The inability to manage reach and frequency is the biggest threat to digital advertising, according to Merkle CEO David Williams.
Merkle has spent the past two years trying to solve that issue for the open ecosystem with M1, a media-buying platform that uses PII-based IDs to target known individuals.
Merkle also has a publisher network, Publisher Addressable Marketplace (PAM), that allows clients using M1 to sync their IDs with publisher audiences and manage reach and frequency across publishers such as Pandora, AOL and Conde Nast.
“Our thesis is that more money will shift to where you can measure outcomes,” Williams said.
That thesis, however, is complicated by GDPR in Europe and a global push to regulate the use of personal data.
“We’re going to take a half-step back and slowly start to take more steps forward again as everybody gets more comfortable,” Williams said. “The customer needs to be at the center of the conversation, and in order to put them there, we need information about them.”
Merkle, which began as a database marketing company, has scaled globally since being acquired by Dentsu Aegis Network in 2016, adding 2,000 employees across Europe and Asia. Merkle’s M1 team has spun out into Dentsu to scale across the network and support agencies.
“We’re pretty much fully integrated at this point,” Williams said. “We’re working across multiple clients with other pieces of the network and we’re selling jointly.”
Williams spoke with AdExchanger.
AdExchanger: How bad is reach and frequency management?
DAVID WILLIAMS: I don’t know that it can get any worse. GDPR makes it more difficult, certainly in Europe.
It’s the elephant in the room. Everybody is building like the whole experience takes place on their platform. Our mission is to help people resolve that across platforms, but until those platforms are willing to play, it’s very difficult to overcome. But it’s got to get solved. Somebody somewhere is going to figure it out.
Who?
AT&T might solve it on TV before Google and Facebook decide to solve it on digital. Ultimately, we need a single understanding of identity, and we need to know whether ads were viewed and where they were served. The idea that we don’t know that is outrageous.
We have the technology to solve these problems. I don’t know that the industry is really working on the problem. It should be a bigger topic. I think people just accept it as the way it’s got to be.
Is reach and frequency management going to get tougher as the conversation around privacy picks up?
I don’t think it gets that much harder. You have to innovate. In the US we’ve been dealing with HIPAA requirements and fair credit reporting for years. There are many regulatory restrictions. It just creates new forms of innovation.
You’re expanding in Europe. What’s it been like working there post-GDPR?
Our expansion in Europe has gone really well. The scale and scope of the UK market allows it to integrate some things faster than the US. We’ve been able to capitalize on the intersection of data, media and experience.
GDPR certainly is a game-changer. It makes it more complicated and technically difficult in the short term. But in the long term, I don’t think it’ll matter. Five years from now, we’re just going to operate in a world where consent needs to be a part of the business process. If you’re doing things right, that consent isn’t so hard to get.
Because we have experience managing and consulting around first-party data and privacy, it’s not an issue for us. What’s more disruptive is digital platforms’ reactions to it. Marketers have all taken a half-step back as those platforms rationalize the regulatory environment.
What’s been most disruptive about the platforms’ reaction to GDPR?
Both Facebook pulling platform partners and Google limiting the way tags can be used on and off their sites. These guys are trying to understand what does consent mean and how far do I need consent in a cookie to do retargeting? For the most part, the big platforms are interpreting these things in the most conservative ways.
Are clients pulling back on audience targeting under GDPR in favor of contextual buys?
No. There’s dialogue around all of these things. You’re dealing with an environment that’s changing rapidly and everybody is reconsidering. People rush too far into certain areas of the and then pull back. But were seeing clients move toward better use of data.
Media buying has become a bigger focus for Merkle. What’s your ambition there?
For the last 25 years, we’ve been building first-, second- and third-party data assets. But we saw clients struggle with applying and activating that information in paid media. Candidly, we got tired of trying to help media agencies figure it out, because they weren’t really that motivated to do it. So we did it ourselves.
Part of the challenge this industry faces is that often teams responsible for managing data and media have never even met each other. This isn’t a capability problem. It’s a transformation problem. Organizations have to change the way they’re doing business, and they have to have a partner that is willing to change the way they do business.
That unwillingness to change has made room for new competition, like the consultants. Are they a threat to media agencies?
They’re a real threat. They have real skills and they’re viable businesses. They have stronger transformation capabilities than agencies.
If this world is becoming about technology at the heart of everything and transforming for a digital economy, clients are going to go to partners that can help them on that journey.
Agencies always argue that their creative skills aren’t up to par.
I think that’s very shortsighted.
This interview has been edited and condensed.
