The State Of VivaKi Nerve Center: CEO Hecht On Audience On Demand, Programmatic Buying And Trends

Curt Hecht is CEO of VivaKi Nerve Center, part of agency holding company Publicis.

As part of its “State of…” series of articles with industry executives, sat down with Hecht to discuss the Nerve Center, his views on the space, and the state of VivaKi Nerve Center today.

Click below or scroll down for more: A year ago, I asked you in an interview: “It’s been suggested that a billion dollars of ad spend will be running through Google from Publicis next year. If true, how much of this will be audience‑driven display?”

And you responded, “That all depends on Google’s ability to innovate. It could be five percent of that, it could be 15 percent of that figure, but the key is no obligations.” This is in reference to the deal between Google/Publicis that was announced at that time.

Any updates to the answer to that question?

CH: Well, it’s hard for me to quote exact numbers because there’s sensitivity around it. But, what I would say is that our fastest‑growing line of business with Google right now is through the exchange.  Granted, it’s not the biggest space.

I was with [Google exec Nikesh Arora] and [Publicis CEO Maurice Levy] last week. The two areas that Nikesh particularly pointed out in terms of the collaboration between Google and Publicis Groupe, was what we’ve been doing in the addressable space since 2008 and the collaboration between Susan Wojcicki and Neil Mohan and that extended team – and how we grow together.

It pulls through in the numbers, in terms of our overall growth, because we’re connected on product, delivery and execution – which is great. That’s why I’m out there in a week – to road‑map, update the conversation and plan for next year.

What I’ll also say around that is, Right Media Exchange still has the largest share. In a bidded marketplace, we’re going to follow performance, so we’re growing overall for sure.

Google’s seeing a lot of that growth. The conversation is more, for us, around the technology and… Listen, we have a very simple philosophy which is no different than our philosophy in any other medium, which is, we as an agency should go direct to supply.

There’s no reason for there to be any intermediaries that sit in that space, unless they can bring something of value. The latest numbers I’ve seen is that around 75 percent of the supply, at least in the display space and taking Facebook out of that for a second, most of that supply is with Yahoo!, Microsoft and Google because AOL is a closed marketplace, for the most part.

We should go direct to that supply. The tools are available. We definitely have the people that know how to do that, and that’s what’s driving the growth. It’s the acknowledgement that we don’t need intermediaries to add value there, because we can add it on our own.

That shows up in the numbers and that has been our big growth area with Google. In terms of the billion dollar number, without giving that away, I feel very good about that statement.

Stepping back, regarding the announcement last week regarding Microsoft, Yahoo!, and AOL, what that deal say to you? And, what’s the opportunity for Publicis and Vivaki?

We’ve known and we’ve been having conversations with Yahoo! on this since June. It was before there was conversation about Microsoft or AOL. Yahoo! said, “We believe in being able to work directly with you.” I think, for them, they have a double-pronged issue, which is that they’re not getting it direct from the buyers. There are intermediaries sitting on both the buy and the supply side.

For them to have a more direct line on that is good for them. Yahoo! I give a lot of credit for taking the leadership position in saying, “I think we like this future more, in terms of working with the buy‑side directly.” From there, obviously, they spoke with Microsoft and AOL. And I think that goes back the idea that there’s already a lot of consolidation in the marketplace.

The more that these guys are making it easier for the buy‑side, the better and greater they see the benefit in that as publishers. And that makes sense.

The complication in it is going to be on the technology side. They’re going to need to come to some level of understanding between those three companies on tech. I don’t know if that’s been entirely sorted out.

We, at the end of the day, may end up working with them the way that we have been working with them. It’s not going to change how we go into the Microsoft marketplace through AppNexus.

On the Yahoo! side, and, I don’t know this officially, there’s speculation around them taking people out of the market. Listen, if they feel like there are companies operating in a way that isn’t in the best interest in their marketplace, that’s great. I’d like to see that happen. Whether or not it’s true, I guess we’ll see over the coming weeks and months.

AOL is the biggest question mark for me because I don’t understand their technology strategy. If, at the end of the day, it’s a marketplace that requires us to use [Aol’s] AdLearn to enter into their market, I think we’ll be challenged with that. That’s not exciting to us.

Let me go back to something I think you said earlier –in regards to Yahoo! going direct to a customer, you’re OK with that?

No, no. Not to confuse the issues… What I was referring to was, if Yahoo! thinks a DSP is bid‑bundling and they have an issue with that, they’re going to no longer let them enter the Right Media Exchange because of it. That’s great and I’m supportive of it.

But, I’m happy to address the other topic too, which is them going direct to marketer. My point of view on that is, it’s an open marketplace and everybody has choice. There’s plenty of marketers that do search in‑house. We get that.

Could that happen in a display marketplace, and is that potentially already happening in the display marketplace? Yes.

My counter statement for that would be, it’s a complex market. [VivaKi team leader] Kurt Unkel has about 100 people now, just in the U.S., that are best-in-class in this market, which is much more complicated than search.

Search is a couple of engines, and you’re buying keywords. I don’t want to make it sound overly simple, but it’s nowhere near as complicated as the data marketplace and the different ad sizes and formats, the fragmentation in terms of inventory and the practices that can take place.

What I’ve shared with clients is, the reason that we’re good is because we solve a lot of problems. We have a lot of clients. I don’t know if we’re up to about 300 brands operating now. And, what makes you good is solving problems. Unkel and the Audience on Demand (AOD) team, solve more problems across more categories and that allows them to build a system that’s pretty well‑tuned.

It’s going to be hard for individual marketers to deal with the understanding of that level of complexity. Scale matters in any marketplace, so we have a good sense on our aggregate pricing and, overall, how well we’re doing in the market.

If your only visibility is Brand “X” versus Brand “Y” in a single marketing organization, I just don’t know how you know if you’re doing a good job.

We know if we’re doing a good job the way that agencies have always known that they’re doing a good job. They work across a lot of categories and a lot of clients and have visibility into a marketplace that allows them to hone what they’re doing. Listen, we see every technology company. I think, if there’s any question around how good we are at that, we were the first ones working with Invite Media at scale. And everybody knows how that story turned out. There’s a whole line of companies that we’re starting to work with more closely now.

Marketers are great at being marketers. Marketers operating in a very complex automated media marketplace should trust the expertise if their agency has it. I just don’t know if all agencies have it either, so that’s just another thing that they need to work with.

I think the next step to what I think Microsoft, AOL and Yahoo! are hoping, is the idea of the “upfront.” What do you think – are we any closer to a digital upfront, in the display world or the data‑driven online advertising world that we all know?  When people look at the TV world, they think about that moment in time where everybody stops what they’re doing [and buys in the future]. Will that come to digital? Maybe that’s a function of the new partnership?

Yes. In the addressable, data‑driven marketplace, with all the standard ad units, I just don’t know why there can’t be more automation with a reservation‑based model and a spot model.

We will see that, but you have conflicts, too. You’ve got sales channel conflict for the publishers and some cultural issues inside the agencies because they know how to buy that stuff well and asking them to focus on non‑standard can be challenging.

Also, for marketers there’s a bit of change that needs to happen there too. But, yes, if it’s standard ad formats and you can put a reserved marketplace in, why not [an upfront]? We would like to see that.

So, to clarify, when you say “reserved,” it’s also programmatic, so that it will fit into your programmatic spot market buying as well?

Yes, absolutely. Being able to shift between a reserved and a spot marketplace makes a lot of sense. For a long time, I think there was concern about the bidded marketplace and what that means to agencies, versus just a CPM, scale‑driven market.  We’re over those concerns. We can see how we can still protect our client in terms of what they pay per media, and they can manage the marketplace appropriately.

We’ve moved from a raw cost per thousand mentality, to … outcomes are the things that we should be measuring, and you can actually do that better in a bidded, data‑driven marketplace. It’s better for all parties involved.

All the growth right now, if you look at the display marketplace, is in the automated marketplace. So, I think you’ve got 5% growth on direct sales and somewhere around 30% growth on the automated marketplace. That’s huge.

We know that we’ve got to continue to expand our capabilities in that area so clients can [experience] the growth. Two years ago, people thought display was dead. You still have people talking that way, in terms of, “I don’t know how you build a brand,” and “click‑through rates are low,” but the numbers are the numbers, and that’s where the growth is.

It’s a reinvigorated marketplace, for sure.

What is it you’re seeing in terms of internal buy off on the agency trading desk model and how you are overcoming any challenges?

The first thing is – I don’t call it a trading desk. The whole industry does. I don’t call it that, internally, because a trading desk is part of the problem. A trading desk infers that you’re a bank. It infers that you’re trading on your accounts. Some of our competitors do. So it is a trading desk, but within our organization, I actually don’t spend a lot of time saying, “You need to do this.” There’s no mandate within our organization on this topic.

What I will say is, the amount of activity continues to double, year over year, since we’ve been doing this. But, I think that that growth is not fast enough and it goes back to the first question you asked me which is, as long as I’ve been in the business, clients have expected their agency to go directly to the supply source – that could be television spots, for example.

The example that I like to give the clients is that it was only 10 years ago where you would have a global brand that would say, “I’m working with six different creative agencies and four different media departments at three different holding companies and they’re all buying TV for me.”

At the end of the day, the marketer is competing against themselves using four buyers. What I’ve been helping people understand internally is, “Hey, guess what. Buying cookies isn’t all that different.”

If you’re going to subcontract to a bunch of ad networks which are essentially buying services, to go and buy the same cookies for our clients, you’re actually creating artificial inflation.

That doesn’t seem like a good idea. It’s not something that we’ve done, ever, in television. It wouldn’t make sense to have four brands at one marketer compete for the same back cover in a magazine.

So why would we make that recommendation? You know as well as I did, two years ago the tools weren’t available for us to do anything about it, but today they are. Where we’ve focused is, “Hey, guess what. This isn’t right for your client. It’s creating artificial inflation in the marketplace.” There really isn’t that much supply. In fact, it might actually be the second most concentrated marketplace to search, where you’ve got Bing and Google. Here, you’ve got three or four big players.

We shouldn’t do this. It’s not what we do anywhere else. And so I’m focused more on helping the company understand that. It’s more of an educational process and my suspicion will be that, as long as Kurt Unkel and the team continue to execute, which they’re doing a good job of, they’ll just continue to take share because, at the end of the day, it’s going to lead to a better outcome for the clients in terms of what they paid for inventory in the space.

Another reason that there are challenges in the marketplace is, if I’m a marketer, you have four holding companies that have all said that this is important. And you have very different execution paths. So the two biggest players in the market, in terms of throughput, would probably be us and WPP Group – dramatically different models in terms of how technology is used. We’re transparent on media, pricing, they are openly focused on running a private marketplace, so very different models. And in the new marketplace that’s coming about, that’s confusing.

And we’ve created our own confusion by making, in some ways, this sound more complex than it is. It is hard work, and we should get the fair value for dealing with the technology and the data that’s out there, but at the end of the day, agencies going to direct to supply for their clients is the way that we’ve always operated. And that’s what this is.

In terms of milestones you’re thinking about that are ahead in the coming year or two, anything come to mind in particular?

Sure. Our design for Audience on Demand – it’s not a trading desk, it’s a kind of marketplace and systems integrator. That’s why, for us, when we think of and talk about Audience on Demand it’s connecting all of these marketplaces. That’s why we’re so focused on display, search, the mobile launch, social media and the Facebook API, and hopefully LinkedIn and Twitter APIs that are coming. And video is live of course, and TV. So that’s how I look at 2012. I want to be able to go to clients and say, “What type of audience do you want? What’s an outcome look like? We’re channel neutral.

There’s a saying around here from Maurice, “How do we grow as fast as the digital companies that are out there?” My philosophy is we need to be entirely hooked in to this programmatic market because that’s what’s growing quickly. Our ability to add value there is going to help our growth from just being purely a services organization. I want integration across the screens and I want this to be more than a market that’s powered by the United States.

The UK, in a lot of ways, in looking at their plans for next year, looks better than the States. We’ll have a better share in terms of using our own internal tools and technology, and Audience on Demand essentially, versus having to use external companies because we do a good job for our clients.

I hope that France and Germany and China and Australia all where we have movement and activity, they just grow. This has to be global, quickly, the concepts and everything that’s taking place is clear. What I don’t want to do is relearn this at a three‑year pace in Australia, I want to do it in a three‑month cycle.

So that’s where we’re focused, all screens, integrated, programmatic, data and technology powering it, and very quick adoption, at least in the major markets across the globe.

Finally, what’s the latest update on The Pool?

The biggest thing is I’m certain we’ll hit our tenth “lane” next year. We just launched a tablet lane, which Tracey [Sheppach]’s proud of. Nobody really knows what to do on tablets and the only thing that we’ve actually seen is the iAd. Tracey’s got a great design; it’s our biggest one yet in terms of numbers of clients and helping marketers understand from a consumer‑led perspective, how they should be advertising and marketing.

My guess is, while online video took off for us in many, many markets from Australia to China to Great Britain, I think the tablet is going to go like wildfire across the markets next year for us.

This speaks to the notion of what VivaKi is all about, which is open‑source collaboration in the marketplace and trying to find ways to make it work for the media owners, for the marketers, and for our own company, in terms of leadership.

Other holding companies are taking a flavor of, “Well, we’re going to create friction in the ecosystem,” which tends to slow things down. We’re excited about The Pool, and we’ve got the AOL lane, which is our first, closed, single media owner collaboration with clients, to focus more on video and what’s happening with [Aol CEO Tim Armstrong’s] doubling‑down on content and video, in general.

Follow Curt Hecht (@curthecht), VivaKi (@VivaKi) and (@adexchanger) on Twitter.

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  1. Chris Pirrone

    Hecht says that Vivikai can help marketers because buying in the display marketplace is very complicated. This is absolutely true! Later Hecht claims there are inefficiencies because marketers have multiple partners purchasing the same user cookies. So Vivakai’s idea of display is just simply retargeting a cookied user that has visited a marketer’s website? The truth is that each partner brings its own unique approach, inventory, data and optimization to the equation. If an agency uses only 1 partner it is missing out on the ability to find RT users (no DSP can handle 100% of the RTB QPS, plus many users are on non-RTB inventory), serve ads to users earlier in the impression chain (guaranteed inventory buys tend to be impressions earlier in the user session), and find new in-market users through differentiated data and look-alike modeling (we’ve found unique data performs 2-3x better than the data aggregators). No single partner can do it all, so testing multiple display partners, then optimizing to the 2-3 best performers on each campaign, is a prudent approach.

  2. Been struggling recently with the “trading desk” moniker too. Great for strictly exchange buying inventory, but not so good to describe what the automated/programmatic umbrella channel this whole thing is evolving into.