Mike Leo is CEO of Operative, an online advertising systems company.
(Editor’s note: Operative acquired Solbright last week – read more about the acquisition from Adotas’ Gavin Dunaway. And, read the release.)
AdExchanger.com: Seven years as CEO and President for one company is not the norm for digital. Why does it make sense for you?
ML: I love my job. I work with talented people, great clients, and we’re solving a huge problem that publishers, networks and agencies need solved. Our future is bright. Why would I do anything else?
What problem is Operative solving today?
There are two certainties in our space:
- The industry cannot thrive until it becomes easier to do business with.
- Continual innovation is a requirement for survival.
By giving media companies and their partners freedom from the complexities of the digital value chain, Operative enables both. Since the ERP evolution of the 1980s and early 90s, you will not find a leader in any other industry that has not brought together all of their value chain processes and systems. This revolution, which is a ticket to the game for everyone else, is only just getting started in digital media.
Without a platform upon which publishers can innovate, digital innovation creates chaos. We provide a business management system that supports the adoption of new innovation (new products that can be offered to advertisers) in the context of the publisher’s current way of doing business, yet integrated all on one platform.
Can you drill down from the big picture and discuss the three biggest pain points that you’re solving for clients today?
- Demand-side planning: With so many different technologies and channels available to monetize inventory, it can be difficult for publishers to understand what and how much is available to sell, and determine the best way to package and price. There is pain associated with managing and optimizing price, as well as pushing inventory to these channels. Operative.One solves for this.
- Supply chain management: The amount of innovation that comes out of this industry is staggering. Ad production technologists like DoubleClick, Rubicon, and BlueKai are a constant source of innovations, increasing the value we bring to advertisers. But if those innovations are not integrated into the business, then chaos ensues. Production systems are not business systems, and media companies simply cannot grow if they manage production systems independent of one another. Operative.One enables effective cross-platform execution providing a single view across all production systems.
- End-to-end ad execution: For many publishers, product packaging, sales, operations and finance processes are connected manually, and internal systems that handle inventory, CRM and financials don’t talk to each other. This limits sales productivity, reduces time to meeting impression goals, and causes billing discrepancies. We connect all business processes and systems so publishers can effectively package, sell, traffic, manage, optimize and collect revenue on ads.
Operative.One represents one place to manage demand, one place to manage supply, and one place to execute digital ads.
How has Operative pivoted its business to meet client needs over the past 10 years?
Operative has always been focused on getting the job done for its clients. Ten years ago, we began as an ad operations services company, and over the last six years, we have done significant work to automate those jobs. While the jobs remain the same (whether performed by a client’s staff or ours), our platform creates efficiencies and lowers transaction cost – ultimately getting the job done faster and cheaper.
What is advertising business management? How do you see this evolving in the next 1-3 years?
Business management platforms are well established in industries outside of digital media. Leaders in business management solutions include SAP, Oracle, Netsuite, Salesforce… and even Wide Orbit, which serves stations and networks. For the advertising industry, business management solutions free media companies from the complexities of the value chain by integrating all of the processes and systems necessary to package, sell, traffic, manage, optimize and bill ads.
In the next 1-3 years, the industry will focus more on the business of advertising, not the system or the pain associated with industry innovation and so many disparate technologies. Does anyone really need to know how the sausage is made? Does anyone question how a TV ad makes it on the air? Has a Jaguar salesman ever concerned himself with how (or if) the ABB 6-axis robot is installing the sunroof before it leaves the assembly line? Don’t publishers succeed when sales people stop talking about ad tags and start talking about how their products maximize brand value?
If you were running a media agency today, what key strategies would you put in place to survive and prosper in the future?
I would ensure that my teams were focused on marketing problems, not technology problems. It’s important for agencies to get control over variable costs and understand how to leverage technology without being in the weeds with it. The number of transactions required to execute a digital campaign are an order of magnitude more than most any other media. If you do not have control over the transactions, it’s difficult to grow a profitable business. Agencies need to be partnering with providers who have built a business on helping agencies manage transactions, and can take infrastructure off their plates so they can grow profitably, and focus on what’s most important: client relationships and great creative.
What are the funding needs for the company? Profitability? Any plans to go public?
We are profitable and we plan to go public.
Is the DSP model impacting your business? How?
Yes, Operative.One plays an important role with any innovation that our clients choose to adopt.
Ad networks, DSPs, direct to advertisers (and more to come) – these are all viable channels for monetizing advertising assets. The key is having tight controls and a unified view of distribution channels, whatever they may be. Having one business system ensures media companies can make the right decisions to effectively price and allocate inventory across channels.
What are you seeing from clients today in terms of current momentum?
Publishers are increasingly more focused on direct sales. The deal size is going up and CPMs are going up. And our clients don’t want to give inventory to those who commoditize it.
For publishers looking to get their arms around their data, what do you advise? And what do you tell them regarding ad network/exchange relationships?
The secret to data is having it all together. Getting it is easy. Analyzing it is hard. The only way to properly analyze data to have it all in one place.
Follow Mike Leo (@rmikel), Operative (@OperativeInc) and AdExchanger.com (@adexchanger) on Twitter.com.
