welcome to segment two of hip bones I’ll
show 15 so in this segment we’re going
to talk about a very interesting article
i read in Reuters were basically will
Margalo for Marge Olaf who is the CEO of
ignition one a division of the Japanese
media and advertising giant dentsu he
basically says that there’s going to be
a shakeout in the online ad market and
the reason for that is he goes you
possibly can’t have six or seven market
leaders amongst ad agencies and adnet
well at agent sees you could but it goes
you can’t have six or seven market
leaders amongst ad networks can have six
or seven market leaders in the you know
exchange field what do you think do you
think that online medium is growing and
consumers are spending more time than
ever online budgets are flowing online
is media cyclical but online media going
to grow for the next ten years
uninterruptedly a sake out what’s your
read on on the ad agency world and um i
think there’s going to be a little bit
of a shakeout and i think what’s
important to consider here is when you
look at an ad agency we really gotta
distinguish between you know their media
buying divisions or departments and
their creative division two departments
on their creative side you’re going to
not see as much of a shakeout you know
there you’re going to see fun stuff like
the old spice guy i’m sorry i love the
old spice file you have like stock in
Old Spice I just think it looks good in
that towel but um on the media buying
something every day on the media buying
side I can see that really shaking
things up I get the impression at a lot
of agencies especially the big ones like
at the end of the day a lot of their
revenue comes from for media buying and
media placement the thing is is that’s
not nearly as complicated as it used to
be you know like used to have to have
networks with like billboard vendors in
yada yada yada now you can actually go
and do a lot of your buying through ad
networks and in a lot of sense it makes
much more sense to go through an ad
network than to deal directly with the
publisher because then one you got one
point of contact and to what networks
specialize in is like tracking and
metrics and that kind of thing that a
publisher just won’t be able to give you
to the same degree so I can actually buy
ads through fifty publishers and get
reporting through one dashboard with a
network so i can see networks in a sense
eating into i guess the media buying
divisions one agent
these will have a less of a demand for
media buyers and two it also puts
individual advertisers in a position to
do more of the media buying in house so
I can see that really disrupting the ad
agency model especially for the agencies
that are very strong and media buying
and rely less on creative I was going to
talk about something else but he touch
media buying what’s interesting is I
think agencies do make a lot of money
from media buying but they pay the
people in the agency so little because
they’ll be like here’s a 10 million
dollar budget campaign account but i’m
going to go hire a 21 year old very very
cute girl but a 21 year old who’s like
really never done anything but she
happens to have a facebook account she’s
on Twitter so she gets social media and
we’re going to make her basically
planned as 10 million dollar accounts
and some higher senior guy with more
experience will sign off on it because
they actually don’t make a lot of money
than the lower level employees don’t
necessarily do the work that they should
do or go to the extent of planning and
researching they don’t have the
experience they don’t have the
experience yeah but they are very cute
not so the problem is I think what you
are seeing is a lot of this sort of not
as successful buying and like the saying
goes nobody gets fired for buying an ad
on yahoo but you might get fired for
buying an ad on XYZ the new site that
happens to be edgy or whatever so I
think that is another reason why you’ve
seen the quants the the you know
analytical guys take over Madison Avenue
is because yeah the way you by media to
quote area you have your old spice I
keep repeating Eric Schmidt who goes as
light as good in the town no definitely
not advertising is the last bastion of
unaccountability in corporate America
and he’s right so I think but the reason
why the ad agencies and the ad networks
re the reason why the ad networks and
the ad exchanges have had so much
success is because buying the old school
way of you know an advertiser hiring an
ad agency who in turn hires a bunch of
junior people to plan and by campaigns
across hundreds of publishers is
actually very inefficient and hoobae
ceases unit razorfish one of like the
first and leading digital shots came out
and said we are now doubling the amount
we buy through ad exchanges and the
number of publishers we buy directly
we’re
the cut in half so a few years ago makes
perfect unfortunately but I think this
is the challenge content is really
expensive to produce but if you’re a
Content producer and you have these big
plans to be like you know having an
ad-supported business good luck ad
agencies don’t really buy directly from
publishers anymore especially video
where the ad networks have come out of
nowhere you know give credit where it’s
due the ad networks whether it’s tremor
or whether it’s bright role whether it’s
you mean whether it’s you know all the
bee bees and and you know the millions
over that dozens out there they’ve come
out of nowhere and they’re generating a
lot of revenue and a lot of it is coming
at the extent of small mid publishers
and even large portals right and I think
they’re the other thing is networks
enable you to buy inventory across a
bunch of sites that you would never
invest someone’s salary a time and
trying to deal with directly yeah that’s
the problem now I think there’s going to
be a shake out the the category right
now that is sort of the belle of the
ball are the ad exchanges the ad
exchanges are like this layer on top of
even the ad networks where basically
you’re not even looking at publishers
anymore you’re just looking frankly at
you know demand side supply-side
inventory matching it based on pricing
and and you know demo and all that I
think right now that seems like a very
very efficient way to buy and you know
what I’m not knocking it I see why
there’s a lot of interest amongst buyers
but I do think though that you will see
a regression to the mean the same way
that on Wall Street 10 you know 10 15 20
years ago you thought oh my god the
quants are running all these hedge funds
nothing can go wrong the sky’s the limit
and then they destroyed wall street and
the broader economy because they just
assume there’s no such thing as risk
anymore they were too big to fail that’s
it and they all felt so I think it’s the
same thing there will be a point in time
when a coca-cola or McDonald’s or even a
smaller advertisers going to say you
know what yeah maybe this user that I’m
reaching now is exactly my audience but
he’s a neo-nazi I don’t want to be
associated online with my banners
loading up targeting neo-nazis I rather
go and target my ads and place my ads or
my video ads or my text ads for my
banner ads on a site that has the kind
of Content that I want because if I’m
surfing on CNN and I see a mercedes-benz
ad i’m going to associate
even if I’m not going to buy that car
I’m going to associate mercedes-benz
with CNN and I’m going to say ok this is
a certain audience that they want and
that’s I think how long term brands
develop goodwill brand equity etc etc so
I get it why in 2011 we’re all enamored
with ad networks and and ad exchanges
but I just think that there’s going to
be a regression to the mean by then I
will probably be long out of the content
game I will have no you know don’t care
and no say in the matter but trust me
there’s always a regression to the mean
this blind buying through ad exchanges
this black box formula works only until
so far and one little sort of micro
example of that is look at Google
Google’s black box adsense AdWords
system work for text links because the
kind of buyer that was buying those text
links didn’t care who it was they just
wanted the neo-nazi guide to buy those
boots you know what I mean they didn’t
care but when then google bought youtube
then it was more about branding and
fortune 500 advertisers and Google give
them credit they realize that that model
was just not going to transpose yeah but
at the same time the majority of the
revenue is still driven totally text
that totally but look at the fact that
you know innovators dilemma they’re
making 29 billion from from total
revenues 29 billion is probably all from
advertising probably 25 26 27 billion
could still be from search and text
links but if they don’t get that two
billion that comes from display and
video to 20 billion it won’t be relevant
they won’t be relevant Facebook’s going
to come along hulu crap stir that is
waiting lurking in the shadows to come
and take over the world so I think
that’s the idea that at least I give
credit for google for not sitting there
waiting to become redundant that kind of
touches on my point about in terms of
targeting y networks can do better is if
I go straight to a publisher I am just
trusting that their demographics are
right if I go through a network a
network can actually place the script on
their site and show them an ad when it’s
one of my ads when it’s you know when
the demographics are right and someone
else is at the rest of the time so I
don’t actually have to buy up the real
estate like completely I can only buy it
when it’s relevant yeah I mean again
from the advertiser inside i get the
value I just think from an investment
business side it won’t really matter ad
networks at exchanges most tech
companies are set up to scale very
quickly that’s the beautiful thing about
them but then there’s not
damaged defensibility so you end up
getting 15 copycat companies and the
problem is most of these companies that
have raised 50 to 100 million dollars in
funding they won’t even be making that
much revenue look at the number of
companies that big buyers the googles
the yahoos have bought and then they’ve
almost become redundant within a couple
years because a better shinier
technology has come what’s up does how
many of those acquisitions were just to
keep them away from someone else or just
a dwarf you know rival technology from
coming up and eating into their market
share I do want to say quickly keep your
eye on facebook facebook connect
facebook Insights facebook is already
pretty much injected itself into pretty
much every website that’s worth looking
at they are pretty much building the
groundwork the foundation infrastructure
for their rival to add words but they’re
also building the facade I’m kidding
thanks ash thanks but they’ll be
actually be able to target me based on
my interests than you know my social
graph which means we’ll be able to go to
the same site at the same side same time
see two different sets of ads and they
might be served up by Facebook or they
could they might just sell off that data
to a network to do this I have no doubt
that as we sit here pontificating about
the industry Mark Zuckerberg is thinking
about miraculous ways to make money off
you and your profile and your social
graph that you don’t want don’t want to
find out and whatnot we’re going to take
a short break but before we do we’re
going to leave you on this stat why the
ad networks are a bit scared so the
money that will be shifting into video
advertising online forty-three percent
will come from display banners and less
than forty will come from television
buys what does that mean it means that
display I think has a very very
threatened future we can go ahead no is
it we’re going to take a short break
come back for lightning round and the
email of the week
show 15 so in this segment we’re going
to talk about a very interesting article
i read in Reuters were basically will
Margalo for Marge Olaf who is the CEO of
ignition one a division of the Japanese
media and advertising giant dentsu he
basically says that there’s going to be
a shakeout in the online ad market and
the reason for that is he goes you
possibly can’t have six or seven market
leaders amongst ad agencies and adnet
well at agent sees you could but it goes
you can’t have six or seven market
leaders amongst ad networks can have six
or seven market leaders in the you know
exchange field what do you think do you
think that online medium is growing and
consumers are spending more time than
ever online budgets are flowing online
is media cyclical but online media going
to grow for the next ten years
uninterruptedly a sake out what’s your
read on on the ad agency world and um i
think there’s going to be a little bit
of a shakeout and i think what’s
important to consider here is when you
look at an ad agency we really gotta
distinguish between you know their media
buying divisions or departments and
their creative division two departments
on their creative side you’re going to
not see as much of a shakeout you know
there you’re going to see fun stuff like
the old spice guy i’m sorry i love the
old spice file you have like stock in
Old Spice I just think it looks good in
that towel but um on the media buying
something every day on the media buying
side I can see that really shaking
things up I get the impression at a lot
of agencies especially the big ones like
at the end of the day a lot of their
revenue comes from for media buying and
media placement the thing is is that’s
not nearly as complicated as it used to
be you know like used to have to have
networks with like billboard vendors in
yada yada yada now you can actually go
and do a lot of your buying through ad
networks and in a lot of sense it makes
much more sense to go through an ad
network than to deal directly with the
publisher because then one you got one
point of contact and to what networks
specialize in is like tracking and
metrics and that kind of thing that a
publisher just won’t be able to give you
to the same degree so I can actually buy
ads through fifty publishers and get
reporting through one dashboard with a
network so i can see networks in a sense
eating into i guess the media buying
divisions one agent
these will have a less of a demand for
media buyers and two it also puts
individual advertisers in a position to
do more of the media buying in house so
I can see that really disrupting the ad
agency model especially for the agencies
that are very strong and media buying
and rely less on creative I was going to
talk about something else but he touch
media buying what’s interesting is I
think agencies do make a lot of money
from media buying but they pay the
people in the agency so little because
they’ll be like here’s a 10 million
dollar budget campaign account but i’m
going to go hire a 21 year old very very
cute girl but a 21 year old who’s like
really never done anything but she
happens to have a facebook account she’s
on Twitter so she gets social media and
we’re going to make her basically
planned as 10 million dollar accounts
and some higher senior guy with more
experience will sign off on it because
they actually don’t make a lot of money
than the lower level employees don’t
necessarily do the work that they should
do or go to the extent of planning and
researching they don’t have the
experience they don’t have the
experience yeah but they are very cute
not so the problem is I think what you
are seeing is a lot of this sort of not
as successful buying and like the saying
goes nobody gets fired for buying an ad
on yahoo but you might get fired for
buying an ad on XYZ the new site that
happens to be edgy or whatever so I
think that is another reason why you’ve
seen the quants the the you know
analytical guys take over Madison Avenue
is because yeah the way you by media to
quote area you have your old spice I
keep repeating Eric Schmidt who goes as
light as good in the town no definitely
not advertising is the last bastion of
unaccountability in corporate America
and he’s right so I think but the reason
why the ad agencies and the ad networks
re the reason why the ad networks and
the ad exchanges have had so much
success is because buying the old school
way of you know an advertiser hiring an
ad agency who in turn hires a bunch of
junior people to plan and by campaigns
across hundreds of publishers is
actually very inefficient and hoobae
ceases unit razorfish one of like the
first and leading digital shots came out
and said we are now doubling the amount
we buy through ad exchanges and the
number of publishers we buy directly
we’re
the cut in half so a few years ago makes
perfect unfortunately but I think this
is the challenge content is really
expensive to produce but if you’re a
Content producer and you have these big
plans to be like you know having an
ad-supported business good luck ad
agencies don’t really buy directly from
publishers anymore especially video
where the ad networks have come out of
nowhere you know give credit where it’s
due the ad networks whether it’s tremor
or whether it’s bright role whether it’s
you mean whether it’s you know all the
bee bees and and you know the millions
over that dozens out there they’ve come
out of nowhere and they’re generating a
lot of revenue and a lot of it is coming
at the extent of small mid publishers
and even large portals right and I think
they’re the other thing is networks
enable you to buy inventory across a
bunch of sites that you would never
invest someone’s salary a time and
trying to deal with directly yeah that’s
the problem now I think there’s going to
be a shake out the the category right
now that is sort of the belle of the
ball are the ad exchanges the ad
exchanges are like this layer on top of
even the ad networks where basically
you’re not even looking at publishers
anymore you’re just looking frankly at
you know demand side supply-side
inventory matching it based on pricing
and and you know demo and all that I
think right now that seems like a very
very efficient way to buy and you know
what I’m not knocking it I see why
there’s a lot of interest amongst buyers
but I do think though that you will see
a regression to the mean the same way
that on Wall Street 10 you know 10 15 20
years ago you thought oh my god the
quants are running all these hedge funds
nothing can go wrong the sky’s the limit
and then they destroyed wall street and
the broader economy because they just
assume there’s no such thing as risk
anymore they were too big to fail that’s
it and they all felt so I think it’s the
same thing there will be a point in time
when a coca-cola or McDonald’s or even a
smaller advertisers going to say you
know what yeah maybe this user that I’m
reaching now is exactly my audience but
he’s a neo-nazi I don’t want to be
associated online with my banners
loading up targeting neo-nazis I rather
go and target my ads and place my ads or
my video ads or my text ads for my
banner ads on a site that has the kind
of Content that I want because if I’m
surfing on CNN and I see a mercedes-benz
ad i’m going to associate
even if I’m not going to buy that car
I’m going to associate mercedes-benz
with CNN and I’m going to say ok this is
a certain audience that they want and
that’s I think how long term brands
develop goodwill brand equity etc etc so
I get it why in 2011 we’re all enamored
with ad networks and and ad exchanges
but I just think that there’s going to
be a regression to the mean by then I
will probably be long out of the content
game I will have no you know don’t care
and no say in the matter but trust me
there’s always a regression to the mean
this blind buying through ad exchanges
this black box formula works only until
so far and one little sort of micro
example of that is look at Google
Google’s black box adsense AdWords
system work for text links because the
kind of buyer that was buying those text
links didn’t care who it was they just
wanted the neo-nazi guide to buy those
boots you know what I mean they didn’t
care but when then google bought youtube
then it was more about branding and
fortune 500 advertisers and Google give
them credit they realize that that model
was just not going to transpose yeah but
at the same time the majority of the
revenue is still driven totally text
that totally but look at the fact that
you know innovators dilemma they’re
making 29 billion from from total
revenues 29 billion is probably all from
advertising probably 25 26 27 billion
could still be from search and text
links but if they don’t get that two
billion that comes from display and
video to 20 billion it won’t be relevant
they won’t be relevant Facebook’s going
to come along hulu crap stir that is
waiting lurking in the shadows to come
and take over the world so I think
that’s the idea that at least I give
credit for google for not sitting there
waiting to become redundant that kind of
touches on my point about in terms of
targeting y networks can do better is if
I go straight to a publisher I am just
trusting that their demographics are
right if I go through a network a
network can actually place the script on
their site and show them an ad when it’s
one of my ads when it’s you know when
the demographics are right and someone
else is at the rest of the time so I
don’t actually have to buy up the real
estate like completely I can only buy it
when it’s relevant yeah I mean again
from the advertiser inside i get the
value I just think from an investment
business side it won’t really matter ad
networks at exchanges most tech
companies are set up to scale very
quickly that’s the beautiful thing about
them but then there’s not
damaged defensibility so you end up
getting 15 copycat companies and the
problem is most of these companies that
have raised 50 to 100 million dollars in
funding they won’t even be making that
much revenue look at the number of
companies that big buyers the googles
the yahoos have bought and then they’ve
almost become redundant within a couple
years because a better shinier
technology has come what’s up does how
many of those acquisitions were just to
keep them away from someone else or just
a dwarf you know rival technology from
coming up and eating into their market
share I do want to say quickly keep your
eye on facebook facebook connect
facebook Insights facebook is already
pretty much injected itself into pretty
much every website that’s worth looking
at they are pretty much building the
groundwork the foundation infrastructure
for their rival to add words but they’re
also building the facade I’m kidding
thanks ash thanks but they’ll be
actually be able to target me based on
my interests than you know my social
graph which means we’ll be able to go to
the same site at the same side same time
see two different sets of ads and they
might be served up by Facebook or they
could they might just sell off that data
to a network to do this I have no doubt
that as we sit here pontificating about
the industry Mark Zuckerberg is thinking
about miraculous ways to make money off
you and your profile and your social
graph that you don’t want don’t want to
find out and whatnot we’re going to take
a short break but before we do we’re
going to leave you on this stat why the
ad networks are a bit scared so the
money that will be shifting into video
advertising online forty-three percent
will come from display banners and less
than forty will come from television
buys what does that mean it means that
display I think has a very very
threatened future we can go ahead no is
it we’re going to take a short break
come back for lightning round and the
email of the week
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