Where do you position and differentiate Tribal Fusion today in the marketplace? Is it starting to take on agency skill sets?
Our key differentiator is seamless integration of inventory, data, and technology to create customized solutions for each industry vertical and specifically for each advertiser. Offering agencies the kind of innovative solutions that deliver results requires tight integration that is simply not possible if agencies have to duct tape together multiple point solutions.
Agencies bring client relationships, strategy formulation and creative to the table. As a network we target the right users and content, utilize our PageGuard™ technology to insure their ads only appear on pages that are brand safe, optimize the inventory for the best performance, dynamically customize the creative for each user, and deliver post-campaign insights based on rich user data. All this is wrapped in responsive and knowledgeable client service.
For example, for an auto manufacturer’s new product launch we created fine-grained market segments based on propensity to purchase specific makes and models, dynamic ads that served specific make and model to each segment, optimized the campaign, ensured brand safety, tied in site sponsorships and skins, incorporated video and provided post-campaign analytic insights. To execute this without an integrated solution an agency needs to cobble together multiple point solutions from multiple providers. They would need to purchase the data from publishers or a data provider, utilize a dynamic creative provider and have them create a custom data mapping for their campaign, and utilize a DSP to access inventory. This says nothing about optimization to drive results, brand safety, creative solutions that require publisher collaboration, insights, and customer service to insure everything runs smoothly. With Tribal Fusion you get one IO, one network, one great campaign.
AdExchanger.com: What are the growing trends that you are seeing in media today?
Since the start of 2010, we have seen a strong resurgence in spending on large-scale branding and display campaigns. 2009 was a year of contraction for the advertising industry as a whole, and even though the US economy is showing mixed recovery signals in 2010, online advertising is surging. When times get tough, CMOs and CFOs look for more accountability from their advertising spend and online media is inherently stronger in this regard than other forms of traditional media. So the past couple of years have helped accustom marketers to spending a larger percent of their budgets online and it appears this trend will continue to grow over the next several years.
What’s your view on the rise of the demand-side platform model?
The growth of DSPs is yet another indicator of the vibrancy and resurgence of our industry. When something new comes along, there’s typically a tendency to see it as the “end all” replacement to all that was prior, rather than viewing it in the context of the industry and the needs of its participants.
I view DSPs as a “do-it-yourself” point solution, mainly providing inventory access. For some advertisers a “do-it-yourself” solution is appealing because it provides direct access to inventory. However, inventory access alone is not the full solution required to deliver successful campaigns. You also need top-notch optimization technology to find the best inventory, rich, integrated data to inform optimization algorithms and to provide insights that drive overall strategy, the ability to micro-customize elements of the creative based on the same rich integrated data, strong analytical teams to drive campaign execution, and page level protection to insure ads do not appear on inappropriate pages.
At this time, DSPs do not offer this kind of fully integrated solution. Over time, agencies will demand these very same fully-integrated capabilities from DSPs and in order to offer them, they will need to become more like full-service networks.
What’s your view on ad exchanges? Is or will Tribal Fusion participate?
Ad exchanges are often compared to stock markets with the claim that market models are the most efficient means of arriving at the optimal price and as a result all inventory will move to ad exchanges. This comparison is too simple and doesn’t take into account a big difference between stocks and impressions, which is that all stocks of a company are equivalent, but every impression on a site is completely different. This means that every impression needs to be auctioned off individually, and a more appropriate comparison is to an auction market such as eBay provides, with similar benefits and drawbacks. If an auction model like eBay is the most efficient model for finding the optimal price point, then why aren’t shoppers doing all their buying on eBay and why aren’t product companies using eBay as their sole distribution channel? The reason has to do with control. Buyers want control over buying the product and prefer to pay a fixed price to insure they get the product. Sellers need to sell their product to buyers and retain control over pricing, as price is a key component in controlling the perceived value of a product.
Publishers with a sales team representing their inventory, and “selling” advertisers on the value of their inventory, are finding that when the same inventory is also offered on an exchange it undermines their ability to control value and price. For this reason, we believe most premium publishers will not offer their inventory on an exchange. At the same time buyers will want control over actually getting the inventory they buy, and will buy inventory on a guaranteed basis instead of relying on the unpredictability of an auction.
However, we do see exchanges playing a major role in non-premium remnant and long-tail inventory. In order to insure that Tribal Fusion has access to the best inventory, we have many different types of relationships on the inventory side. We manage this inventory as a pool, optimally finding the best inventory for each advertiser within this pool. Accordingly, we see ad exchanges as simply another source of inventory. However, simple access to inventory does not provide the full solution. Advertisers and agencies want innovative solutions that drive results and most innovative solutions that go beyond the banner require close collaboration with the publisher.
Is Exponential and Tribal Fusion profitable? How many people work at Tribal and Exponential today? What’s next – IPO?
The Exponential team is comprised of 250 people and we expect to grow to 300 people in the next 6 months. We have a presence in 11 countries and 20 cities and in addition to offering our integrated solutions globally, we help local agencies run global campaigns. Exponential has been profitable every quarter for the last 9 years. The company was built without venture backing and we are profitable with strong EBITDA and have the assets to make consistent and significant investment in our technology platform, people and market development. As far as the future goes, we’ll no doubt look to create liquidity through a public or private event, but given our financial strength we can explore those options when we believe that both the internals and externals are optimal. My approach is to focus on the business and on delivering value to our clients. If we do that right, everything else follows.
How does the ad network model survive going forward?
People have been predicting the demise of ad networks since their inception, yet they continue to thrive. Why? Because delivering the integrated capabilities I’ve been describing, doing it at significant scale, running thousands of concurrent campaigns, serving 10’s of billions of ad impressions per month is very difficult. It requires deep technical capabilities, data management and analytics, and advertiser and publisher relationship management skills. Once a network learns how to do it successfully it finds itself in a highly enviable position. When you create value for clients and do something that helps them succeed, they keep coming back for more.
But networks cannot sit back and rest on their laurels. We are in a technology-driven industry and change happens fast. Successful networks need to be nimble; to adapt and innovate. Those networks that have invested in the people, processes and platforms to accomplish this are very well positioned for the future. They’ll not only be around, they’ll be thriving.
What’s the biggest challenge in your day-to-day?
Like most high growth businesses, prioritization is the key to success. We’re now at a point where we can accomplish most anything we set our minds to and so the question is no longer “can we” but “should we”. This means that we spend a lot of time thinking about evolving markets and client needs and aligning our focus accordingly. Managing rapid growth also delivers a set of new challenges; how to communicate consistently across multiple countries on a 24 hour work day, and how to train a growing number of new employees on our products and processes.
What’s going to be a key driver for bringing brand dollars online?
Brand dollars are primarily spent on TV and there is no other media that can deliver impactful, full motion, video ads with the massive reach of TV. As people increase their online video consumption, we believe more advertisers will experiment with online formats like pre-roll ads. This will be a fast growing segment of digital advertising, however, since online video does not have the same scale as TV, it will be small relative to TV advertising.
We believe brand advertisers will look to digital advertising for things they cannot get from TV. The first is the ability to get a user to interact and engage with an ad. In addition to watching a video ad, the user could watch other ads from that advertiser, share the ad via a social network, customize or buy a product. Today, you cannot do this with TV.
The second is the ability to get detailed insights on the people who are engaging with an ad and even get them to provide feedback on the ad. Again, you cannot do this on TV.
We believe the way to bring brand dollars online is through leveraging the strengths of digital advertising, which are targeting, interaction, and insights, but combine it with the impact of full motion video ads.
Please share one prediction in digital media over the next 12 months.
Over the last 24 months, we have seen a proliferation of venture-backed startups offering point solutions such as DSPs, SSPs, data solutions, dynamic creative solutions, and others. These solutions will have to demonstrate they have a long-term sustainable business model, and to do so, they will need to offer advertisers value-added solutions, which will make these emerging businesses look more like networks. As a result, I expect to see a fair amount of consolidation taking place as point-solution providers combine with each other or get acquired by a larger company trying to augment their own offering. Nearly all technology-driven industries regularly go through these sort of expansion and contraction cycles and the ad tech industry is not immune from these forces.
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