MDC Partners and Varick Media Leveraging Data and Ad Exchanges Says Pres Herman

MDC Partners and Varick Media ManagementDarren Herman is the Founder and President of Varick Media Management, the audience and media platform backed by MDC Partners, one of the world’s leading advertising holding companies. Varick Media Management appears to be gaining traction according to your press release in January. Any updates?

DH: Our heads have been down at VMM focusing on building our business in every conceivable metric including revenues, staff, relationships, performance, and client wins. It seems as the press release we issued in January about the early VMM success really opened the door to some big named brands and agencies that have become our clients over time. Since we’re a relatively small organization trying to manage growth, we have to be picky with the clients that we work with in order to deliver top notch service and we have been really fortunate with the client base that we’ve been serving over the past 8 months.

Have you seen a change in your clients’ thinking as the economy has shifted into low gear in the past year?

I actually would disagree with that question – our clients thinking has remained strong and it’s been the job of both us and their agencies to push their thinking along. If there is a great time to steal market share, that’s now… when most brands have their head between their legs and are focusing on not interrupting the status quo. At VMM, we’ve been working with some forward thinking MDC and non-MDC agencies to help them with a few things (not mutually exclusive): audience research, media/copy testing, and performance display campaigns. Most of our clients find VMM to be a leader in performance (both fiscal and conversion) so at a time when budgets may be tight, but thinking may be grand, VMM fits multiple roles within any media plan.

Do you consider Varick MM, in part, a technology company, or do you see it evolving into a technology company in any way?

There is this sudden rush for advertising agency holding companies to build technologies to help make sense of this new digital landscape but the biggest issue I see from years of building digital media companies is that most technology companies fail at building technologies. How do agency holding companies who have concentrated in the advertising business for so long think that they can succeed at the very first time they build technologies? Hmmm….

For VMM, we believe that technology is an enabler to maintain the core asset: the client relationship. Clients come in two formats to VMM: agencies and brands directly. There is a core piece of technology that VMM will own which essentially is a “hub,” but VMM has many relationships that will deliver specific tools and technologies that are not built by VMM.

MDC Partners described Varick MM as “an advertising hedge fund,” initially. Still true? If so, this makes Varick a “trader” of media in the marketplace – potentially buying AND selling media. Is Varick MM selling?

We had terrible timing with the launch of “advertising hedge fund,” as this was right before the 2008 Financial Market Collapse. I’d say that we have lessened up on the verbiage of “hedge fund,” but that doesn’t mean that we’ve stopped offering the buying, selling, and trading of impressions.

How does the ad exchange model uniquely provide opportunity for advertisers?

There are many attractions to the ad exchange model for advertisers. One of the most exciting is to be able to purchase individual impressions. This means that we are able to score every individual impression that we have access to and only purchase the ones that we deem are beneficial to one of our clients. Whoever thought that buying impressions by the thousands was smart?

I also am excited about the ability to bring my own “data” to the exchanges. Not only can I manage and segment my clients data, but I’m able to append 3rd party data from a whole suite of VMM partners (we call it Intellidata) and purchase different segments and test.

Instead of creating one media plan that takes months and months to plan which has a fairly static target audience, we can use the exchanges and VMM to create thousands of dynamic media plans that optimize in near real-time (real-time in other instances).

What percentage of campaign budgets goes through ad exchanges right now? Where do you see that percentage in 18 to 24 months?

There is no easy way to answer this question. It’s fairly safe to assume that many networks are purchasing on ad exchanges so that if an advertiser is purchasing media from a network, then there is probability that they are purchasing media from the exchanges. I also know that many agencies are testing out “seats” on different exchanges like Adsdaq and Right Media, but most are finding it hard to manage the buying of media and the operations behind the group, so they are outsourcing it to people like VMM who have full-time yield managers and teams who are skilled in real-time bidding.

Privacy concerns notwithstanding, behavioral data feed providers like eXelate, BlueKai, Lookery, Media 6 and others have received a lot of attention lately. Is behavioral becoming the most effective form of targeting? Or the most scalable?

We are excited about the promise of these organizations. Any organization who can teach us more about our audience segments is interesting to us. VMM has relationships with many organizations in this space and we’re constantly looking to define and execute additional relationships with companies who can help us.

How important is it for a media agency to be entrepreneurial to succeed?

Any company needs to be entrepreneurial to be competitive for the long term,
however, being entrepreneurial doesn’t mean that you shouldn’t focus.

Do you think certain agencies predilection for keeping data proprietary will hurt them with the exchange model where transparency is key?

I think that data should remain proprietary as that is what might differentiate companies like VMM from it’s peers. Transparency is abound in some exchanges but in others, not, but it’s only a matter of time until the majority of exchanges are transparent. History typically manifests itself over again and if the ad network business of the mid to late 90s is any indication of where exchanges may go, VMM is well positioned. Data can remain proprietary but inventory should be transparent.

Follow Darren Herman (@dherman76) and (@adexchanger) on Twitter.

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