The Ecstasy And Agony Of AudienceScience’s P&G Partnership

When the largest advertiser in the world wants to take you to prom, but you’re not allowed to tell anyone – that was the situation facing AudienceScience.

Although AudienceScience provided the technology backbone for Procter & Gamble’s internal trading desk, Hawkeye, for the past seven years, P&G explicitly acknowledged its alliance with the ad tech platform only twice: a brief mention in Securities and Exchange Commission statements, and when it was terminating the relationship.

“The first time P&G spoke publicly about its relationship with AudienceScience was when they announced they were firing them,” said PubMatic CMO Jeff Hirsch, who helmed AudienceScience as CEO between 2006 and 2011.

P&G alerted AudienceScience last week that its contract would not be renewed when it’s up on June 30, and that the brand will now use Neustar’s data management platform and an assortment of DSPs, including The Trade Desk, to handle the buying.

The P&G business contributed the majority – possibly more than 90% – of AudienceScience’s revenue, and AudienceScience is exploring a fire sale, according to a source with knowledge of the matter.

But rewind the clocks to 2010, and the world looked very different for AudienceScience. It was the early days of behavioral targeting and AudienceScience was innovating.

Back then, P&G was looking for one ring to rule them all, a single control center for audience-based buying stationed at its headquarters in Cincinnati – in-housing before it was cool.

What AudienceScience and P&G built together – a direct-to-advertiser relationship with data at the center – was unprecedented in ad tech at the time. But it was also no fairytale. Sometimes the hand that feeds can become the hand that smothers.

Origin Story

In 2000, long before P&G came knocking, AudienceScience started life as the web analytics company digiMine.

For the first few years, publishers used digiMine to glean insights about consumer behavior on their sites, but they quickly started wanting to do more with that information. One client in particular, The Wall Street Journal, pushed digiMine to get into audience segmentation and targeting.

By 2002, digiMine had evolved into one of the first DMPs for publishers, enabling pubs to use audience data to increase the worth of their lower-value inventory. The following year, digiMine changed its name to Revenue Science.

When advertisers approached the company to target customers across the web, Revenue Science created an ad network – and in 2009 rebranded as AudienceScience and focused on the ad network.

The stars were aligning. P&G was already on the hunt for a tech partner to help it get Hawkeye off the ground.

Procter’s Gamble

As early as the mid-2000s, executives inside P&G were becoming increasingly disillusioned with media agencies.

In 2008, P&G began working with Right Media, the ad exchange Yahoo had purchased the previous year, to use its data to do bid-based buying on Yahoo’s unsold inventory.

But P&G wasn’t all that comfortable with Yahoo, one of its largest media partners, becoming a technology provider. Right Media also lacked cookie storage functionality for custom-built segments.

But Right Media was a close partner of AudienceScience, which had segmentation storage technology. Right Media introduced AudienceScience to P&G with the idea that the two would work together to serve the brand’s audience-targeting needs.

But P&G plays by its own rules, and in short order it was hosting separate meetings with its ad tech partners. And by late 2009/early 2010, P&G had declared it was going to use AudienceScience for its data management and infrastructure.

The deal was architected by Hirsch, who was CEO of AudienceScience at the time, as well as CTO Basem Nayfeh and Jeremy Mason, VP of business development, both of whom are still at the company.

Right Media was still in the picture for a while doing the buying and building of audiences for Hawkeye in conjunction with P&G’s planning and buying agencies at the time, Mediavest and Carat.

It wasn’t long, however, before AudienceScience usurped the buying function as well and P&G began using the technology to put its overarching Hawkeye strategy into place: a global system housing all of its data across all of its brands in multiple markets.

“They were arguably the first brand to bring media expertise in-house, pick their own platforms and only use the agency to execute – that was not done before,” Hirsch said. “They were able to synchronize all of the regions in the world to make decisions on the platform and they started to realize that the targeting worked and they were wasting money on media reaching the wrong person or the same person too many times.”

But although P&G had a sophisticated vision, it was still just learning about how to do all this. P&G turned to AudienceScience for programmatic expertise – and that reliance went to AudienceScience’s head.

Burning Bridges

AudienceScience made no secret of its desire to disintermediate the agencies into irrelevancy.

In late 2014, for example, AudienceScience released a study attempting to show that CMOs were increasingly turning to technology providers rather than media agencies to spur digital advertising success.

AudienceScience Chief Product Officer Tim Barnes admits that "adopting a partnership approach” to agencies earlier would have served the company better in the long run.

“We went hard with a specific viewpoint, and we think the benefits from our direct-to-client technology including viewability, fraud prevention and global scale with transparency and control speak for themselves,” said Barnes, noting that AudienceScience has been working closely with multiple agencies in recent years.

“That said, in retrospect, we could have worked more closely with their agency partners.”

Marriage Takes Work

But for a time, AudienceScience had reason to feel secure, even smug. One former AudienceScience executive estimates that P&G paid hundreds of millions of dollars in tech fees to AudienceScience over the years.

That pretty penny came with a price, however.

P&G may be one of the most high-profile clients in the world – but it’s not one to let its technology partners kiss and tell.

It was clear from the start that AudienceScience was not allowed to talk publicly about its work for P&G – and that makes it tough to pitch new business. The captain of the football team is your boyfriend, but no one’s allowed to know.

AudienceScience was also prohibited from working with other CPG brands or any company with a product competitive to P&G. In agreeing to those terms, AudienceScience signed an awkward contract in which a golden opportunity slowly transformed into a golden guillotine.

An enormous amount of time, attention and resources went into keeping P&G happy. And all the while that AudienceScience was laser-focused on its Cincinnati lifeline, competition from agency trading desks and emerging tech companies was cropping up with second-mover advantage.

“AudienceScience dedicated most of their energy to servicing P&G, and they jettisoned their media business, which was funding staff and development, to focus on growing their DMP business,” said Ramsey McGrory, CRO of Mediaocean and former head of the Right Media exchange. “Taken together, it was a high-risk/high-reward strategy that didn't pan out.”

According to AudienceScience, however, tending to P&G’s needs didn’t mean ignoring the needs of other clients. The company is able to drive benefit for other brand advertisers today because of what it learned from building solutions for “a necessarily demanding, global marketer as P&G,” Barnes said.

Nevertheless, P&G is hard on its partners, although the brand sees this as tough love.

“We have high expectations for our partners,” P&G spokeswoman Tressie Rose told AdExchanger. “Our objective is joint value creation.”

One former P&G partner and tech exec put a different spin on it: “P&G grinds its partners.”

To strip it down, “P&G is a commodities company with expertise in marketing,” the executive said. “Commodities are standardized and if you want to save money, you just lower the cost. That is also how P&G views media and its partners in media.”

Life After P&G

AudienceScience undoubtedly saw the writing on the wall when P&G Chief Brand Officer Marc Pritchard kicked off the “Crappy Supply Chain” tour at the IAB Leadership Summit in late January, condemning the lack of transparency and accountability in the media supply chain.

P&G was clearly itching for a shakeup and a cleanup.

But Nayfeh, AudienceScience’s CTO, decries the negative undertone in the recent press coverage of the P&G loss. Although P&G is moving on, “nothing precludes us from working together again,” he said.

P&G itself confirmed that although it’s closing the door on AudienceScience for now, it’s not throwing away the key. P&G’s Rose told AdExchanger that it’s possible the brand will resume its relationship with AudienceScience down the line.

That said, Nayfeh did not dismiss the possibility of a sale out of hand. The reality is that AudienceScience has raised a lot of money over the years – just over $69 million in five rounds since 2004 – and investors aren’t the most patient bunch.

“We’re a pragmatic company,” Nayfeh said. “If something makes sense and can help us advance our vision, that’s good for our board, our investors and our employees and we’re happy to consider it. But from our perspective, we’re focused on building our capabilities around an integrated platform approach – and we think we have pretty great technology. So we're confident that others will see value in what we've created.”

Now that AudienceScience will soon be unhamstrung by its strict contractual obligations, it’s free to woo CPG clients and P&G competitors. The company will need to double down on business development to diversify its client base.

AudienceScience declined to name current clients on its roster other than P&G, although it has worked for Frito-Lay, Adidas, GlaxoSmithKline and Sony Mobile.

“I’m excited for the future of AudienceScience,” Barnes said.

But even before P&G decided not to renew with AudienceScience, the wheels were starting to come off the bus.

In mid-January, AudienceScience laid off a quarter of its staff, cutting roughly 50 positions. The dismissals came less than a year after P&G moved its media account over to Hearts & Science, a data-driven agency launched by Omnicom for the express purpose of handling the CPG juggernaut’s business.

Can AudienceScience soldier on from here? Time will tell. But there’s no arguing that the story of AudienceScience is one of the classic tales of early ad tech.

“Once upon a time, there was a company with a great vision for how media and audience buying should be done, and they executed on that vision with the largest marketer in the world,” Hirsch said. “It’s really an amazing story – but it was also a tough marriage from the beginning.”

Story updated on Monday, May 15 to remove the statement that P&G purchasing managers are compensated based on their ability to decrease the cost of goods or services, which is not the case.

1 Comment

  1. Ted McConnell

    Nice one Allison! It pretty much captures the story (remember "Excerpts from the Annals of Forensic Pathology" in Spy?). Some context here, long forgotten I am sure. Media Vest, 10 years ago had like 30 people in back offices, under paid, coding up IO's and DFA tags for P&G, and CPM's were well over 10 dollars on average for inventory that was probably not in view much, and had a measured 8% incidence, on average, of being on target, in the country the product was sold in, and at or below frequency. Net, the performance of the "traditional" delivery/supply chain was atrocious. Indeed, we were just learning how to do digital as an industry. In testing, ROI, across the board, went up 3x based on global frequency control alone! The agency's answer was to offer their own nascent trading desk. They unapologetically reserved the right to use our data with other clients, and to margin the media even though they were paid fees. To their credit, we were all making up as we went along. Finally, its fair to point out that P&G was, in its own right, a substantial publisher, with 1700 (the number varies, but that's the right order of magnitude) websites worldwide. Further, we believed all the contacts using traditional trafficking were contacts we had purchased at a premium, and should have rights to. Add that up, and the data opportunity was enormous by itself. That has not changed, but the world has caught up.

    The list of visionaries involved at the beginning is amazing, and you spoke to a few of them, but there are many more who would have perspectives.

    Audience Science may have more potential than they realize. The real asset in any platform company is the quality, knowledge, and attitude of the people. Technology changes fast, but people make it all work, and transcend the tech. Audience Science built a machine perfectly designed to do a certain job, and the environment changed. But every feature and choice was made under the watchful eye of an OCD customer. Its MVP! The people will carry the DNA of P&G and Hawkeye with them wherever happens, and IMO, any CPG company will be lucky to work with them.

    Reply

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