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Alan Chappelle
Welcome to the Monopoly Report. The Monopoly Report is dedicated to chronicling and analyzing the impact of antitrust and other regulations on the global advertising economy. I'm Alan Chappelle. This week my guest is Rob Leathern. Rob is an entrepreneur and product technology leader. He led product management for privacy and security at Google and before that he led the business integrity product team at Facebook. And way back in the 90s, Rob and I worked together at Jupyter Research. I'm looking forward to getting Rob's thoughts on ways to improve the ad space and to better understand how ads, and in particular bad ads, impact consumer trust. To those who are regular listeners of the Monopoly Report, it may seem like I'm diverging a bit with some of my recent guests. I think last week we had Rick Bruner talking about measurement or today, you know, talking about building trust with better ads. Well, there are so many inherent challenges within the ad space where there's a significant legal and regulatory component and where you can often draw a straight line between those challenges and some policy of a big tech company. Well, I feel like there's value in bringing them into this forum and I hope you agree. So let's get to it. Hey Rob, thanks for coming on the pod. How are you?
Rob Leathern
I'm doing well, Alan, how are you?
Alan Chappelle
I'm doing great. So you and I go back to the late 90s when we overlapped for a little bit at Jupyter Research. And I think since that time you've been at LinkedIn, you were at Facebook, you were at Google, and some pretty senior product and privacy roles. You know, one of the things I try to do here on this podcast is educate on how to improve the ad space and sometimes that's like purely from a regulatory standpoint, but I try to throw in some non regulatory issues occasionally. And you had shared a list of suggestions that in your opinion would significantly help the ad space and So I wanted to get the backstory, like, what are you trying to accomplish with that? And overall, how do you see that list? And I referred to it, by the way, in this week's newsletter. I may even do it next week as well. But, you know, what are you trying to accomplish with the list? And what do you think if, like, if all those things happened, you know, what, what would be the output?
Rob Leathern
Yeah, I mean, I've worked on ads in various ways for. I know it's almost like somewhere between 15 and 20 years. Right. And it just felt like at various points there's just a bunch of systemic problems that we haven't figured out how to solve yet. And I found it helpful, even just for myself to write down at various points what I thought those problems were and potentially some solutions to them. So the list that I kind of resurfaced, and I've been doing this a little bit, is going back and looking at things I wrote 10 years ago and see if some of them still hold up. I mean, it's partially the analyst in me, perhaps from back in the jupyter days, but this was kind of a list of things that, when I was working on my second ad startup, which was, and we can talk a little bit about that if it's interesting, around better publisher monetization, giving them other alternatives, micropayments, some of that stuff. What are some of the things that would actually just make advertising better? And why did I think people were blocking ads or choosing to block ads across the web? And so it was really trying to get at some of those factors as I was seeing them, as I was talking to a bunch of people and as I was building some experiments in the space. So yeah, that was kind of the genesis of that list.
Alan Chappelle
Cool. And so before we get into a couple of the things that you had suggested, I guess I'm curious to get your sense. Is this mostly about ad blocking? Is this about consumer trust? And one of the things that I always try to work through in my brain is how has consumer trust evolved, or lack thereof, in the ad space over the last 10 or 20 years? Because it's very easy to come out with some piece of research that says that consumer trust is at an all time low and therefore we're justifying X policy, whatever it is. But what I haven't really been able to get around my head is how has that evolved over time? And I'd love to maybe we talk a little bit about that.
Rob Leathern
Yeah, I think it's been quite an interesting evolution. I Think when I started working on ads in 2004, a lot of it, it was very small, it was a very limited number of entities. It was companies like take the example of Lower My Bills that some people in the ad space will remember running these mortgage Legion ads. And they were buying lots and lots of banner ads and they were buying them on Fox News and Yahoo and aol. It just was kind of a small set of entities. Over the last decade, 10 to 20 years, that has really shifted to now. You have tens of millions of advertisers from all over the world that are running ads through self service interfaces that the likes of Google and Meta have. And often you're now dealing with unknown entities that may be in other jurisdictions where you can't necessarily have legal service on someone if they're doing something bad. It's really changed a lot. And also just the numbers have shifted where all of us are seeing ads all the time we're online, we're in these walled garden environments, but we're also out across the web. And so just the volume and the nature of the entities involved have changed quite significantly.
Alan Chappelle
But overall, I mean, so is the sense that consumer trust is in fact at an overall low point or is it something that ebbs and flows over time?
Rob Leathern
That's the interesting thing is I think that we are at a point where trust has certainly diminished the desire or the. When you ask people about whether they feel they can trust things they see online, it's so easy to fake things, whether that uses the latest AI, image generation tools or not. It has become a very difficult environment. There's lots of celebrity imagery and people claiming that they their product was on Shark Tank and that may or may not be true. There's a ton of folks selling products on Amazon or other marketplaces where they might have purchased some reviews to look good. I do think at the lowest point ever in terms of trust, if you look at it by some metrics. But at the same time there's also just so many more interactions that are happening between people and advertisers, between people and publishers. So I don't think all hope is lost. Otherwise I wouldn't be still writing about this stuff if I thought there was no way to improve things. But I do think that it is very much a time where we need to start building proactive and positive trust mechanisms for people to have a better sense of the entities and products that they're interacting with online.
Alan Chappelle
That makes sense. And so I'm not going to go through the whole list, but There's a couple of things that sort of jumped out at me, and maybe, maybe some of this is just triggered by things I've seen in my travels in the privacy world. Is one of your suggestions involved ad labeling? So walk me through that. I mean, isn't that sort of what the Digital Advertising alliance code was trying to get at, or are you trying to scratch a slightly different itch here?
Rob Leathern
Yeah, so some of it is similar to just knowing what is an ad and what is not an ad. There's been a lot of folks who've played, I think, loose and fast with that over time from across the web or the various other monikers that I don't know that necessarily to everyone connote advertising. But I think it does go deeper and I think it touches on some other suggestions, which is we don't necessarily know who the entities are that are running ads. There isn't really a know your developer, know your advertiser type standard out there that I think people can believe in or is consistent across jurisdictions. Obviously there's various things in the Digital Services act in the EU that relates to some of these identity mechanisms, but I'd really love to see us have a much better sense of who the entities are that are running ads. I mean, I think also, by the way, it would be great to know who is running a publisher site and who is getting paid by ad networks and others. There should be some level of higher standard, I think, for identity for entities that are transacting advertising, whether it's on the advertiser side or the publisher side. So I'd really love to see more of that out there that we can agree makes sense. So the labeling is really one part of it, but it's also a deeper conversation about identity, about accountability, and about how we interact with these maybe millions of entities from all over the world. That should be great, but it should also come with some more responsibilities.
Alan Chappelle
So I know the FTC in the US has from time to time issued guidance on advertorials, but that seems like a little different. That's almost like a third party who's basically pitching a product via something that kind of looks like an article, like a news article. So that's a slightly different thing. But I'm wondering maybe what we need is some more regulatory guidance on what they want to see. And of course, half the listeners here are shivering, going, oh God, that's the last thing we need is more of that. But in the absence of some sort of standard, it seems like you're sort of inviting Maybe more nuance than is required.
Rob Leathern
Yeah, look, I think there is nuance. And so when I worked at Meta on ads integrity, similar to other companies that have had to figure some of the stuff out themselves, we had to figure out, well, what are the standards we want to hold advertisers to? Is a countdown timer on a website, should that be okay? Like, should you allow some of those creative tactics on landing pages? And so, you know, there's, there's just a lack, I think of when you, when you go like one or two layers deeper. What should be the standards, what should be the things that you allow? I've worked on some projects, you know, consulting projects, where you're trying to figure out, well, for ads in the cryptocurrency space, you know, what's okay, what's not, what kind of licenses should these companies have in order to be able to pitch you a crypto product, Right? And obviously it gets into a bunch of local and state or federal laws in the US or laws in other countries. But it would be great to have a set of rules of the road that we could all look at and say, oh, well, this is like the minimal viable set of ads policies perhaps we should be following. And then there's a bunch of other stuff that perhaps you could do if you want to have do in certain categories or you want to be even more safe around some of these kinds of things.
Alan Chappelle
So it's funny, what comes to mind for me, and I think for anybody who visited New York city in the 80s, is like you were struck by the number of businesses that were going out of business or having a going out of business sale in near perpetuity. If you were selling shoes or electronic goods in New York City, chances are you had a permanent going out of business sign because that would apparently generate more foot traffic. And New York City eventually put the kibosh on that. And I don't think you're allowed to, to say that. So maybe what we just need is, maybe what we need is, is Mayor Ed Koch to come back from the dead and maybe he'll kind of oversee the ad space. I don't know. I'm just, just spitballing here.
Rob Leathern
It's not, I'm not a bad idea, Alan. But the fake urgency that, you know, so many of these tactics work, right? And so that's why they get adopted. And then, you know, bad actors will adopt them and start to like, I dislike a lot of direct mail tactics, like, oh, the, the fake check that you get in the mail, right? Oh, it's not really a check. It's actually a discount from me going in and taking my car to get a service. Right. So I think there's a lot of those things that, you know, the FTC and others are not in a position to really enforce. So with anything, any discussion around policies like who's actually going to enforce it and is it actually going to prevent that stuff from happening. And also, many of these advertisers, as we know, are outside of the reach of law enforcement or the legal system that might be in some other country. And that's really one of the biggest things I saw when I, when I started working on this problem at Facebook, which was just the scale of, you know, again, for public reports, nine plus million advertisers. It changes the dynamics of what you can stop and what you can prevent and how you should think about it.
Alan Chappelle
Yeah. Another one of your suggestions was to impose some sort of limit on retargeting. And sort of retargeting is one of those things that also works and is also kind of the bane of everyone's existence and probably, you know, on anybody's top three list of things that really messes with attribution, because half the time the retargeted ad ends up being the thing that takes credit for a sale that maybe it didn't deserve. I guess my first question is, like, I don't know that there's a lot of dispute around the effectiveness of limiting the amount of retargeting. So, like, I Bet you get 10 people in the room, eight of them are going to say, oh, yeah, no, that would dramatically help things. So why isn't it happening?
Rob Leathern
There were discussions many, many years ago. So before I worked at Facebook, my company was a Facebook ad partner preferred marketing developer, I think was the term at the time. And there were a bunch of discussions with the company about creating holdout groups that advertising partners could use so that they could do proper testing in display. There were companies like the Right Media Exchange and others that try to create ways for you to do more valid testing. But it's always been really hard to actually do proper tests of stuff where you could understand impact. We did one test at one point in Display, I mean, more than a decade ago, where we figured out that for this particular product category, the optimal number of ads we should show to a user was three in a week. And more than that, and the CPAs went up and it was bad and fewer than that. We were losing out on some opportunities and. But in order to do that test it was incredibly difficult. It required all kinds of weird structuring workarounds because, you know, we didn't have access to the actual platforms to do this testing. So I would say that part of the problem here is that we just don't understand the attribution well enough. We don't understand what the right frequency is to show things. It would be great if we could, and I'd love that to happen. But my suspicion is that there's a lot of wasted spend out there, a lot of people taking credit for other stuff. And this isn't even getting into the discussion of, well, you know, fingerprinting and other weird probabilistic attribution like there's. That's a whole nother can of worms to open. But I think we just don't understand the data well enough and our measurement is hampered and the platforms aren't going to necessarily give us access, a deeper access to their platform because we might actually spend less money with them. So it isn't really in their interest for them to do that.
Alan Chappelle
Yeah, that's sort of an endemic challenge. And I've written a bit, a bunch about that. You know, you can trace a lot of bad stuff to the increasing inability for advertisers to really understand where their spend is. And I had Rick Bruner on, and Rick is sort of scratching a slightly different itch here, not to keep using that metaphor, but purely from a measurement standpoint, you can probably rate the efficacy of the ads. But as you get more into the details around things like attribution, which by the way, is kind of the thing that we sold everybody on the Internet back when you were Jupiter in the late 90s, measurability and accountability, those things seem to be coming. We seem to be heading, if anything, in the wrong direction.
Rob Leathern
I think that's right. And then I think also that creates different pressures where you now have platforms trying to get you to integrate with their APIs instead of pixels. Pixels are challenged. And so you may end up knowing more and more about fewer and fewer platforms, and you may end up having to account for just the fact that these companies have different incentives and some of them are aligned with your own in terms of driving better outcomes for ads you're running. But, you know, they don't always entirely align. So I think that's going to be really interesting to watch how the platforms evolve, what they're saying, and how they're helping customers in the coming years around the stock.
Alan Chappelle
So one other that sort of hit me that you suggested is that the idea of providing consumers with a level of access to targeting data. Now, two thoughts there. Number one, I was at Blue Kai back in the day when Omar really, you know, he built a access tool and you can criticize it, it was far from perfect, but in the absence of darn near anything else, somebody who at least tries something, you got to give them some credit. The other problem for Blue Kai was that they never really improved that mechanism. And as you add more and more data and including some DMP data, you might very well have, you know, DMP customer one thinking that Rob is a 30 year old and DMP customer two thinking that Rob is a 50 year old man. And so when you put both of those in there, question about the overall utility and value. One thing I'd love to see just the ad tech world do is make a better attempt at what bluekai tried to do years ago. But I'd love to hear your thoughts. What do you think that does in terms of building trust?
Rob Leathern
A few thoughts here, which is that I had someone on my team who used to describe some of the stuff as rearranging your sock drawer. He said no one wants to rearrange their sock drawer, no one wants to go look at their data, no one wants to go download their information and look at all the targeting segments they're in. And I think to some extent that's true because it is actually like these are terrible interfaces. These are things that are, you know, if you, if you're doing something mainly because you have to do it, you're probably not going to have your best engineers working on. It's not going to be the best interface or experience. But I do think that there's an opportunity and perhaps, you know, this is something that AI makes a lot easier for you to be able to actually understand these kinds of targeting segments. So, so there's a, there's a piece here where I think that people haven't necessarily said that they want to do that. Maybe they're kind of like. But I do think that with AI agents and other things that could be opportunities to interact more meaningfully with this data. So that's one point. The other point though is that some of this is just really hard to explain. And so you may actually have to have AI models that would explain the targeting because it's really, you know, it's machines making decisions that are hard for someone to interpret. So I do think that there's room to build these things in more helpful ways, but it will take some degree getting us out of Some chicken and egg where we actually agree that this stuff makes some sense. So I would think of it as, it might be an opportunity for someone to get out in front of this to really take a proactive approach, to be entirely transparent. Again, this is someone outside of the walled gardens here where you're talking about, hey, can we actually build something and can we actually get meaningful interaction with consumers around this stuff? So Google actually built something that they released trying to do, giving you a more ability to interact with your data tbd, how successful that has been. But I do think that there's room for some other company or companies to do this with a very heavy, interesting sprinkling of AI that might be more approachable and more possible now to do than maybe in the past. So I still hold that hope that there's the ability to do some of this stuff in a more interesting way than just a data dump of an Excel spreadsheet.
Alan Chappelle
But I think you need to rethink profiles. So as we in the ad space transition, and this may take a while, but we're clearly transitioning from a profile based, you know, travel to Hawaii based targeting mechanism to more of an AI based, which is, you know, that carries its own challenges because it isn't always clear how the AI comes to the conclusion that you should see the red banner and I should see the blue banner. But the challenge here is that like, how do you even explain that to somebody? Like, if I need to see my data and it's, you know, you got blue, I got red, like what, how does that even get presented to me?
Rob Leathern
Yeah, that's a good point. I guess I would say one other way to, to describe this is, I think we've, we've been moving through this for a while now, which is we've moved away from targeting and more towards ranking. So it's like there's a universe of ads that I could see and some AI ML process ranks them in order and says, I think Rob would most likely enjoy this ad. You know, he's looked at sunglasses in the past. I'm going to show him a new sunglasses brand that might have something that he's interested in. You know, so that would be something different than targeting where it's like, oh, I want to target people who are, you know, in this particular area at this particular time, et cetera, et cetera. Now those two things can interact. But honestly, to your point, in a world now where ranking is far more important, those processes are also harder to understand and explain. We may have to build other models to explain how the ranking models are working and we may have to build another models to show how the second model is working. I don't know. At least that's what the engineers tell me. But I do think we've moved through the targeting world. We're now in a world where it's about explaining processes that are a little more black box or opaque.
Alan Chappelle
Yeah, for sure. So this next question I could probably ask three quarters of the guests who come on here because this is sort of an endemic, almost evergreen challenge within the ad space. So, you know, it strikes me that a lot of what you're suggesting here is going to require a level of cooperation across multiple players in the industry. So how do you herd all those cats?
Rob Leathern
I do think that there's scope to do a lot more than has been done across different companies. Right. So I think nonprofits can play a role. You know, frankly, there's a lot of people, I talk to a lot of people who've worked on ads and are interested in contributing in some way to making ads better, but they're don't necessarily see themselves doing it in a full time role. And maybe they would want to do this in some kind of nonprofit or industry association group or so on. I'd like to see more of those kinds of things and maybe ones that are more specific than the iab. The IAB is great, but is there room for other groups that can do more specific things? When I was at Google, we helped start a nonprofit called the Data Transfer Initiative where we were working with other platforms like Meta to give people the ability to move their photos from one platform to another and do some of these other things that, you know, showed the ability for the data not to be a hotel California situation. Right. Or roach motel, whatever the right analogy is. But so, so I think there's room for that to happen with more entities, big ones, small ones. I mean, it's slightly different space, but there's this, you know, thing called Roost, which just was announced recently as a nonprofit funded to build open source safety tools, online safety tools. And that's again very well funded, $27 million of funding per the reports. So I think there's room for more collaboration between entities. The Roost collaboration includes companies like Google, but also includes companies like Discord and Roblox and others. And so I'd like to see more of those kinds of initiatives across various specific problems that people would try to solve, especially in ads.
Alan Chappelle
That's a good point. And I would add one more. Stop Badware. I Remember, Google was really pushing that in 05 06. It was a little bit more in the context of the adware spyware business. But my recollection, of course, this is 20 years ago, but my recollection is that a lot of the things that they were suggesting are similar to what you're suggesting, because it really ultimately was about, you know, ecosystem trust and trust with users.
Rob Leathern
Another one to mention is there's something called iOxt, the IXT alliance, which is essentially an Internet of things security alliance that someone I worked with at Google helped get off the ground. And it includes lots and lots of different companies that are doing, you know, making small devices. There's obviously a lot of. A lot of these devices are web servers, so they could actually be implicated in ad fraud if they're compromised. So there's a lot of initiatives like this that are trying to get at security things. I think security has led in some of these areas, but I think on the ad side, there's scope and room to do a little bit more than perhaps we have historically done.
Alan Chappelle
So I think the takeaway here is that Rob and Al are going to start a nonprofit organization that everyone listening gives us $25,000. We are going to make the world a better place.
Rob Leathern
Absolutely. Absolutely.
Alan Chappelle
Fantastic. Hey, you had one more thing that I wanted to point out in your article. There was some suggestion of three ads per page as sort of a maximum. And you were saying data was showing that fewer ads is often better. And I'm just curious, you know, not to go all lawyer on you, but, like, better for whom?
Rob Leathern
So my. My hypothesis on this is that one of the reasons. And again, this. This predates me working at the company. But, you know, let's just say my opinion hasn't changed. One of the reasons Facebook has been so successful is they've been able to manage ad load for people across their platform. Right. So they, you know, should you see 27 ads, should you see three ads in a day or in a session or whatever? And, you know, we could argue about ad load a lot, probably. But across the Web, there really is this unfortunate tragedy of the commons problem where everyone has an incentive to throw a bunch of ads at people and they aren't aware of each other's, you know, what ads are playing or showing to people across multiple sites. People get fed up, and then they install an ad blocker, and so everyone loses out. So there's some interesting dynamics there where. And this was the second startup I started where I was trying to create a mechanism where you could Essentially coordinate ad load or manage ad load on a device. It was ad blocking, but it also would introduce some number of ads back into the person's stream. And we came up with some interesting ways to do that. So I think this is part of the problem, which is that to your point about coordination, but obviously putting your lawyer hat on and being like, well, how much coordination is the right kind of coordination? Managing ad load across user sessions and across Internet traffic is a very interesting and difficult problem for a variety of reasons, both legal as well as technical. But that really, I think, is something that seems to be missing for people who want to essentially replicate what the Wall Garden ad systems have done.
Alan Chappelle
Okay, I'm going to maybe take this in a different direction, and I guess we'll just edit this out if it goes completely sideways. But the idea of page load, I mean, that's a publisher issue. But isn't that really driven mostly by the fact that publishers could barely keep the lights on right now? And so I feel like when we talk things like the number of ads per page needing to be a certain number, we're dealing with the symptoms and not necessarily the disease. And because the disease is, you know, we need to figure out a way, particularly with news publishers, to support a vibrant economy. And so I don't even know if this is a question or just my getting on my soapbox here, but I'd love your thoughts because I'm sure you've thought about this kinds of stuff.
Rob Leathern
So the problem is that that ship. So the three ads per page ship may well have sailed a long time ago. So I wrote this in 2016. So you know that that might be part of the problem, but the other problem is like, so publishers, a lot of publishers have actually implemented paywalls, as, you know. Right. So, and some of them I call like fake paywalls, where it's like, oh, if I just hit the reader mode on the browser, I can still read the article. And then there's others where, because the publishers also have to get search engine traffic, you can find a free version of the article through proxy sites or through various or, you know, frankly, people posting gift link to it. Right. So the journalists. So there's some weird incentives, though. But some of those incentives, I think, to your point, have been created by these platforms. And so people want the distribution, but they need to make money. They can't show too many ads because people revolt and then they block ads or they don't visit the site. So I do think the publishers are in a very difficult Spot. I also think on the other hand, if, you know, governments come along and say, well, you're going to have to pay news publishers in our country, we've seen examples of meta, Google and others just saying, well, we're going to just turn off news. It doesn't really help us that much. So you're out of luck.
Alan Chappelle
Yeah, I think it'd be a gaslighting argument though, with, with respect to. I, you know, I've taken a look through the Google's recent test and that's a negotiating ploy. I don't think anybody really seriously believes that having news is part of the, the search tool is not wildly beneficial.
Rob Leathern
Well, certainly I do think that, but that's part of the point, which is that these big companies can and have turned off news. They've turned off their services in certain countries. There's some countries they obviously couldn't do that with, but there's some where they could do it to prove a point. And there have been examples of that. So I do agree that I think this is part of a negotiating tactic. But you know, absent something, it's just going to be very difficult. And I, and I do agree with a lot of commentators, especially when you start looking at how AI queries are going to affect people visiting websites. I think the open web is absolutely at risk these days. It's very hard to see how that continues to get funded and small publishers are incentivized to create content. I think we're in a very, very difficult spot right now.
Alan Chappelle
Yeah, no, I would agree. So you spent a fair amount of your career in big tech and without sharing anything confidential, can you share with my listeners? Is there something about how those companies operate that maybe they haven't heard before? You know, particularly as they balance privacy against the bottom line in terms of prioritization.
Rob Leathern
I think really the thing I would share with folks is that the approaches that these companies take, it's always a pendulum, right? So if you look at trust and safety as an example, political ads, scams, all the kinds of things that I worked on at Facebook, for example, the pendulum was swung to one side 2016 and before the pendulum swung way over 2018, 2019, 2020 into adding a lot more protections, you could argue, again based on public reports, nothing confidential here, but you can argue that the pendulum there has swung somewhat back again to a more permissive, allowing more ads, allowing more content in general, condensing the number of policies that they're actually enforcing on for organic content. So I do think that there are lots of differing opinions and lots of very well informed opinions from smart people at these big companies. They don't always agree. In fact, they mostly don't agree, but they do decide on certain things. Some of that's the atmospheric. So like the Trump administration, certainly you can see that showing up in lots of different ways in which people are taking decisions that may be different than what they may have done a few years ago. So I think anticipating that the pendulum may swing, but it will would almost always swing back in the other direction at some point. And just trying to understand what some of those factors might be, I think could help people understand how to work better with these companies.
Alan Chappelle
Yeah, I have a friend who was at Microsoft Ads way back in the day and just the story is about the disagreements between the ads business and Dean and the IE browser team was just legendary, just the back and forth. And it seemed to be a whole bunch of pendulum shifts in terms of who was really driving the bus over there.
Rob Leathern
Yeah, absolutely. Like, I mean you can look at Google and you know, when I was there we made some announcements about fingerprinting and obviously the privacy sandbox has been this long, ongoing source of discussion and one could argue disagreement. A lot of fun as, as we all know from listening to our other podcasts as well. But you know, you can also then see that they've made other announcements recently that would, you know, perhaps show a pendulum swing there. Right. So does that mean that's the direction of travel forever? I don't think so for any of these companies. I think they're always trying to figure out where to land on some of these policy and enforcement topics for sure.
Alan Chappelle
Okay, well, we're going to leave it there, but I've got one more question for you. I always like to get a sense of what my guests do in their spare time. You know, what's your semi secret hobby or passion?
Rob Leathern
Well, one of the things I try to do when I can, but obviously it's not always frequent, is a visit the highest points in different states in the U.S. so the most recent big one that I did was California, which Mount Whitney, which was very, very fun. Quite, that was quite, quite difficult. I think Wyoming and Montana are supposed to be two of the harder ones. So I'm looking forward to doing this at some point. No current plans, but I, I like, I like visiting state high points. I think I've done nine of the nine of the 50 so far.
Alan Chappelle
You know, that's a really nice combination of like clearly a little geeky, but, but you've got the outdoor adventure thing in there, too. So that's pretty cool.
Rob Leathern
Yeah. Yeah. And then I also, I go with my daughter on some of them and we make a charitable donation to a local charity every time we do one. So we like doing that. It's kind of like a thing for the two of us that we enjoy doing together.
Alan Chappelle
Ah. And then fatherhood can't get better than that. Well, Rob, thank you so much for coming on. This was a great discussion.
Rob Leathern
Yeah, thanks, Alan. That was really fun.
Alan Chappelle
That was a great conversation. Rob has visibility into both the privacy regulatory world and the business world in a way that few have. We've got a bunch of other fantastic guests coming up on the Monopoly Report podcast over the next few weeks. In April, we're going to have Professor Daniel Solov on the pod. Can't wait to talk to him. Please subscribe to the show@monopolyreportpod.com or on Spotify, Apple, YouTube, or wherever you listen to your podcasts. And thanks for listening.
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Episode 25: Rob Leathern - Why We Haven't Fixed Online Advertising Yet
Release Date: April 9, 2025
In Episode 25 of The Monopoly Report, host Alan Chappelle sits down with Rob Leathern, an accomplished entrepreneur and product technology leader with significant experience at Facebook and Google. The conversation delves deep into the persistent challenges within the online advertising ecosystem, exploring why, despite numerous efforts, the industry remains fraught with issues affecting consumer trust and overall effectiveness.
Rob Leathern begins by reflecting on his extensive career spanning over 15 years in the advertising sector. He notes a significant transformation from the early 2000s to the present day:
“When I started working on ads in 2004... it was a very limited number of entities” (06:07).
Back then, online advertising was dominated by a few key players, with advertisers primarily purchasing banner ads on platforms like Yahoo and AOL. Fast forward to today, the landscape has exploded with tens of millions of advertisers utilizing self-service platforms like Google and Meta. However, this growth has also led to a fragmentation of trust:
“I do think at the lowest point ever in terms of trust, if you look at it by some metrics” (07:35).
Rob attributes the decline in trust to the rampant use of fake product claims, AI-generated misleading images, and the proliferation of counterfeit reviews, all of which make consumers skeptical about the authenticity of online ads.
A significant portion of the discussion focuses on ad labeling and the necessity for robust identity standards within the advertising ecosystem. Rob emphasizes that merely identifying content as an ad is insufficient. There's a deeper need to know who is behind these advertisements:
“There should be some level of higher standard... for identity for entities that are transacting advertising” (09:29).
He critiques existing frameworks like the Digital Advertising Alliance, suggesting they fall short in providing comprehensive identification across different jurisdictions. Rob advocates for a standardized "know your advertiser" protocol to enhance accountability and transparency.
Retargeting remains a contentious issue in online advertising. While many agree that excessive retargeting can degrade user experience and lead to ad fatigue, implementation of limits is scarce. Rob discusses the complexities involved:
“We just don't understand the attribution well enough” (15:33).
He explains the difficulties in conducting accurate tests to determine optimal ad frequencies. Without proper attribution models, advertisers often misallocate credit to retargeted ads that may not have genuinely influenced the consumer's decision, leading to inefficiencies and wasted spend.
Rob explores the idea of providing consumers with access to their targeting data, referencing past initiatives like Blue Kai’s access tool. He suggests that advancements in AI could revolutionize how this data is presented and interacted with:
“With AI agents... could be opportunities to interact more meaningfully with this data” (17:55).
However, he acknowledges the challenges in making AI-driven explanations comprehensible to users, highlighting the need for sophisticated models to bridge the understanding gap between complex targeting algorithms and consumer awareness.
Addressing systemic issues requires collaboration across the advertising ecosystem. Rob underscores the importance of nonprofits and industry alliances in driving meaningful change:
“I'd like to see more of those kinds of things... across various specific problems” (22:13).
He cites successful examples like the Data Transfer Initiative and Roost, which bring together diverse companies to tackle specific challenges. Rob envisions more specialized groups emerging to address nuanced aspects of online advertising, fostering an environment of collective responsibility and innovation.
The sustainability of online publishers is closely tied to effective ad load management. Rob discusses the "tragedy of the commons" scenario where lack of coordination leads to excessive ad placements, frustrating users and driving them to install ad blockers:
“There's some interesting dynamics... so everyone loses out” (25:04).
He shares insights from his entrepreneurial ventures aimed at creating systems to manage ad load more effectively, striving for a balance that supports both user experience and publisher revenue.
Drawing from his experiences at Facebook and Google, Rob sheds light on the internal dynamics of big tech companies. He describes how policies often swing like a pendulum, influenced by external factors such as political climates and public pressure:
“The pendulum has swung... from more protections to more permissive” (30:15).
Rob highlights the constant balancing act between enhancing user trust and driving advertising revenue, noting that these companies continually adjust their strategies in response to evolving challenges and stakeholder expectations.
Towards the end of the episode, Rob shares a glimpse into his personal life, revealing his passion for visiting the highest points in U.S. states, often combining these adventures with charitable activities. This personal touch underscores his commitment to balancing professional endeavors with meaningful personal pursuits.
Rob Leathern: “We actually don't understand the attribution well enough” (15:33).
Rob Leathern: “This is a time where we need to start building proactive and positive trust mechanisms” (07:35).
Rob Leathern: “There should be some level of higher standard... for identity for entities that are transacting advertising” (09:29).
Episode 25 of The Monopoly Report offers a comprehensive exploration of the intricate challenges plaguing the online advertising industry. Rob Leathern’s expertise provides valuable insights into the evolution of consumer trust, the necessity for stringent identity standards, and the imperative for industry-wide collaboration. His candid discussion underscores the complexity of achieving meaningful reform but remains hopeful for proactive measures that can restore trust and enhance the effectiveness of online advertising.
For those interested in the intersection of technology, regulation, and advertising, this episode is a must-listen, providing both depth and actionable perspectives on why fixing online advertising remains an ongoing endeavor.
Listening to Episode 25 provides a nuanced understanding of the multifaceted issues within online advertising, making it an invaluable resource for industry professionals and enthusiasts alike.