We're going to start our next session right on time. I'm Laura Martin, I'm the Senior Media and Internet Analyst at Needham & Company. I am introducing the Vanderhook Brothers, Tim, and Chris, although usually they sit in Zoom with their name in front of the other one, which is really confusing to people.
We changed it, we changed it.
Yeah, yeah, yeah, you did, which I really appreciate. Okay, so I'm going to start with my favorite question, which is the personal question, which is: Can each of you share the most impactful professional conversation you've ever had and how it changed your path?
Well, I guess for myself, if I think about changing of a path, I started this company with Chris directly out of high school when I went to a state university and started the company and also went to school at the same time. So to me it was that fork in the road of when I was talking to a mentor of mine who told me, "Hey, you can go to this small school and play football or baseball and continue sports, you know, one last go-round before you hit the professional world, or you can just recognize that it's time to start life and get to work." And then I realized at that point I'm going to forego sports, go into a small college to continue to play sports, and I went and started this company and I've never looked back.
To me it was that fork in the road of do I delay growing up or do I get to work, and getting to work paid big dividends because we know more about ad tech than most.
Yeah.
That's a great, I mean, it totally changed your path.
Yeah, yeah, yeah.
Like everything.
Mine was probably similar, but it was a conversation actually with myself. When I was in college I worked at Bank of America and I was a teller and then I did a few other things there.
Wells Fargo as teller.
Yeah.
Was at Stanford.
It was actually a great job because you end up learning a ton.
You do?
You do.
You get to interact with consumers?
Yes, but the funny thing is that every time those consumers walk in the bank, they hate, they hate you.
Yeah.
Instantly. They think you're messing with their money. But I was driving to work one day and I had worked there for over 2 years and I was just unhappy going to work and I probably couldn't answer why. I would hold them up for money every 3 or 4 months that I wanted a raise and I was probably a terrible employee. But I realized I was just unhappy going into work every day, working for the way I called it then, the man. But I was just a kid. But I realized then I actually wanted to start my own company and I'd be more happy doing that and I didn't feel what I was doing there was I was going to get any real value out of. Shortly after that, that's when Tim showed up and.
Borrowed his credit card.
Borrowed my credit card and that's how we got into it.
Yeah. So you really didn't ever have a conversation with somebody else that changed your path, really?
No, but you know, our father was a police officer, but like a lot of police and firemen, they have their own companies and so, he was an entrepreneur. So we were influenced by that for sure. But yeah.
I got to tell you, I've had six bosses in my life. Everyone has had a conversation with me that changed my path in some form.
Yeah.
Either how I interact with clients, or I don't know.
Well, I think that's the part of being an entrepreneur is you don't have bosses. You have to figure it out on your own. And so a lot of times, like, we'll figure it out and I'll be like, "Man, this is amazing." And Chris is like, "Yeah, if you went to business school, they'd just teach it to you. Someone figured that out decades ago." And you're like, "Oh, God.
Yeah.
I thought I just came up with this and I was a genius, so.
We certainly do, you know, you certainly do have things that alter your path. I just think those two things were probably. I think both of us just. Those were transformational of what set our path.
Yeah.
You know, certainly every day. You learn it, yeah.
I definitely think your most impactful professional conversation has to be when you're 18 or 20 or 22. Not. Don't tell me it's when you took your most recent job.
Right.
That better not have been your most, you know, inspirational.
Your time's running out.
Yeah.
Yeah. Okay, so let's level set. For those in the audience less familiar with Viant than I am, can you guys provide a brief overview of the company and positioning in the ad tech landscape?
Yeah, absolutely. So we are a demand-side platform. We're software that buyers of advertising log into to place their digital advertising buys. And they're buying streaming TV ads, Connected TV, streaming audio ads, banner ads, digital out-of-home billboards are now internet-connected and auctioning these things off. So wherever they're going to place their advertising, we help them do that electronically. And then we provide a very good data and analytics platform really to answer the question, "What am I getting for my money?" So, heavily in the targeted advertising game and also in the measurement and optimization.
We believe there's only four self-service, enterprise-grade software platforms that are demand-side platforms. There's only four of them that exist globally. There's Google, Trade Desk, Yahoo has one, and Viant. There used to be a fifth.
Ranked in that order of size.
Yes. And there used to be a fifth. It was a company called MediaMath, but they actually filed bankruptcy a little over a year ago. But there's only four globally, two of which, as Tim was pointing out, were that they're buy-side only. We only service the marketer. The other two, Google and Yahoo, are also on the sell side. And so that's kind of when we go to market, that's how we differentiate. It's rarefied air of these platforms that exist that are truly self-service. And then being buy-side only, the marketer knows that we have their interests in mind.
Let's just stay on that for one second. Pros and cons of being buy-side only? Because most of the guys who sit on our stage are two-sided.
To the customer or to ourselves?
I think to the economics of the business and an investor, which is the seat that these guys are in.
Yeah. The pro of the buy, like Chris said, there's no competition when you represent the buy side. We compete with The Trade Desk and Viant. That's it. There's no one else that's buy-side only, self-service, DSP. There's also other competitors out there that act like a buy-side DSP, but are really there to sell a marketer advertising. So this is, if you're end-to-end, if you are an SSP and a DSP, your primary goal is to get as much of that advertiser's budget and sell them advertising. Our goal is very different. We want to buy the advertising on behalf of the advertiser, drive down the cost to the sell side, and produce better results. So it's one of the big things I think investors don't understand about ad tech is the differences between the companies. Everyone kind of sounds the same.
But when you're buy-side only, there's us and The Trade Desk, and then there's everybody else who's a seller of advertising, couched as an SSP, ad network, end-to-end, a media property is a seller of advertising, all these companies trying to sell. So very, very low competition on the buy side.
Okay. All righty. CTV was 40% of your ad spending on your platform in Q1, right? 40% is where we were?
Yeah.
Okay. You reported 50% year-over-year growth of connected television revenue growth. What are your CTV growth drivers right now?
CTV, the growth drivers in CTV are.
It's connected television.
Sorry. Streaming, connected TV, CTV. It's synonymous. One is the, there's a massive shift of linear television dollars, ad dollars, as viewership has shifted, that's all moving to streaming. The only thing that's holding up, and that is, there's roughly $60 billion or so that's left in linear television, we believe that that's going to shift over the next 3-4 years, the vast majority of it. If you look in linear television, if that seems too fast, if you look in linear television last year, of the top 100 programs in linear television, 93 of them were the NFL. So the NFL is the only thing that's holding up linear television. So that, that, and that viewership is shifting as well. And so I think that's the biggest tailwind in what some of the growth drivers are.
Specifically, if I go to the other side of the coin, what's happening right now is, I think last year was the first time that Google and Meta didn't represent more than 50% of total ad spend in digital. And there is a shift that is happening out of walled gardens. And it's really going more towards, it's not going towards lower funnel display ads or more text ads. It's going towards the premium end of the market, and that is CTV. I think most of us.
You're just not going to Amazon? You're sure we're not just, those two walled gardens are losing it to a different walled garden called Amazon?
Well, I think that Amazon was not stealing, let's say. There's some for retail media. I think a lot of that money is coming out of, you know, Walmart in-store and Kroger in-store because things are hitting, you know, as e-commerce grows, then those in-store media dollars, so to speak, or those retail dollars are then shifting to, well, who's transacting retail? It's all Amazon. I don't believe that was coming out of Meta. Now there are. You certainly can make the case for something sold on Amazon. Are they buying Meta ads? Yes, but they're buying, really, they're buying Amazon ads. So we believe that there is a shift out of lower quality advertising, more towards the premium end of the market. And that we think is a second big growth driver that most people don't realize in CTV.
One statistic that came out on why CTV is so hot, and I think there's, you know, two areas. Number one, we grew at 50%, which was way ahead of the market. I didn't see anyone else that grew that fast. That is primarily because we enable targeting and measurement within CTV with what we call Household ID. so in television, there's no cookie, there's no third-party cookie to track you around the web like you're used to the banner ads that are there. And so Household ID being used to target the ads and then measure if those households bought the product or service is what's driving that closed-loop measurement and feeding money into connected television. That's number one.
Number two, when you look at the perceptions from advertisers, what they perceive by channel, and you compare connected television, search, social, all display ads, all the way down, which channel best hits your KPIs? Connected TV, 75% of respondents ranked CTV number one. 40% of people said search. Excuse me. Sorry. You could pick three, up there. So that's how, that's how the numbers work. 75% ranked connected television, 40% was search number two, and 35% was social. So CTV combined, search and social, search and social, it outperforms. And so when you have advertiser perceptions that CTV is the channel that drives performance, it's an incredible opportunity for growth.
Okay. Let's talk about the growth driver for CTV called direct access.
Yep.
So your Direct Access, and you're going to explain what that is, went from 40% of your total CTV dollars to 50% in 90 days. So why don't you talk about what Direct Access is and how it's driving growth in your connected television revenue stream?
So Direct Access is a program that we run, specifically in CTV, and it's where the largest content owners, in the CTV space, so think, you know, Disney, Paramount, you know, Peacock, even, even the distributors like Roku, Samsung, these guys, they want to connect direct with our customer's demand. They want to get direct to that. Why would they, why would they want to do that? Many of these, many of these players in CTV have yield management capabilities in-house, and they, they do not want to go through a traditional auction, or, or an SSP. And so they may have some of those, those capabilities in-house. So they want to connect direct to our DSP's demand. What's really interesting about that is when we do that, our clients are seeing lower CPMs because there's not a middleman in the middle taking a big fee.
They're actually seeing lower CPMs, but the win rate in the auctions to the publishers is actually higher. So publishers are getting higher CPMs net-net by connecting directly. Our clients are seeing lower CPMs. It's actually an easy pitch. If we go out to a marketer and we're vying for their CTV dollars and another competitor is, you know, vying for the same CTV dollars, and we just ask the question, do you want to buy through our Direct Access program, direct, or do you want to buy through intermediaries? And it's an easy answer. So that is a huge driver. That's just on efficiency, straight up, number one. Number two is that all of these big CTV, these hubs for CTV, they nearly all of them have their user base authenticated, meaning they're logged in.
When we integrate our house, when we integrate with them, we're not only doing inventory integration, it's also they're integrating with Household ID. so I think Disney, Paramount, they take their whole subscriber base. They're then integrating with Household ID. and what we are enabling is addressability that's very similar or the same, same level as what marketers see on, in walled gardens. But the difference is we're giving you walled garden addressability against the world's most premium content. That's real advertising. That's what marketers want.
You can't scroll past the ad. It's there for 15 or 30 seconds.
It's a full screen take.
Massively powerful. Same level of targeting as social, same logged-in users, actual, real quality content where marketers want to be.
One of the things that on the prior panel, or yeah, the most recent panel, Sean at iSpot, who runs iSpot, said he had been using Household ID, which was the IP address in the house, and he's recently moved to hashed email.
Email.
Email addresses, which is like what UID does too. And he actually thinks that's where ID, the ID spine is going to come in the future. So can you speak to that? Because you guys have been really sort of, I'm going to call it stubbornly, but really focused on a Household ID.
Yeah. Well, let's start out. What is a TV? Is a TV a personal device or is it a shared device in a household? So when you think of, when people get into the television industry from digital, they think like a digital person. Television people think like a television person. But when you think of the actual device, it is a shared device within a household. The vast majority of products and services are household purchase level items. What car you're going to buy, where you're going to travel for vacation. So influencing the household is really critical. So we start with the device. It is a household shared device. So you need an identifier that can aggregate the two smartphones that saw the ad. Because you can't buy anything on a TV. You're going to use your mobile phone to buy it.
And so we have Household ID. and just to de-blackbox it, that's your home address. It's your home address, like if you bought a good, where the good would be shipped to, your physical home address. So that's Household ID is. I think Sean was referring to IP address there. But it's different, but similar. So have Household ID, we connect all the devices to that household, and we monitor, did any of the persons within the household take action, make a purchase, download the app, whatever the call to action was. And that's what drives our closed-loop measurement system. Household ID is a way, data comes in many forms and formats. For us, it's name, address, phone number, email, could be a cookie that's out there, all rolling up to the Household ID.
When you get to the email address, I just ask people, we invented that process. What UID2 is, these two guys created that process and launched it in 2015. It doesn't scale. As the founders who invented that process, it caps at about 30%. You have to go up, do something different to get that remaining 70%. And that's Household ID does. So I think our competitors will run into those challenges in the future. It does work in CTV. It doesn't work across all channels: mobile, desktop, CTV, digital out-of-home. One thing too. So those are, we've been in business in this industry for 25 years. Unfortunately, people still sell. I mean, look, everybody has some level of marketing.
You know, if you certainly there are companies you read their website and that might say one thing and you know something about the company, it might be something different. Unfortunately, we, this industry sells themes that are virtuous and profit and definitely not true. Like right ad, right user, right time. Been talked about for 15 years. It's not true. What they're talking about on email, that they want that to be, you know, they will counter when people say like household. Well, yeah, if you do, if you go Viant's way on household, they don't know which person in the household you're showing the ad. You don't need to. That's our whole point. You know, the whole industry is grappling against privacy, and we think that this is a much more privacy-friendly approach, number one. Number two, just the simple aspect.
When our clients, when they buy using Household ID, they can measure using Household ID. so you might have shown me the ad, but if my wife pulls out her phone and purchases, she was influenced by that same TV spot. If you use the email address, you're going to miss that. If you use Household ID, you're going to get it. The marketer doesn't need to track every single person everywhere. They need to know they showed an ad. Did someone who saw that ad, doesn't matter who, did they get a return? It's also why when marketers Household ID, they're seeing such great, such better and higher return on ad spends than using a single identifier like an IP address or an email. So we're going to.
And if you think of an email, like who's logged into Hulu, person A or person B in the home, then who buys the product and which email address did they use to buy the product? Corporate, personal one, personal two. You've got multiple emails also. So when you see, when you bet on email alone, single bullet in the chamber, you got a lot of misses on who was logged in on Hulu, who saw the ad versus who actually bought the product. When you go to the household level, you don't have any of that noise.
Okay.
Yeah. Email is very straightforward, and anyone can match a hashed email with another hashed email. Anyone, any player can do it. When you do what we're talking about, which is identity resolution at the household, I mean, we've been in this game since 2013, and we've been doing it for years, matching third-party data companies like Acxiom and Experian with marketer data and publisher data. So we're very skilled at it, and we have a lot of, we have a lot of technology involved in it. And it is a higher barrier of entry, but it is really the, it's, it's what's going to actually take, it is going to be what I think the industry settles on.
The hashtag, the hashed email.
No, the household.
The household.
Absolutely.
So you think Sean's going the wrong way?
Well, I mean, Apple, Apple is intent on hiding your email.
That's true.
And so is Google. So.
Yeah, that's true. Okay. Let's talk about the non-CTV part of your business, the 60%. Tell us what's happening there. What are the growth drivers and what are the biggest challenges of the non-connected television part of your business?
We said on our last earnings, streaming audio actually reached, that's growing, you know, massively, and it finally reached what we'll call critical mass where we break out. And that's at 10% of the mix of total spend. We think that's really important. We think streaming audio, most people don't even think about streaming audio. They don't think about that. They don't think about digital out-of-home. Those are two very impactful channels because they drive real results. Like CTV, it makes a lot of sense that an addressable ad on your, you know, 50, 60, 70, whatever size TV you have, that works a lot better than a banner ad, or a text ad that truly drives demand generation. We see that in streaming audio, and we definitely see that in digital out-of-home.
But all sides of the business, I think mobile and desktop continue to do well. Also, I would say the areas that are challenged, not just on our platform, but really just in general in the space are going to be cookie-based display advertising, which typically exists on desktops. That is a shrinking segment in the market, we believe.
For many years to come.
Yeah, for many years. And really, it's just over-indexed by marketers. It's probably, I don't know, it's probably easily $60 billion to spend on display ads. And there's just no way it, I promise you, there's no way it drives the results that marketers think, you know, think it does.
It doesn't move consumer behavior the way video does.
Yes.
Yeah.
So you think that $60 billion just, which happens to be the same number as CTV, you think that $60 billion is moving to CTV?
I think that streaming audio, the higher performance channels. In the end, money's fluid in these systems. So the minute one channel stops performing, you know it within an hour, you're able to say, wow, something happened over here. You turn off the budget and the budget flows into.
But it must be still working because it's still like 40% of your revenue.
Yeah, correct. But remember, cookies never got deleted. There's, you know, these channels are still there. They're going to continue to go. Streaming audio is probably the most overlooked, underhyped future advertising channel that's going to have lots of budget, very high quality content. I think a lot of marketer interest. And it's probably the invention of AirPods, you know, between your ears. People have high attention when they're listening to podcasts, music. The ad exposure is pretty impactful.
Okay. All right. Yeah. You did say it was now 10%. You said audio was, it was, I think you said it was up 100% and it's now 10% of total ad spending on the Viant platform in the first quarter. So do you see it's going to be up like 100% for a year or two here? So it's going to be 20% and 30% of your revenue?
I don't, it's tough to say when that hits. I think it will follow. I don't think it will be as big per se as, I don't think it has the same tailwinds as CTV because let's say traditional radio, you know, is a tailwind, right? And it's shifting into streaming. But that's certainly a much smaller market than the linear television market. But I think we could easily see that be in the 20% mark, I would say. That's really about the opening up of supply. There's just been an, it's not, you know, just Pandora and music listening. It's really a lot of the explosion is podcasts. And when you see a lot of the new premium content open up, that's when marketers really start putting more and more dollars in, much, you know, very similar to what we've seen in CTV.
Okay, so streaming audio. So talk to me about the piece of the business, the 30% that isn't growing. And is it just going to dissipate over time?
Yeah. And just to be clear on that, there's not a 30% that's not growing. I think we're, sorry, I'm going to call a friend here in the audience, Larry. What's our video base?
60% video, 10% audio, and roughly 30% display.
Yeah. So, and of that, the cookie-based display, so think Chrome, all that, you know, that Chrome piece, that is less than 10% of our business. That's the piece that, you know, we believe is shrinking.
Tell me about the other 20% then?
The other 20% are, you know, digital out-of-home boards, which you still will consider to be, you know, display, you know, higher impact. You know, I think display ads serve a purpose. They just are not primary demand generation drivers.
A banner ad reminds you about a TV ad you saw. It doesn't actually give you the details of a product.
Yeah. I would just say that what we see is clients are opting and moving money when they set budgets. And if I have $1 million, you know, if I look a year ago, someone has $1 million that they're going to spend in a quarter, we're seeing more of that indexed to video and CTV this year, and streaming audio for that matter, than mobile and desktop display.
Okay. One of the things that they're saying that one of the panels said is that these words media mix modeling are coming back into conversations this year after being sort of absent for three years. They were trying to hypothesize as to why. But one of the guys said that the entire, like marketers got too focused on performance and now they've sold every product to every person they had. Now they need to start moving mid and upper funnel to generate the next set of fandom to buy their products. Can you guys comment on that?
I think that, I think to some extent, there's some truth to that. I think, you know, display ads or cookie-based advertising has been sort of like a video game for marketers. And I mean lower funnel marketers. They think they spend money, they show ads through a Google, you know, their DV360 product, and they'll see that they showed 1 million impressions and they got, you know, 1,000 sales. And that's a cost per customer of, you know, whatever. So let's just say it's $10. All right. So I can keep getting customers at $10, but they, it's almost a simulation. It's not even real. You know, it's very similar. I'll say it. It's very similar to Google Search. Why do, why do brands buy branded search terms?
We were talking years ago, the guy who ran Ford, digital marketing, and he was spending at that time like $25 million on branded search terms. Today they probably spend over $50 million. Why do you buy F-150? And he's like, because it performs well. It's the best performing KPI we have. I said, right, but how did they know to show up at Google and type in F-150? He says, well, if I don't buy it, my competitor's going to buy it. I said, they're already there searching for you. I, you know, I don't buy that. Your TV ads drove them. Your radio spots drove them. Digital kind of forced us into a lot of things that were synthetic performance drivers that were already going to happen. Display ads, you want to know why they work? Because we have a pixel on the site.
We know that you put something in your cart. You leave, Google created this great game that whoever just shows the last ad wins and they get all the money. Like that's the display advertising landscape that's $60 billion. And there is a boatload of companies that are involved in that that have a lot of exposure there. So marketers, what I really do believe is happening is a realization that, oh, wait, like I stopped spending there, I still got those sales. Wait, when I move money into real advertising, oh, I actually got, I got incremental sales. The biggest thing, and I'll give you one of the side stats, over 60% of our clients that use our software, because we're buy-side only, they use our measurement. So they are using our DSP to measure all their investments.
The number one thing that all of our clients look is not total return on ad spend. They do look at that, but it's lift of the money that I'm putting out. They, they look like week by week, geography by geography, different ad placements. What's driving higher lift?
Incrementality. What was incremental reach?
Incremental lift. It's incremental everything.
Incremental reach.
You could show me an ad, but I'm probably, if I've drank Pepsi my whole life, I'm going to buy another Pepsi, right? So those are, those are baseline sales that are happening and they're measuring incremental lift above the baseline sales that they expected anyway.
Okay.
This is where measurement, it's all about incrementality gains because most of these products are going to sell anyway.
Right. Right. And that's like talking about uniqueness versus the commoditization of audiences in the programmatic lens.
But do I, getting back to your media mix modeling, do I think that's the future? Absolutely not. The world never goes backwards. That's from multiple decades ago. That just means that someone in that organization hasn't come up with the idea of what's next. So they're going backwards. Media mix modeling, the genie never goes back in the bottle. Data targeting and measurement isn't going in reverse either. We just have to do it in a smarter, more privacy-friendly way. We think Household ID does that in spades. Stop tracking every individual person. Just measure exposure and purchase.
Media Mix Modeling, people that are saying that is because they believe that there will be no, but privacy goes to the far right and there will be no personalization of ads and no measurement. We do not believe that. I do believe that there will be more privacy as we're seeing, but we believe that ads will become even more personalized and they will become even more measurable. Yeah, because otherwise the money doesn't hit. And if you like the content on the internet, it's all ad funded. Like at the end of the day, it is what it is. Like it's a simple math equation. I don't know why people still espouse that, but.
Well, it could be they were going to first-party data. The people are using first-party data, which is privacy protected. But that means, but the importance of that is that value is then transferring to people that with first-party data, like a Samsung or something, you know? So, so it does make an effect on who you invest in within the ecosystem of money moves towards first-party data.
Absolutely.
Okay. So, when you think about streaming audio, is that, so I know it's growing 100% today. Is that, is it because podcasts have moved to the streamers? Is that, I mean, I'm wondering how long, how big that TAM is and how long it can drive growth at 100% a year.
Well, I think if you just start, if you think of programmatic, here's what happens first. Money shows up to buy ads programmatically. There's no supply. Then the supply says, well, we have a sales force. We don't want sales channel conflict. So we're going to give you the unsold parts of our website or music listening. So they auction off their unsold remnant, whatever. That's how it starts. Then they realize, oh, we have a revenue problem this quarter. Let's open up more inventory programmatically. And they do. It plugs the revenue problem that quarter. So what you had last year at the end in audio specifically, Spotify opened up all their podcast inventory to the programmatic channel, the buyers like us. That's what created a huge amount of high-quality podcast inventory in Q4 last year.
You're seeing the same in CTV with Netflix, you know, et cetera, et cetera. Once demand shows up, it attracts supply, which attracts more demand and it will attract more supply. And then that's how the building blocks go.
Are you guys seeing pressure in your CTV business on advertising pricing as Netflix and Amazon? We have these new big sources of supply on the premium CTV side.
I think if you look at the total market in general as the largest content owners move more and more content online, I think in theory they have, they command higher prices than, say, I don't know, Crunchyroll or Roku. In theory that is true, but there's so much supply that they're bringing online, the market somewhat, the market ends up.
Has to balance.
Yeah. And so I think in general they are going to get higher CPMs, but we don't see, we're not seeing a supply-constrained market right now.
CPMs seem to be pretty stable.
Yeah.
CPMs are stable. Because I did have two guys on an earlier panel saying they were under CPM pressure, but they were both OEMs. They weren't Disney. They weren't Peacock. They weren't the premium. And they sort of felt like CPMs were stable at that level, but their level, we'll just call it tier two, was under pressure.
Was going down.
Mm-hmm. Was going down. And they were first-party. I mean, they were talking about their platform. So I assume they're right. But you're not seeing that in your world.
Oh, sorry. I thought you were asking the other way.
What?
Well, because we represent the buyer, we believe pressure is, that means price going up.
No, I'm saying our price is going down for your buyers.
I mean, they're pretty stable in general. Nothing like, oh, CPMs are down 20%. Sure, there's some pricing benefits quarter to quarter based on needs by the media companies that quarter. Are they short on the revenue? You know, so I think a lot of it is just market dynamics, but nothing out of the ordinary increase or decrease.
Okay. Questions? We have about 10 minutes left. Questions? Yes, sir. Whichever. Both.
I'm curious if you have a way of measuring consumer backlash on CTV and streaming audio, if at all, because a lot of cord cutters like myself are mildly irritated by these videos that show up when they go to the show. And like you said, you can't scroll past them.
Yeah. That's right. We don't, that's not our business, right? User experience is an important aspect for the CTV app themselves. So they would control ad load, like how many ads you see, you know, how long the ad breaks are. We're simply looking at their viewer and determining if any of our advertisers, if they're a customer of our advertisers or if we want to expose them. So that would be more on the sell side where they would monitor that. I would say most probably do not survey their users to understand the backlash. And consumers did get a free ride. It's important to understand that in streaming you were getting a free ride to get you into it, but advertising, it's going to be the same ad load over time. It's not going to be more or less. It's going to be the same experience.
There's going to be some price trade-off for you to avoid that ad at some point. You know, my kids, they're watching YouTube or whatever, and they're going, oh my gosh, ads. I tell them I'm like, hey, it pays the bills. So what do we, come on. We got to like those things. But I think everybody is going to have an ad-free option that can.
It will be very expensive.
So I'll just follow up on that. I'd love to hear, you know, you're talking a lot about sort of data graphing is fine, the deterministic nature of Household ID. and sorry, Ben Barokas, because I was founder of Admeld and I've been on the supply side for a long time.
Ben's an entrepreneur from our industry.
We do some things. We try to solve problems.
Yep.
I'd love to hear, most of the advertising industrial complex, of which I'm a proud member, is based in California. Recently there's been a number of laws that have been passed, CPRA, CCPA, the guy that founded Do Not Track, Ashkan Soltani, has his own jihad against the advertising, the ad tech field in general. I'd love to hear, like what are your investments, both in the technology side as well as, you know, PR or lobbying?
Yeah.
Meet that head-on.
Yeah.
Where do you think we go from a privacy perspective while just, you know, obviously AI will have something to do with it? I'd love to hear about your investments and what your vision is to get more addressable and more specific. No pun intended, but while still navigating compliance.
Yeah. I think long-term, and feel free to add. I think long-term the industry's approach to advertising and privacy was that it's opt-out and it was on by default. I think in the future it moves to opt-in for just the in general. So when I sign up to Hulu, you have to tell me what you're going to do with my data and I click allow because it's not really an option as a consumer. I could not watch Hulu. But in the end, it's just moving to disclosure and opt-in consent from consumers. I think that's important though in general. I do think what the historical of location data, which is highly sensitive for consumers, you know, that should need to be opt-in and all this type of stuff. So I think there was too much data flow 10 years ago.
I think now there's been lots of steps taken where we're moving from opt-out to opt-in. You kind of saw it with GDPR and the cookie banners. How annoying, like more annoying than the advertising is the cookie banners you have to click allow or disallow all the time, of which, yeah, I mean, it's destroyed.
Why don't they, when I hit accept all, why did you serve it to me again? Like you can't, you have a cookie. I just gave it to you. Every one of those CTV apps, everybody needs their own consent.
Right. Yeah. So I think it's opt-in, which then it becomes first-party data and first-party data will be matched in clean rooms, which is the privacy-friendly. So that's like my short answer to the version. That's kind of the, where we see the world moving.
Follow the incentives because now it's perfectly aligned in desktop and mobile display ads. There were no incentives there. No way. Apple shows up and nukes IDFA. Oh, that killed a lot of companies. That hurt a lot of people. But I think in CTV and definitely when you see this, it's a lot, there's going to be a lot less friction and incentives are definitely aligned because if people in this industry of investors, you know, what's one thing you should know about this space, there is going to be a massive race to get ahold of first-party data. If you don't have a customer's sales data and their CRM file, you're screwed.
Just like right now or historically, if you didn't have a pixel on the advertiser's, you know, website and thank you page, you had no ability to perform and no ability to know, you know, what your cost per customer was you were running at. So first-party data is definitely going to be it. Everyone's going to be looking to, how do I get it? And opt-in is a great way to be able to do that. And they'll design experiences around that. So.
We had one other question over here too.
1% of your clients are using the Direct Access. I mean, this sounds like sort of a layup. How do you guys charge for it? Is this an incremental offering or something?
Here's the best part. So it's over half of our spend in CTV. Sorry, I had to make sure I have so many numbers. Over half of our spend in CTV is now going through Direct Access. And the numbers are going to be, they're going to be great. They're going to continue to be great. We have a lot of really interesting plans around Direct Access. It is a layup because it's cheaper, it's more efficient, it's direct, plus the data matches coming out of these, it's incredible.
The Trade Desk do it as well?
Desk has something similar. They are more, they've historically been more web.
Desktop.
Yeah, desktop-based is where they started. We don't charge for it. They do.
Why don't you charge for it then?
We don't charge for it because we think that we can make off of our regular rates that we charge, we can continue to grab market share this way and grab CTV budgets this way and, you know, and bringing more and more new customers in. It's not a loss. I wouldn't call it a loss leader. It's not. That we don't need.
There's just no need to charge.
Why add the friction point for it? I do like, look, I mean, if I'm charged, I don't want to charge for it because I don't want to confuse the market that we're all of a sudden sell-side.
Any other questions? Yeah, go.
You posted earlier, they talked about the interoperability of IDs. It sounds like you guys are more up to keep yours closed off. I'm curious to hear.
No, it is fully interoperable. Yeah.
With your ID? With your ID?
Yeah, absolutely. I mean, if you think of Household ID, it's your address and then we have all these other data points attached to it, right? So your emails, your, what names that live there, whatever it is. So when interoperability is key because you got to match, Household ID, we match with an advertiser. They've got sales data, customer data, we match. Disney has customer data of subscribers, we match. So it's all about the expertise of having that spine to accept whatever data the customer has. And data comes in many forms and formats. Getting against UID2 again. When you go to the grocery store and you check out your loyalty card to save $10, do you type in an email? No, you type in your phone number, right? It's all attached to your phone number in grocery.
So when it comes to Hulu, how would they know who buys vanilla yogurt across their subscriber base? You need Household ID to resolve an email, a phone number is the same home. That's why everybody.
UID can do that too.
No, it cannot. UID2 is just an exact match on an email address. It is likely that they'll broaden it because it just makes no sense. I mean, I'll bet anybody anything. It goes to 30% and then they'll be like, oh wait, we should include their household address and everybody else in here because wow, we can claim transactions for the husband and the wife and the 17-year-old kid with a phone in the house. That's why you would do it. I mean, so.
Everybody's going to copy this.
We don't have a dog in the fight on that other than we don't believe, yeah, interoperability is key. We don't believe in consortiums. Not a chance. No one's going to work together. Everyone's in it for themselves.
That was one of my questions.
Yeah.
Why do you think they work together?
So that's not, it's not going to happen. There hasn't been one that's ever worked, ever. And so it's not worth it.
There's so much, the whole industry, but you won't work together. I don't get it.
Well, it really isn't about that.
Because we're all too similar.
Yeah. Well, it isn't really about that. It's just understanding, like let's just not waste time. And I could waste, I could have wasted a lot of time for everyone to join and all open Household ID. no one would have adopted it. Like they would have been, oh no, no one adopted UID2 either until The Trade Desk showed up and said, I'll pay you 25% more in CPMs. Then people said, okay, fine. Sign me up. That's just it. So that's smart.
Yeah. Incentives. Okay. Go.
Do you see the same uplift on CPMs when you're buying CTV when you add in?
Yes. The targetability, it's pretty easy. Like when.
An untargeted ad is worth less than a targeted ad.
Is it a little bit of a sleight-of-hand trick? Yes. Because if you compare that to no ID, because there is no ID in CTV, then yeah, sure. It has 25%, you know, higher CPMs. But in the end.
But are those CPMs higher than what that media company was getting in linear TV from that same advertiser? That's the ultimate question.
I guarantee you.
It's the answer.
Procter & Gamble.
I don't know.
I guarantee you.
Not on the sell side.
I guarantee you Procter & Gamble didn't just raise their upfront pricing in the upfronts this week. They're not raising it to Disney by 25%. I promise you that. But is it more valuable to the content owner if they have some form of ID that people can then target off of and then ultimately measure? I don't think they've answered that question yet over there. Yes.
Okay. I need to call it there for our next one.