Tim Vanderhook, CEO of interactive media company Specific Media, spoke recently to AdExchanger.com about everything from his company's acquisition of MySpace to the effects of the exchange model on his business.
AdExchanger.com: What does Specific Media's acquisition of Myspace say about the evolution of the ad network model?
TV: I don’t believe our acquisition of Myspace has anything to do with the ad network model evolving at all, it is simply Specific Media continuing to execute on a strategy of becoming a leading global digital media company. Specific Media has in its possession the advertising technology necessary to be competitive in the digital landscape today. Prior to this acquisition, we were lacking the other half of what a media company is: content creation and distribution. Myspace solves this in a huge way.
More broadly, I believe there are tremendous opportunities for ad networks that have their own technology and data. The companies that have invested heavily in building sophisticated technologies to be competitive in the digital advertising landscape will only continue to grow and compete in this space.
Regarding Myspace, you told DIGIDAY's Mike Shields that "Data has zero to do with the transaction." Does that mean you see no potential with the ad targeting data of Myspace? Why or why not?
I was conveying to Mike that we made the acquisition of Myspace to complete our strategy of becoming a digital media company. We needed the ability to create and distribute content to consumers to fulfill that vision. Myspace has been offering brands the ability to target ads based on non-PII information for many years. Moving forward, we will preserve that model and continue to operate under the same principles.
However, it is not just about brands wanting to deliver relevant ads to consumers, but also about delivering a highly personalized content experience to Myspace users. We are huge believers that the future of the web experience is one that will be focused on personalization for users and the companies that do that well will be rewarded. We see a lot of potential in focusing on the user experience in this way, and we believe it will drive user engagement to a much higher level than where it is today.
3. Two or three years from now, what milestones would you like the Myspace deal to have achieved?
We are going to be maniacally focused on making Myspace what it was supposed to be. We want to get Myspace back into the Top 5 in terms of global reach. We also want to build an even better platform that is even more focused on servicing the artists and musicians as they look to connect with their fans.
5. How will you approach BBE and video ad strategy going forward such as the procurement of hard-to-find video ad inventory? Or target market?
Online video is the fastest-growing segment of digital advertising today. However, unlike display, there is currently a more limited supply of television-quality content for video ad inventory to attach to. We have solved this problem in three main ways: First, we partner with high-quality video publishers that allow us to represent and monetize their video inventory via our international sales team; second, with Myspace Music, we have licensing agreements that allow us to distribute the entire music video libraries of both the major and independent labels. This is very unique and gives us a high-quality, premium, and exclusive asset; third, we create high-quality original content—this is something we intend to do in even bigger ways moving forward.
6. Does Specific Media use, or will it, a demand side platform model for display, video and/or mobile?
We have always built innovative technologies to help our agency and brand partners best execute their marketing programs. We already offer an extensive tool kit of advertiser solutions, which we’ll continue to develop. As the DSP/Data Supplier/Exchange/Yield Optimizer model has entered the landscape, it showed us that we actually needed to disassemble our technologies to offer our advertiser, agency, data and publisher partners more focused and more self-service products to use. We see a shift in the way these four groups of key constituents think. In looking at the landscape today, I believe that our customers—mentioned above—want to go from a full-service to a semi-self-service solution.
7. Is the ad exchange model putting pressure on Specific Media's business?
Specific Media continues to grow aggressively in the space so it is really tough to know whether or not we could be growing faster if the exchange model had not come into the competitive landscape. However there are two huge players in the display advertising space today that weren’t as significant in the past few years. Google has devoted a tremendous amount of resources to compete aggressively in the display space. In addition, the meteoric rise of Facebook has built another big opportunity for marketers looking for places to put their online advertising dollars. The size and scale of these two great companies are going to create a more competitive market than what previously existed.
All-in-all, digital advertising is a high-growth industry that is going to drive a significant amount of innovation, so increased competition is to be expected. Together, Specific Media and Myspace deliver ads to 300 million consumers globally every month; 70 million of those consumers come to a property that we own and operate. With that, we’ve never been in a better position to compete and win.
8. What are your thoughts on real-time bidding? Is all media going to be biddable?
I personally believe that the advent of RTB has driven up costs for brand advertisers while lowering the scalability of their campaigns, and has decreased the monetization rates publishers were historically receiving from other providers. However, it has given agencies more control and publishers a simpler interface to reach the bulk buyers of inventory, which is a positive for the industry.
I have not heard any Top 250 comScore publisher say that they are getting any significant increase in the monetization rates of their inventory. The most common benefit publishers refer to when working with an exchange/yield optimizer is that they no longer have to deal with the 10 or so bulk buyers of their inventory. Historically a publisher would sell “all” of his inventory to ad networks at negotiated premium rates; now, by utilizing an exchange he only sells a “portion” of inventory (retargeting) into this community and the vast majority of the content is given away for cents on the dollar because it is deemed to have minimal value.
It is hard for the publishing community to validate this because they look at a daily average in their reporting systems. If publishers actually looked at the data points, they would see that there is not a significant benefit to running through these systems.
On the other hand, advertisers went from having one intermediary in the transaction to having five, giving them an impossible model in which to drive down costs, and an increase in the likelihood that costs would increase.
As a result, publishers will eventually find a solution that significantly increases their content monetization abilities and advertisers will move to the most efficient partners when they want to reach their target audience. My belief is that while RTB will continue to exist and do well given the amount of control it has given the buying community, its inherent inability to deliver monetization opportunities to publishers leaves the door open for a new solution to come to market.
How will Specific Media target the mobile world?
Mobile is an emerging space that is growing rapidly. This is an area in which we continue to develop our offering and explore new ways to provide value to our advertisers. Much of the targeting being done in mobile today is geography-based, so there’s definitely room for targeting advancements, which Specific Media is apt to offer. That said, I’m not sure that hyper-targeted mobile advertising is the way to go given the product: mobile ads are brand plays and should be thought of as such by advertisers.
As Specific Media continues to expand its offering of advertising solutions, we’re making sure that we have capabilities that match advertisers’ needs at each stage of the sales cycle. Given the ubiquity of mobile, it’s natural for us to incorporate it into our solution set.
Can you see making any more acquisitions?
We’re big believers in building assets, so we are constantly evaluating the market looking for strategic opportunities that make sense for us given our corporate vision and direction. We’re definitely in a period of aggressive growth and you can expect to continue to hear more from us in this area.
By John Ebbert