CEO Dave Jakubowski sees an overarching theme of "interoperability" in the deal as he says IBM marketer clients will be able to unlock what is going on with their website and their media with little need for IT involvement.
Jakubowski adds, “The world where everybody has to revolve around one big company, is over. Everybody needs to have interoperability. This is a huge step. It is one of many that we unlock from an interoperability standpoint.”
AdExchanger discussed AK and industry trends with Jakubowski…
AdExchanger: Do you think of Aggregate Knowledge as a data management platform (DMP)?
DAVE JAKUBOWSKI: A data management platform (DMP) is just pipes and a feature set of a broader thing that we call media intelligence. Media intelligence not only brings together the inner connection of these pipes - which is what this IBM announcement is about - but the ability to pinpoint exactly what to do. In other words, what audiences and what media one should buy to drive new sales and new reach. It's not about the cookie game. It's not about just shifting credit around. It's about how does one sell more goods.
Making big data actionable is the intelligence part and the DMP is just the feature set for interoperability. It might as well be an API.
So beyond the DMP, what are all the features of the media intelligence platform?
I'll answer that in three parts. One is - the classic data management, the pipes of moving stuff around. The second is predictive analytics. Taking petabytes of data and, in real-time, processing them to deliver the five things you should do today to sell more goods, for example. Third is multi‑touch attribution. What's the customer lifetime value? What's the chain on which I want to score these things? How do I want to give credit? How do I think about my funnel? That's the scorecard on which the predictive analytics moves around. Without all three, there is no intelligence.
Who's the AK customer right now? Are you going to the marketer or the agency?
Most of our customers today are direct advertisers. This customer pattern – going direct - follows what happened initially with search, ad servers, video and even mobile. The direct advertisers are the big guys who spend a lot of time researching and thinking about how they're moving their brand initiatives. They tend to adopt products such as ours first. Every one of the categories that I mentioned has experienced a similar phenomenon. A number of big advertisers sign contracts and then give the tools over to the agency. Then, the agency does the execution and begins to see the efficacy of how the tools work, and then they start to adopt it, roll it out agency‑wide. Thereafter, the agency ends up controlling it.
I think that that will happen over time here. Whether it’s the next 12 months or two years, I don't know, but it's likely to happen.
Today, though our customers tend to be direct, if you look at who the fingers on the keyboards are, it tends to be a split of employees at advertisers and agencies.
You've got to remember, we're a technology company. We're in the business of enabling channel partners. We give them the platform and then they run it on their own. We anticipate this area will be our biggest source of new customers in 2013 - agencies and other resellers.
What about the sell-side as a customer? Do you see your media intelligence platform as agnostic between buy and sell side?
Our target market is the marketer. Yet, the publishers are partners in our world too. And, to be clear, we are not arbitraging them. Publishers and the data providers give us data. We don't pay any of these companies for the data. The reason is that the minute I start paying for it, I have an agenda.
So, publishers can dump their audience and inventory data into the system to expose to the advertisers. It gives publishers a direct interface with the person who is buying the media. Aggregate Knowledge makes no money off of the publisher.
We're getting a lot of requests now from publishers who want to use this system and bring it to the marketing community. We're in a few trials right now, but our core market remains the advertiser.
In terms of pricing today, what's that structure look like for Aggregate Knowledge?
The model is a SaaS model. You license the platform, and you pay a monthly licensing fee for use of it, and then you can plug whatever you want into it.
Typically the big driver of the customer’s cost is the volume of ads because all the audiences that get overlaid on top are what drives our cost. So, it's based on size of the media.
Is the media intelligence that you’re providing today mainly around display? Any other channels?
Display is the one that most people talk about, but it's only one among many channels we address. We support display, both bided and sponsored - we're one of only a handful of companies that can do the Yahoo home page, the MSN home page, the AOL home page. We're one of only three that can support Facebook. We're one of a handful of companies with all the necessary Google certification. Search, social, Facebook, obviously, that's a separate channel - and we address it. And the same goes for mobile, mobile web, video and rich media. Basically if it's got an IP address, we support it.
Any traction in the Connected TV world?
We haven't done much there. We have one customer that we're doing a test right now with some TV data, but it's preliminary.
What is the impact of programmatic buying on AK?
It's not so much that it's had an impact on AK. It's an industry‑wide impact. The complexity and the number of different channels that people are buying from and the number of different domains that people are buying from is enormous. We regularly see over 100,000 domains for a single campaign that ads will run on.
The impact that programmatic buying is having is it has made buying and “cookie credit” grabbing more complicated. Showing the impact across these channels has become more important, which has driven value for the customers of AK.
The more complicated the LUMA slide gets, the better our business is.
Can you talk a little bit about AK’s growth plans from a headcount perspective? International plans?
We're at 54 right now. Our headquarters is in San Mateo. That's where most of the core engineering and business operations happen. We have sales and client service offices in Chicago, New York, and Atlanta.
We are making sales and marketing investment right now, too. Until very recently, we had three sales people. So, that's obviously where a lot of the investment is going. The company maintains as a policy a 70/30 ratio of product and engineering to all other groups. We're a product and technology company, and that's where we always want to be skewed.
The most notable things that we've done of late on the hiring front is solidify our senior management organization. We brought in Rob Gatto as our president, and he runs everything that touches the customer. As a result, I get to spend a lot more time thinking about strategy, product, and execution on the backend so that we can begin to guarantee some results for our customers.
You’ve been at Aggregate Knowledge a couple of years now. Overall, what has changed over that time? Any surprises?
I've been doing ad platforms for 15 years and came to AK for a very specific reason: They had the technology that could scale and deal with all these big data problems – and generate real answers to real questions. It just doesn't spit out and create more information that nobody can do anything with. It makes it actionable. That was the whole thesis from day one. And that hasn't changed. We have always been about making media more intelligent.
But, the thing that has surprised me is how blind the ecosystem has been to things like “cross‑channel” and the positive impacts that Facebook and Twitter are having. Also surprising is the volume of dollars thrown at things like retargeting without understanding if it is adding new sales or just taking credit for old ones. You see this with guys like Yahoo and AOL, who are struggling to get into bigger budget lines. Yet, when you put their data and their inventory into the platform, their performance is two or three hundred percent better than a lot of the sexy new channels that are just taking credit away.
Frankly, I'm surprised that the industry got as big as it did without better intelligence to this point. I thought that there would be more companies with the ability to do this. Internally, these are much bigger scale problems than I think anybody imagined. We have peaks where we see 900,000 ads a second. The ability to handle that kind of volume in real‑time and then spit out the five things that you need to do, is a much bigger challenge than I ever dreamed it would be. We took the company dark for 12 months when I first joined, to solve that problem - because it was a huge problem.
What about revenue and profitability for AK? Any future funding requirements?
We had 100% year‑over‑year growth from last year to this year.
Just on the basis of the customers that we signed this year, we already have 100% growth for next year. The customer adoption, particularly in the last four or five months, has exceeded our expectations.
We have one of the top three Fortune 500s in each of the “big money” categories of telecom, CPG, retail, auto and finance at this point. We are live now in Australia. We just completed our testing for APAC and we are in partnership negotiations to take us internationally right now.
You can see that a lot of the foundational work was completed in 2012. 2013 is all about execution and growth.
And profitability? Funding?
Profitability could come as early as the end of Q1. We are in a spot now where that is more of a business decision. Do we want to keep adding engineering and sales and marketing to keep going and grabbing share, investing more in international? Or, do we want to stand pat and make the profit?
As for funding, we don't need any more cash to do any of the things that I have talked about. But, there are lots of discussions about how to accelerate growth. Are there smaller teams that we should go acquire and begin to roll up in the intelligence layers? There are some discussions going on around that. If we want to go put more sales and marketing internationally, that obviously requires capital infusion. Those strategic decisions are happening right now, and we're in dialogs with a number of partners.