State Of Varick Media: Selling RTB Inside The Holding Company And Out

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Varick Media ManagementPaul Rostkowski is President at Varick Media Management, an agency trading desk and part of agency holding company MDC Partners. As part of AdExchanger's "State of" series, we spoke to Rostkowski last week about the state of Varick Media and industry trends.

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AdExchanger: Do you consider Varick Media Management an Agency Trading Desk?

PAUL ROSTKOWSKI: I consider us to be an agency trading desk (ATD), but different than the bigger holding company ATDs. We have both an internal and external focus when it comes to our client base. Most of the bigger holding companies are focusing primarily internally with their solutions.

In fact, we consider ourselves to be more of a vendor, and not an ad agency at all. We've built a data management platform (see the release), we'll be building other technologies – we provide innovation as vendors do and hire a whole bunch of smart, costly people to find, source and optimize media across various channels; mobile, video, display, and even search for our clients.

Who is your target client and how does it relate to your competitive set?

Most of the brands that work with the big holding companies today, the AT&Ts of the world, we don't even put them on our radar. We know they're very close with the [holding company] trading desk solutions. I made a media plan for an agency of the holding companies recently -- a big digital agency here in New York. When the news reached the holding company's trading desk that we were on that plan, they had us taken off of it. But, we were bought as a vendor on that plan as any other digital solution or publisher/ad network would have been.

At [parent holding company] MDC Partners, there are no mandates in place. MDC does not require the agencies within MDC's network to use us. They asked to talk to us and understand what we do, but there's nothing in place around a mandate. We have to earn everything that we do and keep it when we do win business by providing great outcomes to our clients.

We're in the business of driving outcomes and providing results. We don't get involved in conversations about rates, or anything like that, unless it pertains driving necessary outcomes or results.

In our competitive set, I don't consider the primary holding company trading desk, because, we don't put those clients on our prospect list. We consider the independent trading desks to be the closest match to what we're doing. And the DSPs. We end up coming up against some of the ones that are more managed service oriented.

From a DSP buying perspective, we use [Google's] Invite Media, [MediaMath's] Terminal One and others, as well.

Do you see Varick Media as more of a technology creator or a technology user and a company that outsources [its tech]?

We get that question pretty often, in terms of where does the innovation come from. A while back, we specifically made the decision not to invest in bidding technology. So, what I consider the DSPs of the world, they are the technical, bidding technologies. We refer to them in-house as bid tech. We decided that stage is already over-invested, probably highly over-invested. We didn't want to operate in there, since there isn't that much differentiation.

So we've decided to invest our money into building data technologies; as I said, we launched our own data management platform (DMP); and went from beta to production on it about two months ago. We hired engineers and now have relationships with Amazon Web Services. We're in the process of building out a client-facing user-interface, so they can access this data.

We're also planning to build trader tools. We want to empower other traders in the marketplace. We have a suite of data technology tools, so they can look at what they're trading and become a lot smarter about the media they're buying. That's where we're spending our dollars right now.

We feel that much of the data space has been built with smart people, but not from a media perspective. What we're going to bring to the table from a media buyer perspective is how you actually optimize and use media in the exchanges.

Regarding today's data markets, especially third-party data markets, what are the realities of that industry trend right now? Is it something that you all use frequently, for example?

So our view isn't all that favorable. We find that a lot of it has a black box orientation and we will not work with those types of solutions. If we don't know how the data segments were built, we're often not going to use them. We want to know which publishers were used to build the actual segments. So, that's one piece of it. But, it's starting to get better.

We're also finding new technologies and vendors that are providing us transparency. One of the problems you have with auction-based data, is that when you sell that data to many parties, you're going to have many users bidding up the rates on the third-party data which often takes it out of the field of consideration for us. We see that happening often.

Where is Varick buying today? Is it the exchanges and is there enough scale there?

We're buying with RTB, we do a lot of retargeting and are active across all the exchanges and sell-side platforms. We are also beginning to use a lot of private exchange media. It can be a little bit hard to activate. It should be more of a pause-and-play capability, but we're finding it to be a clumsy ecosystem. But we think it will get there soon. Our desire to use private exchanges comes from our stronger brand clients that we're taking online - the private exchanges seem to be working well and resonating with the client.

Can you talk a little bit about the team today, headcount, and how it breaks out?

I've been here for just under a year, and we're now approaching about 25 people. When I joined here a little less than a year ago we were probably around eight.

We've grown significantly in headcount and in our client base, and the economics are getting much better as well.

Is there a 'chicken and egg' thing here, where you need the people in place before you can bring in the business?

We need to do some front-running relative to where the business actually is, that's right. It's not easy to find people in this business relative to our tiny niche that we play in. The trader type of position is difficult to find.

We've got four to five traders. We've built a full analytics team out as well. This is in conjunction with the DMP that we built.

Are you feeling the commitment by MDC to build out?

Yes. We've got the commitment from MDC. MDC is behind us on the headcount side of things and the hard cost, too.

You worked at Lucid Media quite a while – a VC-backed startup. What's the difference between being in an environment like Lucid and being in Varick?  

Lucid is a technology company; through-and-through engineering is what Lucid is. This is not that. We don't have the DNA here of technology, because we were developed out of a holding company. There is more of the agency world DNA ,and what I'm doing is navigating that path...between being a technology company and an agency for the client.

Where we're the same as Lucid is, we're both sales organizations, too. We both do some degree of innovation - Lucid probably more than us just because they have more VC dollars to fund that innovation. This is more of a corporate environment, less of a startup feel, because of what MDC brings to the table as a publicly-traded company.

Thinking ahead in the next 12 months to two years; what are some milestones that you'd like Varick Media to accomplish?

I'd like to share the fact that we are having as much success for clients internally as we are external to MDC. We'd like to build a nice business and bring value to the market, and the independent agencies across North America.

Largely right now, our revenue is MDC focused, so if our new mission here is successful, we will have brought to the table clients external to the MDC ecosystem, which is good for everybody, because we can then make those prospects for MDC agencies in some form, to sort of bring them into the wider capability stack.

For example, I can bring to the table for any particular proposal that we go to, full creative capabilities which are essentially very close to being in-house. We have website development capabilities essentially in-house. We have PR capabilities inside. We have TV buying availability to us. We have a lot of these assets that we want to touch on and put into our offerings.

Also, there is a world of clients out there who don't want to be working with six different agencies or 12 different vendors – they want a single-touch point of execution for themselves across all of their addressable audience. That's what I see 18 months from now. Varick could be one of the leaders, if you will, with true RTB television and an ability to offer a very cohesive multichannel solution.

By John Ebbert

Follow Varick Media Management (@varickmedia) and AdExchanger (@adexchanger) on Twitter.

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