Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

{audio:0:00:20} Adam, can you take a step back and share some context to your role at Sling TV when you were building up the CTV ads?

{audio:0:00:29} I was at Dish Network, the owner and founder of Sling TV, since 2012, and I left at the end of 2018. Sling TV was a project that, from the advertising perspective, I spearheaded, built, ran, and set up, really from its inception, ad sales, and building a team. That started in roughly 2014. It was the first live streaming CTV solution using advertising and putting it into the compartment of a VMVPD or virtual operator. It was the first of its kind. I built that from scratch. I came up with how it would be sold, who the partners would be, what we needed to do to get measurement, what we needed to do to get some revenue going into the business, and then we started the rising tide lifts all boats philosophy. This idea was the entire pitch for swinging the marketplace, besides the consumers and the eyeballs shifting, to get more money moving into the space. It got more folks into the game from an advertising perspective, thus driving more money and more TV dollars.

{audio:0:01:41} What was the big challenge in moving those dollars over to CTV?

{audio:0:01:44} There were a ton of them. First of all, there are digital dollars in the space, and we wanted to get the digital dollars into CTV. But we identified that for CTV and CTV advertising to take hold, we wanted the big meatball; as Mark Zagorski, my old boss at Telaria used to say, the $70 billion of TV money. If we could move that over to CTV, that's the big kahuna, that's the big thing. There was social money running over, digital money, but that was the big kahuna. The challenges were massive; they still are. When we were building, the measurement that was – and still is – trying to be figured out was a currency. It was something on which CTV could be bought and sold where the buying community would accept and exchange and trade. Understanding and explaining the space, how it works, and what you're buying was so new in 2015, 2016, 2017 when we started to market and we were trying to get folks to understand what it was and how it worked.

{audio:0:02:58} Then to buy on impressions, that was a big one. It's also called audience-based buying. Having to change over to the philosophy and thinking for the agencies of impression-based buying as opposed to GRPs and selling on a formula – which has existed for years in the TV space – was a huge undertaking. It still is, but when this first started years ago, forget about how you're doing your numbers, forget about the dollars game you're selling on now; we have a different way for you to do this, and it's very similar to digital.

{audio:0:03:32} That was a problem in itself as well because then I would just get thrown to the digital side, which was fine. We accept it, we always take digital dollars, but this is television. It was live streaming television, the shows that you all know. It would be addressed through impression-based and audience-buying from a targeting perspective. The whole thinking was a complete mind shift of the business and the buying community to understand what was happening. There was an incredible amount of challenge, but getting in the door and explaining it and getting into the right worlds at the agencies to get into the business was a tough one years ago. Now we're seeing changes happening where it's becoming a mainstream philosophy of buying. Everybody needs to get into CTV and all of that, but I'm giving you stuff from seven, eight years ago when this was trying to get its feet on the ground.

{audio:0:04:30} Where are we today with CTV's attribution model versus linear models?

{audio:0:04:37} All co-attribution proof of buying and return, that's still trying to be figured out with many formulas and concepts and ideas. Still, digital certainly helps compared to television buying. We still have a lot of the same issues, yet a lot more money is being thrown into the place. The players are bigger. It's more the first thought, not the last thought, or a might-have in a media plan, which is cool. It's becoming more mainstream because the eyeballs are proven, the content is proven. The entire ecosystem is on board with CTV. The brands, agencies, folks involved with its buying and selling in the middle in terms of currencies, problematics, and technology in the middle, and the publishers are on board. It's becoming more about a must-have – not a nice-have – and a buy.

{audio:0:05:27} There is a ton more money going into content, into how deals are being done, and I think the big answer to your question is the upfront dollars. The dollars in television that are big and command the buying and selling and knowing your ad business for a year, those upfront dollars are coming in. This is the television money and the commitments to guarantees coming over. This completely changes the dynamic of CTV. It is in the next step of growth, and the dollars are showing there. I think now you're looking at CTV as a $14 billion advertising business, and next year I think it's $16 or $17 billion. It's continuously growing. The numbers are astounding, and I think we're talking about $27 to $28 billion by 2025. It's incredibly exciting to see this all happening.

{audio:0:06:26} When you refer to upfront, you mean the advertisers are putting upfront commitments for CTV ahead of schedule?

{audio:0:06:30} Yes, the TV-buying philosophy going for years and years with the agencies and the publishers is guaranteed dollars. It's a marriage between both sides with the premium folks such as ABC, NBC, CBS, Fox, etc., and the advertisers wanting to commit or pre-buy or reserve space or ad units in your shows. What shows do you have? This will fit my brand, this is where my brand is going to launch, or this is where I have a heavy-up campaign. Let's come together during this time. I want to reserve spots because it's about getting a more favorable price now than in what we call the scatter market, closer to when the show actually would air or run. So there's the upfront and the scatter.

{audio:0:07:21} The upfront in traditional television was roughly 60% to 70% – it used to be 80% – of the inventory that reserved or bought and sold during the upfront time, and the rest was done during scatter. I think it's a little less now; maybe 50% to 60% depending on the environment in the marketplace. To have CTV in the environment of upfront sales completely changes the thinking and the paradigm of the amount of money going into the space. It's helpful for a publisher who has to plan and look at my business to know that I have commitments done in the upfront. To know I'm going to have X millions or hundreds of millions of dollars coming forwards, already planned, helps me run my business and work on better pricing because there's so much reserve.

{audio:0:08:08} What about different forms of programmatic buying? Looking five years out, what do you estimate the percentage of the CTV mix between reserve auction and open auction will be?

{audio:0:08:17} Off of the upfront and the scatter world, your question is now about open auction to a programmatic reserve. I'm going to give you three buckets here. Here is what we call programmatic: the AGs, the automated guaranteed deals; the PMPs, the private marketplace deals; and the OAs, the open auction deals. Those three pieces make up the buying within the programmatic ecosystem. The automator technology takes the buy-side and sales side together, and therefore you get the automated buying.

{audio:0:08:54} Connected TV, in particular, is pretty much all done on PMPs or private marketplaces; there's a little bit of AGs, not much, and there's really no open auction right now. Why? Because of control, fear of fraud, understanding your buyers coming in. The whole philosophy of OA is not quite there yet, and there's also a fear that that will open up the front gates, erase the bottom, etc., like the online digital worlds that we saw happen years ago. By the way, we display our online world as roughly 85% programmatic. So putting that together in a few different ways, programmatic will continue to seep into CTV and will continue to be a bigger part of publishers' business, no question about it. It's happening today. I saw it happen continuously when I was a publisher at Sling, and I know all the publishers are saying it's happening now, too. That's all PMP deals with a little bit of AGs at most; not much at all.

{audio:0:09:51} To your question of how much of that could be open auction, I think we will see open auction at the CTV premium probably start to seep in in the next three or four years. Some people disagree with me, and that's fine. Still, I think it has the potential to come in because of the pressure in the business, the amount of money that content needs to have the top-tiered talent to create these wonderful shows, and the pressures of all these companies going public. They're putting more of a focus on their CTV business. Therefore they say, oh my gosh, the pressure of my ad sales business is only growing more and more and more. My fill rate or sell-out rate is 50%, 60%, 65%; what about the other 35%?

{audio:0:10:52} You could have a reselling world if you want; some do, and maybe that doesn't interfere with your direct sales business or however you're run. Still, you have to fill that, and that's what open auction is going to do. I feel as if at some point, there will be some publishers that will have pressures on them to say we have to bring in more money to handle this business, and some folks will start to bring in some open auctions there. I don't think the buying community will have a problem with it as long as it's more controlled, and obviously, it's got to be fraud-focused and protected. I do feel as if we might see that over time. Just given, again, also how display in the online world developed over time, it seeped in there pretty quickly as well.

{audio:0:11:33} Why aren’t publishers more open to doing open auctions sooner?

{audio:0:11:37} Control, fear of fraud, also, many of them have sales teams where they will go and sell to Honda, or they will go and sell to P&G, and all of a sudden it starts coming in at a much lower rate through an open auction. That will crush your pricing, crush your relationship, and crush that whole business. That could be a problem as well, and if they know that they're getting in enough of their demand into your publisher through an open auction, most likely, it's going to be at a lower price. Why do I need to do these higher price PMPs? I'll just cut deals with you. What are you going to give me to offset that difference? But from the top, it's about control and fraud and not bringing in the bad actors because open auctions can bring in a lot of that.

{audio:0:12:26} How do you think about that as a publisher? What's the strategy behind optimizing your inventory through these different monetization methods, as you say, reserve or open auctions?

{audio:0:12:41} As a publisher, most of it revolves around revenue and fill rates and my bringing in the most I can or the highest quality advertising into the top tier content I have, at the best rates for me. It's a dollars game. The first thing I would say is yield management is becoming so much more important. That's a big one, and that was one thing, when I started as a publisher years ago, to see programmatic, direct, and local partnerships growing, I needed to yield manage. I needed to look at all the pricing, all the things I had, and the best pricing I could do. It's really about that and looking at what you have and how you can best work with a yield manager on your mix and what you're doing, and accordingly, you've got to keep eyeballs on it.

{audio:0:13:35} You also allocate in the CTV world. It's still about waterfalls instead of a unified flat auction called header bidding. There's no header in CTV, but it's the same philosophy as a flat unified option. It's not like that in CTV. It brings more necessity for yield management and for looking at what your different spigots of demand are, which I did almost every other day. What are your fill rate and your pricing? Then you start to evaluate that continuously. At some point, you'll probably see more unified auctions in the space that might help that on the pricing side or might help that to be less of a discussion, but that's there as well.

{audio:0:14:16} To your question, in CTV, there are managed service deals, direct deals, that also can come into play that you have to look at in your yield management tool. I've got commitments and guarantees that I've got to get to. It may be at a lesser price but a larger, stronger standing deal, hence upfronts or whatever kind of equipment you have. There are many different things to jockey around, and I will tell you yield management is super, super important.

{audio:0:14:43} Looking at the CTV market, what are the major challenges to reach the estimated $25, $26 billion market size in 2025?

{audio:0:14:54} Measurement is the first thing that comes to mind pretty much all the time. Are we able to have a currency that everyone can buy and sell on, understand, and agree to so we can start to trade and have more dollars?

{audio:0:15:09} Why is that so difficult, today?

{audio:0:15:13} One, because the philosophies of television to digital are different. Two, is the need for a trusted third party with the right understanding of the industry and the philosophies that others will accept and buy on. Three, there is this feeling of a start-over mentality or philosophy where for TV, when Nielsen came in, they were the only one in town, and you kind of had to use them. Everyone does and continues to do in television. If you question Nielsen, which everyone does, but they use them anyway, billions and billions of dollars are being traded off of those numbers. Be careful looking under the hood because you might find something you don't want to know.

{audio:0:15:57} There is this thinking in CTV that we can start over now and look at this fresh; let's do it. Don't do it hastily, and oh, by the way, everyone didn't like the big bad Nielsen or paying Nielsen, so maybe there's a new solution out there that we can get. Again, it's about the right solution for people to fix and choose and look at. Other players are trying to get into the space that might also have digital in their upbringing or understandings that could help. Again, CTV brings digital, CTV brings impression-based buying, CTV brings audience-based buying, which is not what Nielsen measures well in where they come from. With these new philosophies and new types, don't bring in Nielsen and shoehorn an old system into something new when you can start over and look at things differently. There are differences in the type of audience, and there's a lot of things to that answer.

{audio:0:16:53} What do you think are the biggest misunderstandings between linear TV and CTV as we do shift to this new format of CTV?

{audio:0:17:06} I think the biggest misunderstanding is finally getting over the hump, but I don't know why people got stuck on it a few years ago. It's the same content; it's just being delivered differently. People were so stuck on it not going through cable wires to a set-top box or over the air. It was just going through digital, and you could watch it on another piece of glass where there was a computer-connected TV, a hockey puck kind of device, or a stick, or a phone. That just got the community confused.

{audio:0:17:37} I will say that is one-to-one delivery, whereas television, what you're calling linear, is one-to-many. I deliver a spot or a show, and everyone sees that feed, to say it simplistically. There's no difference. Yes, for Dish and DirecTV and Comcast, you could put in a different ad per address and so on, but the nature is it's a one-to-many philosophy in broadcast or linear. In CTV, it's one-to-one, and every delivery is, show this ad, show this ad, so it's a one-to-one delivery. That got folks a little bit hung up with the same premium top-tier content that you've always seen. It's just being delivered on a one-to-one philosophy. For a while, folks couldn't wrap their heads around how they were buying and looking at GRPs, or how they were buying and looking at the differences.

{audio:0:18:32} How do you look at the future CPMs from CTV versus even digital channels like social or elsewhere?

{audio:0:18:40} CPMs is a big one. One of many big questions is, can CPMs maintain the high premium CPMs that traditional television has held for so long? Because the buy-in was, I want to buy this show, or I want to buy this content, and it commanded such a high CPM to reach in that one-to-many philosophy. Now you've got CTV or digital where it's kind of one-to-one, and a lot of the buying is done addressably. It might not necessarily be the same type of buying. It might be contextual as well, but the buying and the thinking are a little bit different. There will be pressure on the CPMs over time. There are now fill rates in CTV that are different from traditional TV because traditional TV has a finite amount of inventory, period.

{audio:0:19:34} If I watch this live show, yes, CTV has it too, but there's a finite amount of inventory. On-demand or digital can be collapsed or accordioned differently than traditional TV. That is one way to try to get the CPMs at parity with each other because you can collapse a show and charge more because there are fewer ads, but I think it's going to be hard, over time, to maintain those CPMs into both fields. I would also say that the digital CTV world is bringing in a ton of apps; a ton of different content and programs. That’s great, but if there's a lot over time, their fill rate isn't going to be as high. But yes, you can collapse.

{audio:0:20:12} There's just so much inventory.

{audio:0:20:15} There will be if we continue like this. There's still a supply and demand issue, but as we go on, that could put pressure on it from the CPM perspective as opposed to a finite. It's going to be interesting as we move on. There need to be some things added into the mix to keep the value up. Whether that's data return on the back end or interactive functions with attribution, proving the ad works; whether it's something to guarantee in a buy that a buyer is going to get to help keep those CPMs at a healthy number as we go on. I think you'll see more creativity there as well.

{audio:0:20:55} Programmatic is pretty much all about auctions and big density. This means the more ads in that auction, the higher the price will go, so you want to have big density, you want to have more ads in there, and that will raise the price. Will that get to the same price as TV over time? It remains to be seen. But as more advertisers move to digital and CTV, and programmatic continues to grow, there will naturally be more advertisers, hence more big density and higher prices.

{audio:0:21:32} When you look at the market structure from the DSPs to the SSPs and the publishers, like you said, there’s so much inventory; there are hundreds of DSPs and SSPs. How do you see this shaking out in the long run?

{audio:0:21:50} I have an interesting thought. I think you'll probably see a return back to SSPs and DSPs together. There was a time when they were splitting. There was a big thought, and I don't disagree with it, about not having a position in media; of just being the pipes and the middle man, with which I do agree. I think, over time, you could see the SSPs and DSPs coming back together. I think the buying community is seeing less percentage of their buys going to working media, which creates an issue. As a middle person, how can I give better, more favorable rates to win the business in the ecosystem of SSPs and DSPs? If they come together, they have more to leverage and negotiate because advertisers will continue to be against and upset about that percentage going to working media, so I think that brings more potential to SSPs and DSPs coming together and helping that.

{audio:0:22:54} Additionally, with the mergers and acquisitions in the business and more companies getting bigger in the space, you're seeing publishers buying SSPs or DSPs and I think that will also bring more to the potential of these pieces coming together in the middle. If I'm an advertiser and I plop down multi-millions of dollars, I'm getting this much money to actually go in front of eyeballs, and the rest is going to SSP and DSP and measurements.

{audio:0:23:23} Let's say you have $100 and you're an advertiser, and you buy an ad. The DSP takes roughly $20, so 20%. Of that $80 left, the SSP takes 15% to 20% again. So does it end up with 60% of the original commitment working?

{audio:0:23:42} Could be 60%, but remember, there's what we're talking about, proving the business and keeping the CPMs at a good rate, but how about attribution? There's got to be a company getting paid to prove the ad works. How about a measurement solution that is still trying to be figured out, and they have to get a piece. Maybe you want a data return that no one else gets. It could be 50%, it could be 60%, but it's not 90%. As a buyer, I don't love that. I want my money going to ads in front of eyeballs or some way to get in front of eyeballs. If I see only that much paid out, I want solutions for that.

{audio:0:24:20} But if you move the DSP and the SSP together, how much does it actually save of those dollars?

{audio:0:24:26} It gives you more levers to pull. Take rates for SSPs are not getting higher. They're getting lower. They're not going from 15 to 20; they're going from 15 down. So if there's an SSP and DSP together, there are more levers to pull and more pieces to negotiate with or to help the buyer so you can provide more working media and win those buys or win those deals for your pipes. That is one philosophy, one piece, and I would also say that buyers want a one-stop-shop solution. Publishers want a one-stop-shop solution. No one wants hundreds of different dashboards. It just makes things easier.

{audio:0:25:11} You also have global areas to look at and not just the US. So, the fewer partners, the fewer dashboards to look at, the less stuff to optimize where there are problems and issues, the fewer calls and more to come to the end, the easier it is to have a buy and sell transaction go through with success, optimization and so on. Keep in mind there's a major SPO process continually going on in the agencies. That's this [unclear 0:25:45] optimization to not have five hundred partners, not to even have 50. Also, what advantage would one have?

{audio:0:25:53} How do you look at Tremor International's strategy of bringing the DSPs and SSPs together?

{audio:0:26:00} It's probably a lot of putting things together and also solving it globally. Can I be a one-stop shop and not just in the US or not just in EMEA or LATAM? It's covering the whole gamut. I think that, again, is a one-stop-shop for buyers and a good solution for both ends of the ecosystem.

{audio:0:26:21} So what’s the rationale of having a standalone SSP?

{audio:0:26:24} Independence, not taking a side on media, which I think is a big one. Being able not to take a position but just be a pipe. All the decisions are made to the left and the right of me, but I'm just going to deliver and work for you, the buyer. I think that's super important as well. There's a bit of back and forth. It's where we are today. Let the DSPs do what they do best on the buying side and the targeting, where their expertise is, and let the SSPs work for the publisher and find the scale and find the premium and do what they do best; not taking a position in media but just being there for the publisher. I think they do what they do for their sides of the business, making for a cleaner ecosystem.

{audio:0:27:18} It’s interesting how the industry has been evolving. They busted these assets up, they're bringing them back together, and there seems to be this continuous flow over the years; no one's deciding on what kind of works.

{audio:0:27:31} It's reinventing itself; it's possible. That is one of the things and one of the issues to be very careful of; we all have the luxury of looking at the digital online space of years ago and seeing how this all came together of direct sales teams, digital selling, impression buys. Measurement came in, multiple different solutions, then weird fraud came in. It was open auctions. That all happened. Now you've got CTV fresh, brand new, don't make the same mistakes that happened before, but what was good, bring over. So it's not completely brand new; it's a bit of we've seen a bit of this before, and it helps to make the playbook as you move on.

{audio:0:28:19} Building Sling, that was one of the first playbooks I looked at. How did digital start and, for online sales, what was most effective, what worked, what was the most I could do with the least amount of team members at the time to make this a highly charged, efficient, high-performing team and business and sales team? Then when programmatic came in, what were the problems and issues? That was the first reason I brought programmatic in because it happened in digital and online years ago, so let's bring them over here because it's the same thing. That's also why addressable was brought in to CTV. It's exactly what digital online is. One by one impression-based buying to the audience? Boom, same thing. It was just the mixing and matching that has evolved into new without bringing over the same mistakes. So there was somewhat of a playbook there. However, evaluative pricing was a lot different.

{audio:0:29:08} Why was the pricing so different?

{audio:0:29:10} I should have added that the CPMs, in CTV, you're not dealing with $1 or $2 CPMs. You're dealing with $20, $30, $40, $50, $60 CPMs. Much higher premium and you're bringing over the TV philosophy and buying community, so they're used to that. If all of a sudden CPMs plummeted to what online and digital was, we'd be in trouble. Preserving the CPMs in CTV was also something to be very careful and cognizant of because if, all of a sudden, it brings over to what the digital and online average CPM is and that world, my dollars will plummet.

{audio:0:29:56} What’s your view of publishers building their own DSPs, of trying to own the stack themselves?

{audio:0:30:01} First of all, will they build their own or acquire somebody, and will they bring it in-house? Over time, I believe that you will see the big publishers in CTV try to do it themselves; probably like Disney has with Drax. They've got Magnite involved in that. I believe that you will probably see that to the point of, why am I paying out to so many middlemen; I want more control of my business. I think that is important in all of this; building out your ecosystem, your types, and your philosophies and outside parties to do that. I do foresee a future where people will be doing their own thing.

{audio:0:30:53} But then you’d get what you said you don’t want, which is something like 20 dashboards, potentially, for the big premium players.

{audio:0:31:00} You would have, I believe, 10, 12, 15 big guys in the business that are the soup to nuts everything; content, SSP/DSP whatever you want to call it. Maybe also exchange and their own measurement will be possible because that's just opened up with Nielsen now. They're big enough and have enough outlets, not just in CTV, but all omnichannel solutions. It could be at home; it could be audio, online, mobile, CTV, the all-in-one worlds of Disney, Comcast, Viacom, and CBS if they're big enough, and the all-in-one world of Google. I think you could see that.

{audio:0:31:41} Where would that leave theTradeDesk, for example?

{audio:0:31:44} That's a good question. It could be within that world of one of them, yes. It's a pretty tall buy, based on the value. They're going to continue to promote independence, and they're certainly going to continue to do that as Magnite does the SSP side. I think they're big enough that it won't happen as soon as one might think, but you could see them maybe powering two of those. But there will also be smaller guys that they can help as well. I think that it remains to be seen from the business side what they would do if that theory did happen.

{audio:0:32:24} Now I see Trade Desk working with Walmart rolling out white label offerings for retailers.

{audio:0:32:30} That's a good point, too. Could their technology help enough on the buy-side of the buyers and the brands? Maybe it's through agencies or some of the major brands directly, and maybe their technology could help field that where they could white-label or use their technology. That also brings more thinking to your question and philosophy. I would also say that all this breeds more programmatic, breeds more automation, which means more technology, which means that people are going to need the tech of the likes of The Trade Desk and Magnite. People will need their technologies to grow and help their business, so there are opportunities there, too, at the brand level.

{audio:0:33:15} Maybe you see one of the big Disneys purchase one of these big platforms?

{audio:0:33:20} One comment from theTradeDesk that I thought was particularly interesting in their reporting was that, effectively, the supply side is commoditized because there's just so much inventory, and owning the demand is where they believe the long run value will accrue.

{audio:0:33:53} That goes somewhat against some of what we just talked about; I believe the power of the buy-side is so important. Again, companies are going public with the pressure of the business, and at some companies, the publishers are replacing traditional dollars into this, so they have to bring in the dollars, so to speak. There isn't time to finesse and put this through because of the pressures, and Wall Street is really saying this is going to grow this X, and so on. I believe the buy-side is so important in this whole thing because the dollars have to come through, and the education has to go through.

{audio:0:34:45} To the question, yes, the deeper, richer relationships with the buyers are incredibly important. This means there will be and continues to be more of a get to the brand philosophy. This has always been a thought of running an SSP and publishers, to get to the brand, influence at the brand. Yes, you need the scale of the agencies, but the major brands could go direct or direct to consumer at some point, and you've got to get to the brand. You've got to get deep with them, get a relationship with them, and get omnichannel thinking with the brand to use your solution as you move on. Having a great relationship with this brand means making sure you're working with them and in lockstep. Because now you can service them in CTV, audio, podcasting and digital at home if they do that; their desktop and their mobile, display, everything. That is incredibly important moving on. You've got to be the solution for the brand.

{audio:0:35:51} Can we look at the publishers' side now. Let's say you're running Disney, and you're thinking about the future of monetizing your inventory, CTV, and the other channels they have. How do you look at working with an SSP? What's the first step in choosing one of these big platforms?

{audio:0:36:15} Absolutely the customer service; that's an obvious one. You need a relationship and to build trust massively, but there needs to be an understanding in specifically CTV, and it's something we talked about before. I'm not dealing with $1 and $2.50 CPMs anymore. I’m dealing with $30, $40, $50, $60 plus dollar CPMs. I need the attention, I need the understanding, and it's got to be treated with kid gloves. I don’t want to hear, why not just do open auction; don't just open it and move away. It's incredibly important when I choose an SSP in CTV, and even omnichannel moving forward, that they understand how important this is to my business and the value of what they're dealing with. It's not a "set it and forget it" philosophy. The tech is incredibly important.

{audio:0:37:13} What's your road map? Here's my road map. Do we meet in a year, in two years, in three years? Do we have the same philosophy, the same technology, the same structure that I can continue to build with you? Whether it's a deprecation of cookies in your philosophy, whether it's more addressable, whether it's how your auction mechanics are going to be run? Do we have the same philosophy moving forward? Are you going to help me in omnichannel, in different outlets? That is massively important when I talk to an SSP and think about working with them. Do you have omnichannel solutions? Do you service not just CTV or video? Yes, you have to do it well, but do you do audio and at home and so on? That may help me, the publisher, work with you because I don't want a hundred dashboards. I don't want 50 million partners. I want to rely on certain partners, and I want you to be reliable in talking about that.

{audio:0:38:09} The auction mechanics are becoming so much more important as programmatic continues to come into the space. CPMs are higher, more valuable top-tier premium content, etc. I want your expertise in data. I want your expertise in auction mechanics to help me so I can win more as a business. Yes, we talk about a publisher where you’ve got your direct sales, you’ve got your programmatic sales, you’ve got your partnerships, your local partnerships, however you’ve got it. But can I get everything I can out of my programmatic business working with you and understand the auction mechanics to bring those dollars through?

{audio:0:38:41} It's a spigot where we can optimize within that spigot, and then my hope is we can simplistically optimize everywhere else. But I want your brains and your genius folks on auction mechanics to help me make sure I am optimizing and maximizing. The last thing I would say to your question that just comes to mind is, is this an SSP built for one, video, and two, CTV? When I was a publisher and also being in the SSP space, I can't tell you how many SSPs have told me we can do CTV and we can do video. Many of those were go for desktop, and they were go for display, but they have no clue.

{audio:0:39:26} What’s the difference there?

{audio:0:39:29} One, you have to be able to serve in video, two you have to have a real-time transcoder or something where you can serve in live streaming, which is different. You have to understand the pixelations, the technology itself, how the server works, how the information comes back, server-side, client-side; there's a whole bunch of stuff in the weeds technically that are incredibly different. I'm not an engineer, but the minute I got an SSP involved, I knew that we might be okay if I didn't get a call within an hour of the first meeting. If I got a call within the hour of an engineer talking to a new SSP, I knew that these guys were display; they couldn't technically figure out how to set this up.

{audio:0:40:13} There are a lot of things under the hood of the technologies of plugging in, of working, of how it's measured, client-side service, and all this stuff in live streaming. It's just different. And if you think you can do it because you're in display, no. I've been through that too many times where I've received that call, or I've been in a conversation where I just don't think they understand it. That brings me back to the fact that they have to understand what premium top-tier content is and what CTV is about and delivers. They're dealing with the big guys, the big programmers, and not your longer tail stuff that kind of doesn't have that pizzazz in the business or that top-tier premium content.

{audio:0:40:58} How much do publishers care about the SSP take rate?

{audio:0:41:00} They'll give suggestions. As a publisher, I would set the price generally for most of your PMPs and your auctions. They would give suggestions, which I think is important when we talk about the bid mechanics and auction mechanics. What data you have becomes important to say the price is too high, or you have to move your floor down or so on to optimize. That's all important.

{audio:0:41:23} If you're Disney, for example, and you're looking at x SSP versus y SSP, is the take rate the top priority, or is it, like you said these other things about the SSP; do they understand CTV, premium and so on? How important is the take rate for the publisher?

{audio:0:41:41} Take rate is a business discussion that you would have on what percent would be paid to the SSP. It’s very important whether you’re doing auctions in gross or net because that would affect the pricing, but it's also important in terms of being a publisher. If I had multiple SSPs, who would I give more percentage to in the stack? If I'm in a waterfall type of behavior where I, as a publisher, had a more favorable take rate, I might put them higher up in the stack, knowing I might get more money in my pocket. But it also gives me negotiation points. Having multiple SSPs, I can negotiate the take rates. Take rates are extremely important and in terms of how the auctions work, if it's gross. Yes, that helps me to understand and move my business and that goes on volume as well. If you have a lot of volume coming through, there might be a different negotiation point for negotiating the take rate.

{audio:0:42:45} What do you prefer as a publisher when you work with the SSP, gross or net?

{audio:0:42:49} I think most of them were gross if I remember correctly, and there is more to play within that. I'm not sure.

{audio:0:42:56} Thinking of how this can evolve in the future, these are the big guys, ten, 15 inventory, great media properties. They're going to monetize their inventory programmatically. Obviously, these big companies can have a much lower take rate because they're Disney. How did you see the take rates evolve in your experience in the industry and across the different mechanics of bidding and auction types?

{audio:0:43:26} My best answer is going to be I'm not a big mechanics guy to go in the weeds with. There was a whole separate group to do that on the pricing, especially in SSP. Tons of people would look at that. It would be more than what meets the eye for a lot of what the targeting was. If you have multiple SSPs, there's a lot of things going on there. I think most of them were on gross if I remember correctly, but I don’t have a ton to add there.

{audio:0:43:52} Looking forward to the next five, six years, what do you think is the biggest challenge for growing a standalone SSP?

{audio:0:44:01} Understanding the space. Understanding CTV. Again we're focusing on CTV and, of course, omnichannel, too. I think that’s a huge challenge. Getting a really good, solid view of what’s happening and where it’s all going and not just trying to be a, oh, we’ll pull this in, and we'll bring you demands, which isn’t really true. I think that’s hugely important and to note that when you’re dealing with CTV, these are the big guys in the space. These are the premium, top-tier guys. They have their own sales teams, their own worlds. You're not going to come in here and change the world for me but let's talk about what you've got from the tech side as well to help me grow. As well as understanding premium and understanding how valuable it is and matching your tech to where you're going as a partner.

{audio:0:45:01} Every SSP wants to get stickier with the publishers. They want to be tighter with them. They want to be a solution and not just tech in the stack of someone who might bring me some demand. If you are an SSP with a sound tech team, product officer, product team that can build with me and help me innovate as a publisher, that's incredibly important. That's a challenge as we move on for SSPs to be that person or that group or company. And for the publisher to find the right programmatic company and team to work with you to help build as you are building your future because everybody right now is changing. There’s nobody out there staying the same. And when you're changing, you want to change with a good partner. You have to make sure that you are in lockstep on your philosophies and where you're going. That's a challenge.­­

{audio:0:45:53} Is there any reason why there will be four, five, six, ten SSPs in five years?

{audio:0:45:59} It will be determined by a few things, but I think the first thing is the scale. If there’s enough supply and demand out there, there could be a bunch of SSPs in the space. I also think that the omnichannel world will command more SSPs. That means I'm not just serving display or CTV. I'm serving digital at home. I'm serving audio, podcasts and so on. That also creates more supply and more opportunities to have more SSPs out there that can do that. I think that will mean that you could have more.

{audio:0:46:36} Then will the big guys have their own SSPs? That’s something we’ve talked about as well, but yes, I think with more opportunities, with different outlets out there, I think you will see more SSPs trying to get in and be experts in certain areas. We're starting to see that now, especially with folks going public as SSPs and getting in the space. I think you'll see a lot more for the next five years or so, coming in and looking for different opportunities, trying to create a niche, trying to create some sort of strategic foothold. Even though it's not a sexy thing to talk about, traditional TV is still trying to figure out programmatic, and there are still billions and billions of dollars there. There's an opportunity for a company if there can be some programmatic fit there if you are trying to do that and get that locked in. So again, more opportunities equal more SSPs, so I think you'll see a good amount as well.

{audio:0:47:33} How do you look at the position of The TradeDesk as this all shakes out in five years’ time?

{audio:0:47:38} They’re strong. There’s no doubt they’re going to start to get some pressure. I think some of the other DSPs are getting bigger as well. Google and Amazon, in particular, those guys are going to start to threaten them more. I think relationships and getting sticky will be more important with the buy-side, locking in any deal whether it's exclusive or whatever you can with the buy-side, and then marrying that with the sell-side and relations with the publishers.

{audio:0:48:09} I also would give a bit of caution. As you get bigger, it gets harder because you're not as nimble in a changing environment. We’re in a very fast-changing environment right now of CTV to omnichannel; audio is growing quickly. If you get bigger, great, but you’re not turning a cruise ship around as opposed to a speedboat in a fast-moving environment. That is something that I wonder about folks like theTradeDesk, where they are huge now, and it's going to be harder for them to maneuver in such a fast-paced environment.

{audio:0:48:55} It's interesting how theTradeDesk arguably owned demand and scaled that far more than expected, arguably more than everyone else.

{audio:0:49:03} They also got into CTV very early, and they got it quickly. I can tell you that as a partner of theirs as a publisher when CTV and the growth really started to happen. Very early on, they saw the opportunity, jumped in, and did it right quickly.

{audio:0:49:22} But then, in the long run, as we've been discussing, the publishers arguably hold the keys? Arguably, if you're Disney and your customer goes to the theme park and is watching Disney+, is this a long-term risk to the whole ad tech value chain if the publishers do decide to have some kind of walled garden or own more of this themselves? Where does that leave SSPs but also theTradeDesk?

{audio:0:49:56} What if major brands went on their own, directly to an SSP? Yes, those are threats. What if an SSP does targeting itself where they can go ahead and do a lot of what the DSP bailiwick is? What if the SSPs did it and they did it at the publisher level, or the publishers did it? There are many of these potentials moving on, yes. I don't have answers to it. I would only say that I think the bigger, the better. The bigger mousetrap you can build or the larger scale you have, the bigger partnership and stickier partnerships you have, the better as this continues to go.

{audio:0:50:33} I'm more worried about the smaller guys; that's why these acquisitions are happening, and that's why these mergers are happening. That's why I went through a merger and acquisition, to get CTV to be a bigger company and to be a bigger company with another SSP coming in. I think you'll see more of that behavior come on, too. That's something that can help these challenges because there's a lot of what-ifs. I don't think anyone has a full strategy of where this is all going. It's hard to predict because it is kind of new. Something I’ve always said, and I continually say, is a five-year plan is really a two-year plan. I don't know what's going to happen in five years. Everybody is giving me this five-year question, and I don't know. I couldn't tell you. One big maneuver changes everything. For example, if deprecation of cookies happened already or happened at the end of this year, that would change everything, but it moved, giving people more time to think about it.

{audio:0:51:35} How do you look at the impact the deprecation of cookies could have?

{audio:0:51:40} It wouldn't affect CTV per se because there are no cookies, but it would affect other sides of the business, the concentration. You're seeing it with everyone creating their own IDs, different consortiums, UID, that sort of stuff. Folks are scrambling to find solutions, which is what I would have done, and with the delay, it gives more time. More contextual targeting for sure, potentially more addressable with the TV type way, which is the publishers work with partners and they do the targeting on their end. They do first addressable audience-based targeting and control all the data there, like the CTV, where all the traditional television addressable works; how the box TV guys who are doing it at Dish and DirecTV. That brings more to that type of philosophy and I think that you'll see more contextual type of asks in growth and, again, more sell-side targeting.

The Connected TV Advertising Value Chain

Former Head of Sales at Magnite and Director of SlingTV

inpractise.com/articles/the-connected-tv-advertising-value-chain

Executive Bio

Adam Lowy

Former Head of Sales at Magnite and Director of SlingTV

In Practise Notes

Interview Transcript

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The Connected TV Advertising Value Chain(October 20, 2021)

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