Does DOOH Matter? Tim Rowe on the Marketecture Podcast with Ari Paparo and Eric Franchi

Summary

In this episode of the Marketecture podcast, host Ari Paparo is joined by Eric Franchi and Tim Rowe, founder of the OOH Insider podcast, to dive into the world of Out-of-Home (OOH) and Digital Out-of-Home (DOOH) advertising.

The episode kicks off with an exciting scoop about a recently published deck from DoubleClick (get it here), revealing insights that highlight their conservative estimates regarding media revenue.  From there, it's an action-packed conversation about Why DOOH Matters, how it's being traded, and speculation on winners and losers as the programmatic pieces fall into place.

Takeaways

• Market Size and Growth: The global DOOH market is approximately $21 billion, with $5 billion in the U.S. Despite growth, its share of advertising spend is declining, indicating challenges in capturing a larger market share.
• Fragmentation Challenges: The DOOH industry faces fragmentation, with many screens and networks leading to inefficiencies. Most programmatic transactions occur through private marketplaces (PMPs), complicating the buying process.
• Future of DOOH: The integration of DOOH with connected TV (CTV) and advancements in technology, such as first-party data utilization, are seen as key opportunities for growth and innovation in the sector.
• Attention Measurement: The collaboration between IAB and MRC for attention measurement accreditation is a significant step towards validating attention as a metric in advertising, which could benefit OOH advertising strategies.

Chapters

• 00:02:05 - Why Care About OOH/DOOH?
• 00:02:23 - Case for DOOH
• 00:02:49 - Market Size of DOOH
• 00:04:07 - Growth Challenges in DOOH
• 00:07:16 - Programmatic Transactions in DOOH
• 00:08:03 - Leading Programmatic Companies in DOOH
• 00:13:08 - Measurement in DOOH
• 00:16:33 - Future of DOOH and CTV Convergence
• 00:21:45 - Roku's Role in DOOH
• 00:37:41 - Attention Measurement in OOH

Check out the Marketecture Podcast at https://www.marketecture.tv/

Mark your calendars! OOH Insider LIVE! NYC on February 11, 2024 - details to follow, stay tuned.

Transcript

Ari Paparo:
Welcome to the Marketecture podcast. I'm Ari Paparo. We have an exciting show today. We're talking about OOH, DOOH, known as ooh or doo, depending on how you would like to say it. We have Tim Rowe, who is the founder and the host of the OOH Insider podcast. He's going to tell us all about DOOH. In terms of market texture, we had a scoop this week. So the Monopoly report yesterday that we're recording on Thursday. So last on Wednesday, we published the deck that DoubleClick used to sell itself to Google. It had a lot of nuggets that hadn't been shown publicly before, including their estimate that the buyer would make two point six billion dollars a year in media. Turned out to be a pretty conservative estimate. And next week, I'm going down to Virginia. I'm going to be in the courthouse reporting like an ink-stained wretch every day, daily updates. So if you want to know everything that happened, who sneezed, what the judge said, what Jason Kent said to me in the hallway, you're going to get all that every day. I don't know who wants to subscribe to this, but if you're one of those people, this is the Super Bowl. We're ready to go. All right. I am joined today by Eric Franchi. As always, Eric, great to have you. Great to see you both. And Tim Rowe. Tim, how are you doing?

Tim Rowe: It's great to be here, Ari. That is an exciting courtroom coverage series. I'm looking forward to that.

Ari Paparo: Yeah. And if I'm not returning your emails or tweeting next week, it's because there are no phones allowed in the courtroom. I'm going to be effectively offline from nine to five every day for really the rest of my life, which will be fun.

Eric Franchi: To the lion's den. Can you handle the amount of like handwriting that you might need to do? I'm going to have to stretch.

Ari Paparo: I'm going to Staples today. I'm getting some legal pads. I'm doing some prep work. I bought a laser printer. That was my big prep work this week. I bought myself a laser printer because I just printed out all the exhibits. It's going to be ridiculous. All right, Tim, OOH, man, like tell me why we should care. Let's just start there. I've decided to take a grumpy approach to this meeting because like everyone tells me I should care about OOH. They've told me for 20 years and now I've got the man. So convince me why it's like the most exciting thing I've ever heard abOOH.

Tim Rowe: No pressure. Convince you why. The case for DOOH, OOH in general remains that it's the most powerful connected broadcast channel in the world. If you want to reach a lot of people with a unified message, OOH might be one of the most stable, scalable ways to do it. So I think it's wildly underpriced. It's incredibly efficient from a media delivery standpoint. There's probably no better builder of top of funnel than offline attention. So those are some of the reasons why I think DOOH is relevant.

Ari Paparo: All right. How big is it? How big is the DOOH. market?

Tim Rowe: It's not big enough. It's not big enough. It's about $21 billion globally. It's about $5 billion here in the US. And while that number continues to grow up and to the right, it's the only traditional format that continues to grow, share of wallet continues to decline. It's about 5% share of wallet globally. It's 2.4% share of wallet here in the US. And what's scary is by 2028, even though that number is going to continue to move in the direction that looks good, that 2.4% share of wallets is going to drop to 2%. So it's got challenges.

Eric Franchi: Point of clarification, the five billion in the U.S., is that DOOH or is that all of OOH?

Tim Rowe: And if that's DOOH,, DOOH all of OOH s, it's about 10 billion. OK, so it's like half of the market. Yes. Half of the market going to DOOH and a growing percentage being transacted programmatically. Is the same globally? Same globally in terms of transacting programmatically. Is that the question?

Eric Franchi: No, just market size. Is it basically like this is – digital has eaten half of it.

Tim Rowe: Yeah. That as a rule I think is fair.

Ari Paparo: So, my perception of the segmentation of the market is that there's really three segments that you're going to tell me if I'm right or wrong. Segment number one is just in cinema, which actually is surprisingly big. Those ads you see before the movie plays. The segment number two is really high-end like JC Deco, integrated units or Times Square. And then segment three is small screens everywhere else. Is that an accurate way to look at it?

Tim Rowe: I think it's an incredibly accurate way to look at it. If you think about in cinema, it's got that high dwell component, the large kind of spectacular is premium inventory. It's got high impact. So it's that credibility builder. And then there's a lot of screens kind of in between and an octopus, I think, you know, in the ride share TV is that one to one kind of lean in or even a lean back content experience where you can convert riders into users or signups or what have you in that experience. I think those three buckets are accurate.

Ari Paparo: Why isn't it growing faster? It seems like I see more screens every day. Octopus didn't exist 10 years ago. You didn't have in-cab ads nearly as present. I hear about new ideas and OOH all the time. Shouldn't it be growing faster?

Tim Rowe: There are too many screens. There's the hot take. There's just too much. And there's too much, and it's fragmented. We'll talk about it, I'm sure, at some point. But the majority of DOOH. programmatic is actually transacted on a PMP. So it's still being sold hand-to-hand combat in the trenches. There's a lot of fragmentation in terms of networks. And then one of the big challenges that most of the companies think of themselves as real estate investment trust. They think of themselves as REITs. So they don't act like media companies. They don't make decisions like media companies. They make decisions like REITs. And I think that that holds the industry back.

Eric Franchi: Speaking of offline, the two things that come to mind when I think about OOH, in addition to what you said, you didn't actually mention, which are billboards on the side of the highway, and then place-based stuff. So malls, speaking of REITs. Are those not like on the radar in terms of like being large enough for digital? Is that like the other half of OOH?

Tim Rowe: So there are some scaled networks in that where we see that the biggest growth coming from, I think, is the DSPs being able to aggregate a lot of that fragmented supply. take regional malls and regional footprints and put it together as, hey, this is convenience store media. This is mall media. So combining those otherwise fragmented networks has been one of the advancements, but still one of the biggest challenges.

Ari Paparo: Why don't we walk through the supply chain from like where the dollars come from, where they go to. Is it easier to start on the sell side or the buy side? Maybe sell side. So someone owns real estate. Yep. You said REITs. So billboards effectively are owned by real estate providers. They own a building. They own a piece of land, whatever. Do they generally get into the .home business themselves or do they then contract with somebody?

Tim Rowe: Typically, it's through a partner. So a lot of the big billboard companies that you'll see or even in big cities, it's a public-private partnership that's bringing those things to market.

Ari Paparo: and it differs by spot. So Eric, you were saying earlier, you have an investment in the bar, a common restaurant. Yeah. So there are different companies that are now putting the billboards in place and they do the maintenance of the hardware in some cases, but they have the ad SDK, stuff like that. Then how does it sell? So you then bring in a programmatic exchange and or you have your own Salesforce?

Tim Rowe: Yeah, there's a lot of small networks that are just, hey, let's plug into programmatic and we'll take what we can get. And then there's more scaled mature networks that say, hey, we've got to go out and we've got to be our own brand champions here. We've got to tell the story and convince people why this media space is valuable. And they're seeing a lot of success. What are the leading programmatic companies? So the big media companies are really leading the way. And I think that that's because of controlling valuable real estate. So Lamar is doing a great job on the programmatic side. JCDecaux has their own programmatic platform. So kind of the usual suspects are doing a great job, but then there's smaller players. Eric, you mentioned TAVE. We mentioned Octopus. Octopus, who obviously is now part of the T-Mobile consortium as it is. There are companies like that, that are doing really smart things and making the right choices that I think have an opportunity to win disproportionate to the rest of the market that's just hanging screens and kind of hoping that if we build it, they will come.

Ari Paparo: Are the mainstream SSPs like Magnite, Pubmatic, Index involved in this?

Tim Rowe: They are so and really you see the main DOOH DSP or SSP rather is a company called place exchange that was born out of intersection media Google backed intersection media needed to be able to get their digital inventory on the programmatic pipes. and spun off place exchange because of it. So they're one of the leaders globally. You've got other companies like Hivestack that do a good job on the international side I think of bringing that inventory together. But those are two of the leaders and then plugging in subsequently to access that demand.

Ari Paparo: What about Vistar? I think a lot of people are familiar with Vistar. I don't know exactly what they do though.

Tim Rowe: They emerged as the dedicated DOOH. DSP and they are by far the market leader in terms of dedicated DOOH. DSP.

Ari Paparo: Okay, so there's dedicated DSP, but then you could use an omni-channel DSP. How do the buyers think about that?

Tim Rowe: It depends on which buyers we're talking to. So if you think, I think one of the misnomers is that programmatic DOOH is being bought by OOH teams. It's really not. Out of home teams are buying more DOOH because it's similar to the traditional OOH that they've bought, but maybe offers them the ability to be a little bit more dynamic, more timely, things like that. But the programmatic adoptions really coming from programmatic buying teams looking for more space to serve ads on to. About 40% of all the programmatic money goes to billboards. So a lot of money flowing to the large formats and then everyone else fighting over what's left. 15 second video plays really well. Networks that can take 15 second video, they're winning. But that's kind of where the money goes.

Ari Paparo: Yeah, I once had the dedicated DOOH. buyer described to me as sitting in the basement of a midtown advertising business building with a fax machine, 90-years-old file cabinets showing what they bought in what area of zip codes of the country.

Tim Rowe: is that would you take offense to that i would not take offense to that and i'll give you a story about an account executive i worked with at a billboard company only five this is five years ago so still in the modern era great guy one of the most passionate billboard sales people i've ever met his crm system this is not a joke i wish it was his crm system was a cardboard box with Manila folders full of printed out emails, Chinese food menus, post-it notes. And that's one of the largest billboard companies in the country. Now, that's five years ago. Obviously, maybe things have changed. But within the last half decade, that was the CRM system for one of the biggest outdoor media companies in the United States.

Ari Paparo: I'm sure there's some way to file away your Chinese menus in salesforce.com. There's probably a marketplace vendor that allows you to do that. So let's go on to the, let's ignore the dedicated OOH people. Let's talk about the digital native people who are now, you know, dabbling here. I have a multi-part question. First part is, do they know that they're buying OOH or are they buying it by accident? The second question is, how are they treating it against their spend that is more traditional? And third is, how are they measuring?

Tim Rowe: So, the first question, do they know? I believe that this is the reason why PMP is the primary mode of transacting and it will continue to be because there needs to be a level of trust and transparency of what the heck am I buying. I talked to a founder of a CTV network, Eric, similar venues to a TAVE. And they shared with me that the previous company they were at, they were selling CTV space, CTV inventory, but all it was was like a little sidebar on a TV screen in a bar. It was really like a glorified display ad. on a TV screen in some bar or restaurant that probably the buyer had no idea they were in. So I think that remains a disconnect. The second two questions, I didn't get to write them down in time. What were the second parts of that question?

Ari Paparo: Is it part of the same media plan, assuming they know what they're buying? Are the digital buyers saying, OK, this part is CTV and here's the KPIs I expect. And then a different line item or different campaign in their DSP is, you know, more what we think of as programmatic. And how do they reconcile them?

Tim Rowe: I don't see that happening yet. I would like to say I see that. But the conversations that I'm hearing, it's really about how do we integrate DOOH with our CTV buy? I don't know that anyone's actually figured it out yet. Best practice would certainly be to keep them as separate line items and then really to think about DOOH as a full funnel channel. We could do large, high-impact formats like billboards. We can do street, kind of one-to-few place-based placements like the Link NYC kiosk, or we could be one-to-one down funnel in the backseat of a rideshare. So I think thinking about DOOH holistically as a full funnel channel and then picking which formats, which inventory, which networks, which regions, some of that obviously sounds a lot harder than just let me pick an audience and press go. So it does require probably a little bit extra thinking through, but the segmentation of those teams, CTV versus OOH versus, versus, versus, versus, that is definitely prohibiting growth.

Ari Paparo: And what about measurement? Obviously, you could put a QR code. I actually was on the New York City subway this morning, heading to a breakfast meeting, and I saw someone use a QR code on an ad to download an app. I was so impressed. It was like a conversion in the wild. It's a conversion in the wild. But other than QR codes, how do people measure this stuff?

Tim Rowe: I think QR is a great barometer of So they had to have seen it. They had to have been interested. Then they had to take out their phone and scan it and want to do whatever the thing was. So I think that that represents a segment of the available universe. But one of the cleanest ways to measure OOH is really exposure data. It's lat long exposure data. And then did something happen from that exposed audiences? There's some really cool platforms where you can do web lift. You can do conversion. You can do foot traffic. But again, the challenge remains education and knowing what's available and how do we integrate that with multiple teams across the buy. So there's some really cool ways to measure it beyond QR. I think QR is a useful tool in the right use case, but exposure data is the cleanest way, in my opinion, to measure OOHcomes.

Eric Franchi: Just a kind of niche question for you. Oftentimes, and maybe just because Ari and I are in New York City, there's like broken billboards, there's like graffiti over ads, you know, so like, is there like a equivalent of moat or IAS for OOH to kind of like ensure delivery, QC things? It's less about the, you know, defaced things that you sort of might notice, it's a little bit more about like, How are buyers, independently of the video example we talked about, how are buyers ensuring that some of those true OOH placements are actually delivered, actually up? Is there independent companies that are doing that or how is it done?

Tim Rowe: There are some independent companies that are verifying impression delivery and things like that. There is not a great solution for, are the screens on? I'll give you a scary story. During COVID, I was working at a startup and we were building a place-based kind of screen network and some technology to accompany that. And our CTO pinged the Google Maps API to kind of pull all of the stores down. And we were looking at some things. What we were looking at were venues that were closed. And is that inventory listed as still available on the major exchanges? And what we found was it was like north of 80%. Venues that were closed for an indefinite amount of time, but you could still buy inventory on the touch tunes jukebox in the back corner of the restaurant. It's things like that, that I think kill the credibility of DOOH. And for those reasons, I think it's going to be individual networks that do a good job of solving for those pain points that ultimately win.

Ari Paparo: Yeah. So DOOH is changing pretty rapidly right now, um, because Uber and other in-car activities was pretty new experience. Also, I've heard from various people – it was actually in my AMA that I did yesterday – the question of like, is DOOH. converging with CTV? We heard from Eric earlier about bars, bar screens, etc. So it seems like there's a lot going on. You want to give us some thoughts about the future and how it gets out of this rut and increases its percentage of spend?

Tim Rowe: I don't know if this is one of the answers. I think back to the early days of CTV and the blending of mobile with CTV products. I know that's not everybody's favorite, but I think that there could be a place for DOOH to own what it is, specific networks to get involved in the conversation. How do we bring down an overall CPM? How do we help allocate the budgets differently? So I think that that's one of the opportunities. Really leaning into the conversation around first party data, there's only a couple of networks that can offer it and I don't hear any of them talking about it, which is interesting to me. And I think it's evidence of, again, that disconnect between REITs, media companies, and where the conversation actually is. There's a really great network that is in most of the major airports around the country. It is all of the screens need to be verified by the government, the FAA, that they are where they say they are and that they are on and functional because they serve critical messaging along with content and ads. So I think that they have some of the elements and then a network like that that does have access to a lot of first party data. I was listening to one of the episodes recently with Michael Levitt about the conversation about travel retail media. And it had the wheels turning around networks like that that have kind of these elements. They have, Eric, the third party verification that the screen is where it is, that it's on. It works. There's no graffiti on it. You know, it's not hanging off the wall because it's in an airport and these things need to be secured. So I think that there's, again, individual network stories like that that could continue to emerge. That's where I see the conversation going for the place-based video networks.

Eric Franchi: Can we take this a step further? So, one of the things that I've just, you know, oftentimes gotten wrong was I underestimated the time that it would take for like new formats or new user adoption technologies to like actually hit the mainstream. Examples being voice search, examples being like AR, examples, you know, being sort of like things like that, that, you know, sound great and futuristic and they remain in the future evermore. You know, a lot of people think that with full self-driving autonomous vehicles being, you know, like at least, you know, you can see it happen in the future. Everybody's just going to be like sitting in their car, watching video, like interacting. And, you know, that can like open up the market for something like this greatly. Do you think that that's like a five-year, 10-year? Where is that in your crystal ball of timeline? Do you agree that that's going to be really the future of OOH, which is we're all just going to be sitting back, getting driven and having screens in front of us at all times?

Tim Rowe: I think it definitely sounds nice. I might like to live in that world. I would like to be driven around. I don't know that that solves the problems for .home. I think that the problems for .home ultimately are infrastructure. I think that the biggest problem for .home is branding. Digital .home, like what the heck is it? CTV ad, I know what a CTV ad is. I get that. What's an .home? What's a DOOH .? I don't know. It's CTV, right? And it can be all of those things. It could be a connected TV with a, you know, an enriched content experience that is one-to-one or one-to-few in the lounge of a private airport. Or it could be the screen that's off in my local coffee, you know, roaster that's never been on. What is it?

Eric Franchi: Yeah. Yeah. No, I think that's, that's good. And, and I personally like, Ooh, you mentioned Roku as an exciting company to you from an OOH perspective when we were getting, you know, doing a little bit of warmup, how expand on that? Cause we just had JASC and ASEAN.

Tim Rowe: So Roku owns a company called BrightSign. BrightSign is the hardware player for about 2 million screens worldwide. So, as I continue to just watch what Roku is doing, in the back of my head, I'm thinking about those two million screens. So, what's cool about BrightSign, this is obviously not a commercial for BrightSign, but they've really adopted a platform strategy in that they will integrate with hundreds of different CMSs. So, their goal is to very intentionally be the hardware player for real-world screens. that as an activation lever for Roku to suddenly just, hey, we're going to be the brand, right? DOOH as a brand problem. Hey, we are going to make this all available via a Roku, I think is really interesting.

Ari Paparo: I have one last question. How often do people bring up minority report to you?

Tim Rowe: Minority report in Blade Runner. At least once a day.

Ari Paparo: Do you have like a pat answer? If I was like, hey man, it's going to be like minority report, what would you say to me?

Tim Rowe: I would say I don't want to live in that world. I'll take the self-driving cars, but you can leave the minority report at home. I don't know if I can have my cake and eat it, too.

Ari Paparo: All right. So this was awesome. Tim Rowe, OOH Insider podcast. You have a newsletter, too?

Tim Rowe: We've got a newsletter. The easiest place to go is the OOHinsider.com. Really active on LinkedIn. That's kind of the hub of all things out of Home Insider.

Ari Paparo: Nice. All right. Let's take a quick break and we'll be back with news of the week.

Eric Franchi: We're back. Hope everybody had a good Labor Day weekend. A few juicy things dropped right before the weekend and right after the weekend. Let's get into it. We've got TTD rumored to be building a TV operating system, a critical analysis of Netflix future in ads, and some other cool stuff around attention and some M&A as well. We'll start with TTD. An independent journalist named Janko Rotgers – Janko, sorry if I butchered that – dropped a scoop right before the holiday weekend that TTD is building a TV operating system. We'll put it in the newsletter. Ari did an epic breakdown of what this might look like. You should absolutely read that for some primers. We should talk about it. A couple of things here, really two, so it's number one, outside of the fact that this is kind of awesome, is people working on the product, and I'm quoting the piece, include former senior Roku employees, speaking of, and at least some team members have been hiding the fact that they are employed by the trade desk on LinkedIn. It seems to be a very Apple-y technique there, if indeed it's happening. That was thing one. Thing two, just strategically, I picked up something in the piece where Sounds like they're going to be using a open source version of Android tvOS, which I think a can make this, you know, sort of like easy to get to market, but then b apparently Android doesn't like when you fork their technologies. So it could be a little bit of a hiccup. Two things that I picked up. What do you guys think? This sounds, I think some people think it's crazy. Some people think it's awesome.

Ari Paparo: Yeah, I put a lot of my thoughts in the newsletter, but I want to follow up with some reporting. So I've been in contact with, I'll just say one anonymous source. So it's not confirmed by multiple people. But I talked to one person who is in the industry who would have a reason to know the ins and outs here. And they said, yes, definitely happening. And in fact, there are contracts out to most app providers and fast channels already. And they have some signatures for distribution. But with that said, they don't necessarily have manufacturers or glass lined up. That's the reporting I've got from one anonymous source, so take it with a huge grain of salt. The other thing is that I'm still not clear, even my source was not clear, on what this is. Is it a full OS or is it just like a thin layer, like a unified ad SDK that might go on top of somebody else's OS? Are they going to sell TVs? There's a lot of different ways this could go to market and the original article wasn't clear on that and it could – I don't think we should just assume the business plan based on the information we have, which is really pretty thin.

Eric Franchi: Yeah. Of those three, and we'll get to you in a second, Tim, full OS, kind of like lighter weight at STKOS or just like all in, burn the boats, TTD TV, what do you think? One, two or three?

Ari Paparo: I think they would love it if there was some way to just do the ads SDK. Because if you're trying to talk to a Samsung or a Vizio who already has an OS and already has an ads business. You're asking them to swap the whole thing out, which would be very expensive, a big opportunity cost lost. But if there's some way they could convince them to make this additive to pay them, so that's a new revenue stream and it's not overly disruptive, maybe if it improves their monetization in some way, then that would be exciting. But I don't really know how that would work.

Eric Franchi: Tim, one more question for Ari and then we'll get to you. What is the level of work and integration for a TV ads SDK?

Ari Paparo: Well, I think you have something like Android as a starting point. I think you would have to do quite a bit of work to make it very user friendly. If it's a full OS, consumers are going to care about that a lot. And then the number of hardware variations is going to turn into a big burden. You could see this in the Android world where Google has their own pixel phone, which they spend the time on, but then they have tens or hundreds of OEMs, every one of which adds complexity to the operating system and to the integration. I think the distribution strategy has a lot to do with the level of lift. Makes sense. Tim, go ahead.

Tim Rowe: I don't know that I have a take or can add value to that but I would love to hear from y'all's standpoint of why you think that they are approaching it from this kind of angle. Why are they going this route to solve the problem do you think?

Eric Franchi: So big companies do big things. This is a big move, right? This isn't just about facilitating the buying of CTV. This isn't just about having access to inventory. This is actually having a root level access to the inventory, being in front of the consumer, having deep integration. with the TV players. I think that this is a move that is appropriate for a player of TTD scale. This would be a very big, exciting move. That's my take. What do you think, Ari?

Ari Paparo: Yeah. Number one, ACR data. It's the gold standard in TV and it's controlled by other people. Number two is user data. They're trying to convince all these players in the TV business to give them IDs. If you have the login at the TV level, it's a lot easier. Number three is disintermediation. They're having to negotiate with a hornet's nest of companies, every single one of which has its own advertising division and wants to not work with TradeDesk ultimately because they'd rather keep the margin themselves. So the whole future of the company is dependent on cooperation among these global behemoth companies who have your worst interest at heart. So I like the swing.

Eric Franchi: And just to point on the fragmentation, I did a couple of searches leading up to this. It's not like the mobile or web market where there's like one player to rule them all, i.e. Chrome and then Safari and then a couple others. the operating systems is so fragmented. So Android TV has 6%, Samsung Tizen has you know, just over 6%. Roku TV has 6%. Fire TV has 6%. Smartcast by Vizio has 6%. So it's like a super fragmented space. So, you know, one would expect that if they can be, that adds SDK layer for everyone, this could be like a really exciting bold move.

Ari Paparo: But it's a tough market. They might declare success at 5 or 6%. Maybe that, you know, getting the ability to capture some portion of the audience and to have leverage over their distribution partners might be the end game here.

Eric Franchi: Yeah, that's a really good point. So hopefully more to come on this. And shout out to Janko, who became really famous in ad tech after I don't think anybody had ever heard of Janko before.

Ari Paparo: Nice job, Janko.

Eric Franchi: Yeah, Janko, come on the pod. OK, we'll continue on the theme of TV. So there was a long and perhaps gossipy story from Insider this week about Netflix's ads leadership The Hunt to Replace Peter Naylor, the conflict between programmatic and direct product and sales at Netflix. So you should all check it out. It's really, really good. This is like pretty fascinating how publicly this thing is playing out. And I'll pull a quote from the piece just to kind of give some more additional context. People who had conversations with Netflix and Sid Reinhardt, who's the head of sales, appear to still be deliberating on topics like how much Netflix should rely on automated versus direct sales, how much the company should use outside partners to jumpstart growth while it builds its own ad server, how much should it share prized customer data like household income with advertisers, like real existential questions on like the biggest TV platform out there. Ari, if they hired you to be the consultant on this, And there was these big questions around, you know, like build a direct sales team versus programmatic or in addition to programmatic, give up the user data measurement, like all of these things, like what would you tell them to do?

Ari Paparo: I don't know, man. This is a tough one.

Eric Franchi: Who do they hire? Let's start with who do they hire? Who do they hire? Do they hire a media person?

Ari Paparo: Do they hire an ad tech person? Well, that depends on the strategy. So I think the theme in this article, which I think is accurate, is that Naylor was brought in to be more traditional ad sales oriented. They mentioned a couple of times John Whitacombe as the head of product being more sort of programmatic leaning. And I think the senior execs don't know which way to go. So there's obvious conflict between those two. And then on top of that is this need for them to show results quickly while they frankly are new, don't have a lot of clout in the marketplace. They would like to be Hulu tomorrow, but they aren't Hulu today. So that's the transition. What would I do? I'd probably go open to start to juice the revenue. I'd probably just be as friendly as possible to the programmatic world, have a senior sales force for big upfronts, but get a big portion of my revenue in the most liquid way possible. And then just start as we gain market power per country, start tamping down and allowing less and less access over time to get back to where we think we should be ultimately. That's just my general take, but I think it's a pretty hard problem.

Eric Franchi: Yeah, it is. Beyond the go-to-market strategy, the obvious being able to turn on a bunch of revenue in that way, would you focus on the customer data? Would you focus on ad formats? What are the things that you think are interesting that can help Netflix be what we all believe that it can be?

Ari Paparo: Yeah. Netflix has amazing first-party customer data because they have a subscription relationship with every household. They know the household. They know the credit card number. They probably know how many people are in the household. They know a lot of things that are very valuable. So I would definitely look to use that data either in PMP form or through a clean room of some kind. I think the content data is not very valuable. Genre or other context of the actual programs is probably not that valuable. You just want to use it in broad swaths so you don't show kids ads on adult content, that sort of thing. But I would definitely use Geo. I would use household data. And I like what they're doing on the distribution side. They started with Xander through the Microsoft relationship. That was obviously going to be short-lived because Xander is not a very popular DSP. Now they've opened up to the trade desk of DV360, which are the two leading DSPs. So this seems kind of smart to get that distribution. As for creative, everyone wants to do creative. But ultimately, just slap a QR code on your ad and call it a day.

Eric Franchi: That's where we disagree, but that's okay. We can disagree. Tim, what you got?

Tim Rowe: I think it's interesting that whether you're Netflix or a small budding DOOH. network that you probably have the same decisions to make. It sounds like that the problems exist at every level of scale. I'm thinking about the conversation that you had with Craig from Connie Nast and and Mark Menino and kind of pulling those two things together of Mark talked about financial media networks and Craig talked about time on platform being kind of that new metric consumption being the new currency. It feels like there's an opportunity there to integrate more of that data to keep me on Netflix longer. So I don't know how that ultimately plays out, but maybe it's smart things like that, because to me, Netflix is still a premium product. It's a premium product. It's got to be smart. Don't do like what what Samsung. I don't need to see seven of the same Capital One ads in one one commercial break. So I look to Netflix to keep a premium experience.

Ari Paparo: Tim, you did your homework before coming on this podcast. I'm very impressed by by all your call outs or our previous episodes.

Tim Rowe: I love the Market Texture podcast, and I'm going to be listening now after we get off here, because I think that what you do is you bring together so many of those stories that seem disjointed and disconnected. To me, they are all very connected.

Eric Franchi: Man, we're going to have to have you back. And my God, we are never going to hear the end of this from Mark Menino. Let's go, Mark. You've created a monster. We didn't put this on the docket, but worth noting that apparently Amazon had an incredible upfront. Numbers weren't provided, but it sounds like buyers who were surveyed said they increased their spend with Amazon significantly, and they cited the efficiencies in CPMs. being one of the factors. So Joe, just another data point hanging out there. Super interesting stuff. So a couple other things, and we'll call it a day. So IAB and MRC are collaborating for attention measurement, specifically around attention measurement accreditation. So we talked about Adelaide, who my fund invested in a couple of weeks ago, and this idea of attention being an emergent category. I'll ask you, tell me if I'm right or wrong. I think this is a good step towards validation of the category, right? Like something for this is needed.

Ari Paparo: Yeah. I think someone told me, I can't source it, but someone told me there's like 20 different attention vendors out there trying to get advertiser dollars. I can confirm. Adelaide is the only one who advertises on this podcast, so shout out to them. But yeah, if you have that situation with that many vendors calling on agencies and advertisers, then the more standardization, the better. I think I've said this on a previous pod, which is I do not think attention should be a currency. I believe in currencies that are very conservative and can be measured at scale and I think attention you know, step one is getting some accreditation and some standards. Let's not go too crazy the way we did with viewability. But I think it would definitely help to have this.

Eric Franchi: Yeah, great. It feels like attention is also tailor-made for OOH. Right, Tim?

Tim Rowe: Well, it's interesting because OOH as an industry is moving away from attention as the currency. To date, mostly the effort has been to adopt a currency of likelihood to see. Recently, there's been an effort to move towards opportunity to see aided by, ironically, the MRC. I don't know what everybody using those QR codes. They know what it is. Here's your hot take. I think that I think that there is by some an effort to potentially artificially inflate the amount of impressions that some of this media gets so that they can make more money. versus drive down to the job to be done of creating investment confidence for marketers who've never used the channel before to spend on it without losing sleep at night. I think one man's opinion.

Eric Franchi: Yeah, that makes a lot of sense. All right, cool. We'll keep an eye on it. A little M&A news. So Attitude, which is a programmatic company for publishers, acquired Hashtag Labs. Ari, I think you're more familiar with these companies. Why don't you give us the breakdown of this deal?

Ari Paparo: Yeah, so I think, and I might be wrong, I know what Hashtag Labs does. I interviewed them on Markitecture. We've made that interview free with registration on markitecture.tv, so you should listen to it. They effectively are automated way for publishers to manage their monetization. So they have technology that will manage your header bidding setup, your pre-bid, will do all that sort of stuff, add tags. It's like a big tag management system, really slick UI. I was pretty impressed by the product when I saw it. I think Attitude is kind of the same thing but also with monetization and services. Yeah, I think so. But I don't know if it's exclusive like Raptive or if it's more just like a service. I'm just unclear. Maybe we should have someone from them on the show. But basically, it's a bit of a broader solution than Hashtag.

Eric Franchi: Got it. Makes sense. I think consolidation of these companies to service publishers makes a lot of sense. So good job and check out that free interview on MarkitectureTV. Two quick notes, and then we'll call it a day. So everybody should absolutely look at that deck that you got a hold of for the DoubleClick acquisition thesis. That was killer.

Ari Paparo: Yeah, a little backstory here. So I think the moral of the story is don't get me having a grudge against you, because like four years ago, I was I saw this deck firsthand when I worked at DoubleClick. I wasn't responsible for it, but I saw it. So I knew it existed and I didn't have a copy. And four years ago, I was on Alex Kantrowitz's Land of the Giants podcast. He did an episode about Google and its dominance in advertising. And I was like the first guest on. And I gave him the whole story. There was a thing called Wymag. It's called Wymag because Yahoo, Microsoft, AOL, and Google were the only people big enough to buy DoubleClick. And there's a spreadsheet and it's been lost to history and it's really exciting and interesting. So that was my story. Immediately after me, they had my good friend, Neil Mohand on. And Neil was my boss at DoubleClick and he has had an amazing career. He's now the CEO of YouTube. And Neil gets on the podcast and he's asked about Wymag by Alex and he goes, I don't know about that. I don't think that's true. And he created the podcast. So he fibbed online and made me look bad. And I love you, Neil, if you're listening. I really don't think he's listening. But if you are listening, I got your back here, man. We found it. So eat it, Neil.

Eric Franchi: You didn't put that in your newsletter, to be clear. I did not. All right. Excellent. So Markitech, to your listeners, you got the scoop directly for this one. That is an awesome backstory. One thing that is like non-AdTech related, but got AdTech X all fired up that I want to close out with is Founder Mode. So there was a post by Y Combinator's Paul Graham talking about a new term that he invented called Founder Mode, inspired by Airbnb's CEO's speech. Everybody's mad about it or loves it. And effectively, this is about founders just working more directly on the company, in the company, you know, not having professional managers making decisions and getting their hands dirty. Tim, start with you. Are you for founder mode or are you against founder mode and why?

Tim Rowe: All for founder mode. If founder mode is being led by presumably some semblance of the founding team, I think it creates the connective tissue to the original thesis. Why are we here? What do we stand for? I think that those things can get lost as teams get big. I'm a fan.

Ari Paparo: All right, I have complex thoughts here. It's definitely real. It's definitely real. The founder knows more than anybody else, and they care more. And those are the two important things. And I want to emphasize knows more, because it's impossible to come in as a VP or CXO at a company and know every little choice and mistake that was made over the X years beforehand. And when you're the founder, you literally know every single mistake. And you can see patterns that other people can't see and make decisions. I actually found this the other side when I joined AppNexus as their first head of product. And I had all kinds of thoughts that immediately, like Brian and Mike Nola, like, nope, tried it, sorry. And that's a little humbling, but it's true. The one thing I will say is that I think that it was Brian Chesky from Airbnb is the person who brought this up. He has sort of a history of saying inflammatory things that are typical Silicon Valley group think, like MBAs are bad. Product managers are bad. Those are really stupid thoughts to have. MBAs are great if you use them for what they're good for. I think that the danger of founder mode is it's an endorsement of micromanaging, which is a terrible mistake. What it is an endorsement of is caring and staying involved and very actively managing the people you bring in as professionals, even in categories that you may not care about, like HR and finance and legal. As a founder, spend the time, dig deeper, do – I love the idea of skip levels, but it is not an excuse to micromanage. It's not an excuse to say that the VPs I hire are not qualified or should not be given the power they need to do their jobs. You really have to be subtly balancing those two things.

Eric Franchi: Yeah. I think that was very well said. And, you know, I think one of the valid criticisms of, you know, if founder mode now becomes a thing and, you know, these hats are getting printed up, um, does it, you know, become now an excuse for bad behavior by bad founders? Um, and, uh, that's not something that, you know, we, we, we ever want to see, but I, I think that's right. And just like even thinking back to my, my own career, like, you know, hiring managers and, you know, abdicating everything to these managers mistake. like micromanaging these managers in areas where you have, you know, little subject matter expertise, mistake. But, you know, there's something there that I think is very interesting. Speaking of founder mode, we dropped an interview that we recorded a couple of weeks ago with Brian O'Kelley, former founder and CEO of AppNexus, you just mentioned on open market. It was really good. You should listen to it. And we've got a founders founder coming on today for an emergency pod on founder mode. So we're like trying to advance this a little bit.

Ari Paparo: I haven't listened to that yet, I will. But I will say that O'Kelley, when he was involved in technical decisions, he had written much of the stack or designed it in any case. And even 10 years later, that founder mode aspect mattered enormously because he just knew how you could build stuff in a way that no engineering manager who was brought in later could ever do it.

Eric Franchi: Yeah. Well said. Oka, I think we've done a lot here. Want to take us home?

Ari Paparo: Yeah, sure. So this has been a great episode. We've learned a lot about DOOH or OOH or who do whatever you want to call it. So, Tim Rowe from OOH Insider, thank you so much for being here.

Tim Rowe: Eric, Ari, thank you both. This is awesome.

Ari Paparo: Thank you very much. This is great. We'll see you next week. Take care, everybody.

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