BRUCE FALCK: Our competitors are doing varying pieces of this. DBM (DoubleClick Bid Manager) has all three legs of this stool, though they’re much newer to the DMP side. I think it’s in alpha or beta testing right now. But outside of the independents, nobody is doing all three legs the way we’re doing it.
The Trade Desk and MediaMath have seen substantial growth. How does Turn go to market against them?
Broadly speaking, The Trade Desk, as the name suggests, is primarily focused on trading desks, and specifically doesn’t go customer-direct. They don’t have the DMP component that’s sold customer-direct. And MediaMath doesn’t have a DMP at all. [Editor’s note: MediaMath says it has a DMP and The Trade Desk says it has a standalone DMP, which it sells to agencies.] They’re doing interesting work in the data and analytics side – they announced the data co-op. We primarily run into DMP pure plays like an Oracle/BlueKai or Google, which has the DMP/DSP combination at scale.
It’s fair to say that nobody else, outside of DBM, has multiple customers with north of $50 million a year in spend. Some customers are just getting to scale, and that’s when the magic happens. That’s when the revenue becomes really sticky and repeatable.
How about going after agency business? Is that a focal point at all or are you zeroing in on brand-direct?
It depends on what the brands want to do. They’re driving this more than Turn is. We’ve always worked with agency trading desks. They’re still a key segment for us. We often see partnerships with the brand, the agency and ourselves. I suppose it’s more true of VivaKi at Publicis, where they decentralized off of AOD and the programmatic expertise lives at the agency level. We have great partnerships when that happens.
We expect what we call the brand-direct and agency segment to grow north of 30% for Turn in 2016.
In terms of revenue, how much comes from brands, how much from agencies?
Revenue that’s brand-centric will be more than 50% of our business in the next couple of years. It’s a little tricky to answer that question because you have to categorize revenue by whether it was driven by the agency or brand. Usually when it’s driven by the brand, it’s in close partnership to the agency. But when the brand decides to choose its technology and issues an RFP and, at the end of it, says, “We choose Turn,” I consider that a brand-direct deal.
You referenced VivaKi. When a trading desk like that gets decentralized, how does that affect your relationships?
You have to ask: What was the agency’s strategic intent? [VivaKi’s] strategic intent was to get the programmatic expertise deployed into the agencies. I would agree that’s a good idea. Programmatic will be so central to what agencies are doing in the next five years, they have to get smart about it. You heard Megan Pagliuca [CEO of Omnicom’s Accuen trading desk] at Programmatic/IO talk about how Accuen is headed in that direction. You’ve seen how Brian Lesser, formerly of Xaxis, is now running GroupM. We go from contracting with a trading desk, which is like a one-to-many wholesale deal, to contracting with specific brands at agencies.
Now, there are folks like Cadreon that don’t subscribe to that model. If that’s how the agency works, we’ll partner with Cadreon, obviously.
What does that do to your sales structure?
The evolution has been happening over the last five years. When I was at Google and we acquired Invite Media, it was mostly trading desk revenue. Since DBM has grown up, it’s evolved. I’d say the evolution isn’t driven by Turn, but by brands wanting to get smart about programmatic. This is their future. If you’re a marketer at a brand right now, programmatic is the at the top of your priorities.
How has Turn adjusted?
Last time we spoke, I shared with you that we’d done some restructuring. We merged our pre and post sales together. Part of that was to accommodate this new world where we are working with big brands at scale. Most of our growth is coming from existing customers who are looking to double, triple and quadruple spend programmatically – ideally by consolidating on our platform over the next three or four years.
Are you hiring?
I’ve hired about 30 people since I got to the company. I’ve been bringing in the expertise that knows how to talk to brands about video, that knows how to navigate big brands as opposed to trading desks. And I’ve been bringing in consulting capabilities to help brands with their data strategies. A lot of times, that’s where our conversations with brands start.
Is that consulting capability a value-add? Incremental revenue? The start of a full-blown consulting service?
Think of the business model conversation we’ve had. The DMP business is inherently a subscription model. When you sell the DMP with consulting services, that piece of the deal is much more like a software deal. We do a specific implementation for a specific customer. The DSP component is media buying, where we contract with an agency on percent of media. You can think of us as having two business models.
As agencies respond to global cost pressures, how does that affect you as a tech vendor?
A big part of the agency’s job is to negotiate the best rate that they can with their tech providers. I wouldn’t say I’ve seen any change in state from where I’m sitting – at least as it relates to agencies and their cost pressures.
What else has changed since you took over at Turn? And what more do you hope to change?
Productwise, we have a lot of work toward evolving our UI to make the three components – the DMP, the DSP and the analytics platform – work really well together and seamlessly.
Another big focus is video. That’s an incredibly important category for large, at-scale brand advertisers bringing TV budgets online.
In parallel to that, we’re doing lots of work on mobile and cross-device. So our platform will allow you to buy video, display and native inventory across all devices.
Turn had been positioning itself as a video DSP as well, even before you arrived. Now that you’ve checked it out firsthand, what does Turn need to do in video to be competitive with your old company BrightRoll and with TubeMogul?
It’s a lot of small system tweaks. We’re making algorithmic changes that optimize for budget delivery on different metrics like CPM or GRP. We’re working on tighter integration with key supply sources to help advertisers scale their video spend. We’re doing work around measurement with the usual suspects, Nielsen and comScore. And we’re doing integration work. We want to be an omnichannel DSP. It’s not really about video or display or native. It’s about reaching a customer wherever he may be and we need video to work seamlessly within our campaign flow.
We already have substantial video budgets flowing. It just needs to be a more core part of our offering.
When will video be where you want it to be?
You sound like my chief revenue officer. It’s not like we’ll ever declare we’re done in video. We’re making incremental improvements. We’re running budgets today, and we’re already video ready. We’ll be fully mature over the course of this year.
Speaking as your CRO, how about mobile and native?
We’re in really good shape with mobile. The key feature that everyone is looking for is cross-device. Our approach there is to partner with vendors and not to invent that technology ourselves. So we think about who we partner with and how deeply we partner. But we’re mature and competitive there already.
The native side is trickier. Native inventory is not as accessible by RTB, though we’re doing quite a bit of that already. But all DSPs need to think about what they do with API inventory. That’s a second half of the year priority. We’re very focused on video in the first half, and we’ll focus on native in the second half.
The vision, again, is to build a platform that lets you buy someone where ever they may be on the Internet, across all channels. That includes plugging into the Twitters and the Facebooks of the world. We have to work with the APIs.