay. Third, one study. So publisher ad supply is down 40% in Q2 in the UK and US according to ozone Data shared with Digiday. Now this was a pretty long piece. I read it. And the other thing that was interesting is that apparently CPMs are going up for various reasons. The lower supply, you know, more direct deals. So it's effectively making up the ad revenue shortfall. But I mean 40% down is like really, really bad.
- [38:51]
A
And it's, that's not. I had to read the article too. It's not year over year, it's quarter over quarter. 40% from Q1 to Q2 and probably Q1 was down 40% year over year. Right. It's not good, it's, it's not good for website monetization at all.
- [39:06]
B
Yeah, I was really surprised at the, you know, just like the ecpms going up. But again perhaps just because, you know, just like basic economics, right. Like supply demand, if it's, you know, quality inventory, you're going to pay up for it.
- [39:19]
A
Yeah. And I think we, we saw, I mean this is going back over a year ago, but raptive had some studies about where AI was having the most impact and not surprisingly it's on lower quality, repetitive content like, you know, recipes and stuff like that. So you. There is a, a flight to quality, I imagine.
- [39:39]
B
Yeah, yeah, agreed. Okay, let's move on. TTD came out with a bunch of new people this week and a bunch of like really impressive appointments. So first, Henry Price, longtime Google exec, you probably worked with him. Are you?
- [39:57]
A
Yeah, yeah, I know Penry pretty well.
- [39:58]
B
Yeah, Penry's great. So he joined the board. So some like you know, strong kind of incremental commercial talent joining the board. Christy Argillian joined as chief commercial officer and evp. She was most recently the global head of advertising at Uber. She worked at Albertsons Roundell, IPG Media Brands. So. And she's going to run retail and data data partnerships and marketplace. And just before we started recording the pod, Vinnie Rinaldi from Hershey's is joining a VP of client strategy and growth. Shout out to Vinnie. These are some good hires.
- [40:39]
A
Yeah Vinnie, that's breaking news. I think Christy's resume is amazing. I don't know her personally and you know it's great that they're restaffing because they've had so much turnover. One thing I was unclear about maybe you know, is Christie really the CRO or is she getting all the non sales?
- [40:57]
B
It appears to be the latter. Argillian will lead the trade desk data partnerships team including identity measurement, retail media governance and more. And she reports directly into Jeff. So it's super senior. Right? So reporting directly into Jeff. She's based in San Francisco and she's got like really important parts of the business but not you know like agency and brand.
- [41:17]
A
Sort of a replacement for Samantha who is the chief strategy officer. I forget her last name. Sorry. Yeah, Samantha Jacobs who went to OpenAI earlier this year.
- [41:26]
B
Yeah, yeah, makes sense. So good for ttd. We love to see it. Talk about this Playwire Pubmatic thing that you into the docket. This is interesting.
- [41:38]
A
Yeah. Jason from Playwire harangued me to talk about it but I'm happy to. So Pubmatic had a rapper. So it was a rapper. Management was a little bit of a. I wouldn't call it a fad. It was a necessary segment that everyone got into at some point where after pre bid one and people got rid of having their own wrappers, the next thing was to manage pre bid for publishers as a way to do customer acquisition. There's hashtag labs which got acquired. There's you know, in a sense Raptive does this and a bunch of other folks do it. So Pubmatics exiting that business part probably related to the decline of the open web that we talked about earlier like five minutes ago and they gave it to Playwire which is one of the leading Playwire sort of a analogous company to Raptive. They manage the monetization for thousands of small and mid sized websites. They have a little bit of a concentration in gaming which is where their name comes from Playwire and he's been on the show so I think it's kind of interesting. I think Magnite still has a business that does this. I'm not sure. And app Nexus used to not sure if they still do. It's a necessary thing but it's not a big business basically.
- [42:46]
B
Yeah. So it makes sense for a Playwire just to add it to the stack with the offerings for pubs. Makes total sense. Want to call it there?
- [42:55]
A
Yeah, let's call it there. So this was a great conversation. A lot of interesting news and definitely we're watching what you're doing, Brian, very closely. Waiting to see where all that money goes. Want to see the next announcements besides the real estate acquisitions and whatnot. So thanks to thanks so much for being here.
- [43:14]
C
Thanks for having me.
- [43:15]
B
We'll see you next week, everybody.
- [43:17]
C
Thank you for subscribing to Market. New interviews are added every week at marketecture TV and your favorite podcasting.
- [43:24]
A
Applause.