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[on-hold music] Welcome to the Rebooting Show. I am Brian Morrissey. One of the big themes of Cannes this year was just how competitive the ad market has gotten.

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Retailers see advertising as a giant opportunity to add high-margin revenue.

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The growth rates tracked by Group M, it expects retail media to represent fifteen percent of ad spending versus just over one percent a decade ago, show just how much the weight of the ad market has shifted clearly to performance.

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And increasingly, there's a narrowing of the distance between advertising and commerce, and this is where retail media really excels.

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After all, if it was up to companies, they'd just have sales, not marketing, and brands are a means to an end.

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For publishers, that leaves the imperative to adapt their ad businesses, and that means often using their first-party data to drive sales with unique advertising that often mimics retail media.

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At Cannes, I spoke with Hearst CRO Lisa Ryan and Hearst SVP of Ad Products and Data Jen DeRay about how Hearst is trying to harness its data across context and commerce in order to craft its own version of retail media.

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I hope you enjoy this episode, and if you do, please do me a favor and leave the show a rating and review on Apple, Spotify, or any other podcast platform.

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[on-hold music] Lisa, Jen, thank you for joining me. Thank you for having me at the Hearst house. Thank you for coming. Yeah. It's a beautiful view.

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And I could swear that I've been here at some point over the last fifteen to seventeen years I've come to Cannes. [laughing] Probably have. I just don't know when. But it's interesting.

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We're, like, halfway through the week, and I feel like there is a sense of realism with the publishi- publishers I talk to. I mean, we all know the challenges, and then there's no denying it.

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The search traffic figures just came out today to show, you know, generally, I think most people are down, like, ten to twenty percent. Some people are down thirty percent, and that really impacts it.

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But I think also what I've heard a lot is that, you know, there's a real need for it to have growth agenda, to, to figure out how to grow instead of just being like, "Woe is me." And that, that's what I get sensed.

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So I wanna start with you, Lisa. Like, when you think about where the growth paths are, I mean, we talked about this a little bit at the dinner on, on Monday. Mm.

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And I was just, like, pushing, trying to push people to be like, "What does this look like in five years?" And I don't think anyone really knows. Yeah.

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But, like, how do you think about that when, you know, things are changing so rapidly in the landscape that are also... that are, frankly, outside o-of your control? Yeah. I mean, it is an...

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It's a really interesting time because there is so much, to your point, changing.

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For us, I think we're excited because I feel like we're going back to our roots a little bit, focusing on a direct relationship with our readers, focusing on excellent content, focusing on digital experiences that are really truly premium.

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And that part is great because, I don't know about you, but I do think the web, when we were in this era of chasing scale and, you know, getting bigger and bigger and bigger and more and more and more, we lost something as an industry, and that was kind of that, that inspiration and that kind of elegance of storytelling, and, you know, it became really commoditized.

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And so I think we have an opportunity going forward to really kind of be better in the digital world, probably more like back in the day in magazines and, you know, in our world where it was about kind of telling the story, you know, beautifully and elegantly, and I think we're gonna be able to do that, and now we're trying to do that with ads, too.

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So I think we have an obligation as an industry to provide something for people, for our consumers who, who love our brands, to speak to them in lots of different formats.

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In, uh, wherever they are engaging with content, we should be there, and we should be there in a high-quality way.

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And if we are, then the ecosystem of search and all these kind of other discovery areas that are being completely upended right now are gonna work themselves out, and the best quality will rise to the top.

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And I'll also say that for our part, we're focused more now than we were before on social search because that's really popping for us, and we get a lot of new readers through social search, people who never- W- I would define social search, like, on Instagram?

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On Instagram, on TikTok. Yeah. We're producing, on average in our partnership with TikTok, six hundred to six hundred and fifty videos a month on TikTok through our fifty brands.

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So that's been really interesting for us because we see that as a new door for younger consumers who maybe never even read a magazine. Yeah. So, Jen, when you think about...

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'Cause one of the things I, I think about with-- 'cause I think there's a broad shift to being audience-focused- Yep... at a lot of publishers, right?

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And so when a lot of people think about audience focus, they think about subscriptions. And I think we went down this road where it was all about subscriptions.

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And the, the, the reality is, in a lot of categories, subscriptions are not going to work. They're gonna be extremely niche, a-and particularly in lifestyle. It's, there's just a ton of content out there.

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They've always been ad businesses. Subscriptions, yes, but they've been ad businesses.

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But at the same time, I think it's very clear that having a really good handle on your audience data is going to be critical to having an advertising business now.

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I mean, last night at the, the, the dinner that you were at, at, at Zoom, it was a little windy, right? But, um- It was a little windy... but it was beautiful. [chuckles] I was afraid that my wine glass would fall out.

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Yeah. There were a lot of wine glasses. You know, you know you're in Cannes when, when wine glasses are breaking. It's the sound of Cannes.

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One of the, the people sitting nearby me was, you know, she had said, "I don't see how you have an advertising business even without the subscription business 'cause of the data."

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I mean, I don't think that's necessarily the case, but I understand the point. Talk to me a little bit about how, you know, particularly with Hearst, you're thinking about using the data that you end up having.

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Yeah.I mean, for publishers and with the cookie list we had to all l-lean into first party data so one of the things for us is going deeper and really understanding what the reader is there for, what they're looking to do, why their interest is there, what's their lifestyle and so I think...

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I mean, I do think cookie list was a forcing function for everybody to get really strong on their one P data.

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And yes, subscriptions are great, and you have more data on that person, but you can also do a lot with AI and anonymized data, and you can find patterns in behavior, interests, shopping, and so we're really excited to lean in on knowing our reader.

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We're gonna go deeper in engagement with those signals. We're gonna be able to see more patterns. Yeah. It's like we're here...

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I think one of the things with, with Can is, is I've charted over the years, as the unofficial Can historian I've christened myself, is- Fifteen years, it's like- I hope... you know, you've earned it.

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I de-I deserve, I deserve a plaque- For sure... I think that Karl maybe... Mi-me and Michael Kassan will have, uh, plaques. His will be more prominent. Mine will be by the men's room. [laughs] But look, there's...

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The, the tech companies have the, have the big... There's a, there's, there's a metaphor here of sorts. You know, the... there's... the, the ad tech companies have the yachts.

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The, the, the giant tech platforms have the beaches. I love the house, right? It's- Thank you. It is- We love it too... it's a beautiful view, right? Right on the Croisette.

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It's not a yacht, but, but look, the- Intimate lunches, you know? Yeah. [laughs] You've seen. I, I joke that performance, performance marketing has almost eaten this industry, and pendulums always swing, and I, I,

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I think I'm not going out on a limb too much that it's pretty clearly swung really far in the direction of performance, and performance as defined, weirdly enough, by our platform friends out there, as getting as close as you can to the sale, and a lot of times what happens before that is obscured.

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Now there's- Yeah... there's a banner hanging out here as I was, like, looking for the place that says, "Own the funnel." Yeah. [laughs] Yeah.

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I mean, I'm glad you caught that because I think that's unique to Hearst, a big focus and, and kind of one of our... the areas that we're launching new products around is in the fun- is in owning the funnel.

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It's ad products around what stage you are in the purchase journey, so you may... We've always been good at, at Hearst kind of the branding and the awareness stage and providing inspiration for people.

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We've, we've had products, ad products for that. We've not been so great in the past at really kind of mining and understanding when a consumer's in that consideration stage, so I'll give you an example.

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One of our brands, Runner's World. If you're, you're a runner, right? Yes. I just learned that a little while ago.

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If you're gonna run a marathon in six months, and you're thinking, "What shoes are gonna be the, you know, the right shoes for me?" There's a lot of, you know, kind of technological advancement in shoes right now.

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What are shoes that I want, you know, to train in to be ready for, for that marathon?

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You would go to Runner's World, see the list of the best shoes, you know, for long distance running, and now at that moment, because you're in that stage where you're actually thinking about what to buy- Yeah...

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you'll see a new product that we launched here at Can called a native commerce ad, and that is in this...

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It's an ad, but it's inserted into the list of best products, clearly demarcated as an ad, but in the native format of the editorial, and it will not only have a recommendation from a marketer that may not be on the list from a shoe, but it'll have relevant products, so a Theragun or a water bottle or- Yeah...

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other, other products that are kind of when you're in that mid stage of the funnel, right?

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And we also have products lower down the funnel when you're actually at the point of purchase, and so I think we're thinking a lot more deliberately, and that's actually a trend I've heard at Can.

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Even retailers, they're thinking further up the funnel too. So perhaps we kind of hit the max on the performance marketing- Yeah...

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and sale, sale, sale, and now everybody's thinking about, okay, like, what's behind that and what's happening, like, further up the funnel. So it's branding. It's really consideration in this moment, and then purchase.

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Yeah. It's interesting you say that, 'cause before I thought we would end up with, with running. I don't know why I did. You did? So I did. Yeah.

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I did a search on Perplexity for, for a, a marathon program, a, a half marathon program, and I said, "I'm gonna run... I run three times a week." I run more than that, of course. But- Of course you do...

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I did, it was just... This is for testing purposes. That's admirable. And I said, "I do- Three times... three miles each run, and give me a marathon program."

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Now, in my marathoning days, I would go to Runner's World for that, right? Or I would t- uh, you know, put it in search and, and I've done... I've had Achilles injuries, and so I, I'm like, "What, what are...

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Maybe I'll switch running shoes," right? And I go to Perplexity, and it's... I gotta say, it's pretty good. Mm-hmm. Well, that's our challenge, right? [laughs] I mean, competition is good. Yeah.

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It's gonna make us better, but I think- But what's the differentiator, I guess, from a consumer perspective- Yeah... and then from an advertiser perspective? Yeah.

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I mean, I think we think a lot about this because our brands, some of our brands have been around 130 years, and the idea is in this moment that we're in where there's so much innovation and so much change, what isn't changing, and that's trusted brands, whether it's Oprah or Elle Magazine or Harper's Bazaar or Good Housekeeping.

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These are brands that people are gonna recognize.

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It's our job and our challenge to be able to make sure that we're showing up in really relevant places for those people who trust our brands and believe in them, and so...

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and to get them discovered, and that's kind of the fun part right now because it's so dynamic. But yeah, Runner's World is actually growing.

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It's, it's an interesting opportunity for us, I would say, around membership because if you- Yeah... think about the utility, you're looking for kind of really service-orientedInformation. Mm-hmm.

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And I think for lifestyle publishers, and us as the world's largest lifestyle publisher we're thinking a lot about that utility around, you know, what brands. Is it recipes? Is it, you know, planning a marathon? Is it...

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And would people pay for that? We'll see. We're experimenting a lot.

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We brought on general managers at the brand level here at Hearst to really dig into brand by brand, what is the opportunity for people to experience our brands at a deeper level such that they'll wanna pay for it? Yeah.

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And also segment by segment, 'cause we have different audience segments.

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And, and it's something I've noticed, like a lot of people are, are, are thinking more about how do we build products for specific segments of the audience, 'cause they all... An audience is not a, a monolith, right?

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Right. So you, you were on the demand side more at- I was... just the fancy term for the, the ad buying side, right, literally. The, the obsession with, with... Not...

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And it's an, it's a regular obsession, right, with basically attribution, right?

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And I think a lot of times when we talk about the third party cookie, I think people who are not in it day to day don't really totally understand that targeting is, like, not as big of a deal as the measurement piece.

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Right. And I think throughout basically the internet, I think, it's been really difficult to attribute what leads up to a sale. And I'm reminded of this completely in Cannes because there is...

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This is the place of all kinds of disconnects, and you have a lot of people on beaches who are out there saying that it really just matters r- right before the sale. I'm like, how are you attributing [laughs]

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your spending of, like, millions of dollars here directly to your sales? I would love to see the spreadsheet. [laughs] Right.

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But that's, like, an essential challenge when you're getting on the funnel is, like, getting the kind of attribution and credit. Right.

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And we're seeing a lot of money going to retail media, and we're seeing a lot of money going into walled gardens that can promise the nirvana of closed loop attribution. Closed...

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Well, I think the, the days of the last click attribution- Yeah... advertisers know they need to go upper funnel. They know they need to have a full funnel media plan. They need to build a relationship with the consumer.

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So we're really excited about looking into providing media products that they can build that relationship. So whether they start with brand storytelling, then they have consideration, and then lower funnel.

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So I think with the third party cookie, I am in complete agreement, it's not targeting. Targeting is one aspect, but the measurement is a big change in ROAS and last click. But, uh...

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So we're looking at metrics across not only interaction and attention, we're looking at brand lift, and those things combined with the, the format that you put your ad in plus the targeting, we're gonna help advertisers understand how it's performing by vertical.

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So we're looking at a, a number of different metrics. And the appetite is there.

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I mean, in the conversations that we've had with brand marketers, they know that they need to start looking at metrics in different slices and different ways.

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And like you said, the investment in Hearst House, for example, we can't do a ROAS immediately for what's gonna happen on Monday, but it's a longer term ROAS. Yeah. And that's how marketing's always been done.

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That's right. I, I think that there's gonna be a return to, to sort of sensibility, because you cannot measure everything in a spreadsheet perfectly. And, and what's crazy is even a lot of...

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The, the people in the tech industry talk about it, and Jeff Bezos talks about all the time that ultimately they, they're so data driven and they do a lot by gut.

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And Amazon's spending a ton of money here, and I'm like, how are you attributing [laughs] any of this stuff? Be pretty difficult. Well, can we do the ROI on us doing this in person versus video? Y- yeah. I mean, it's...

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But at some point you, you sort of know. I don't know. You, you have to, like, trust experience as a form of, of data, I think, to some degree. Yeah. So but, uh, uh, Lisa, talk to me about...

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I, I think that there is this blurring of the line between commerce and advertising in some ways, 'cause advertising used to just, like, sort of hand it over, right?

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And, and it would create demand, and then it would hand it over, and then the commerce would take place. We're seeing these, these lines blur quite a bit.

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I mean, and now when you think about, like, Hearst, I mean, you guys drive a lot of GMV. I mean, it's not just CPM anymore. It's- Yeah. Yeah, we-... gross merchandise value for those who don't know.

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And this is something that I learned joining. I joined 20 months ago from another publisher, and that didn't have kind of a meaningful or scaled commerce business.

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Hearst has an enormous commerce business, so it's a big part. It's our number two revenue stream behind advertising. Very meaningful. We drive almost $2 billion, or just under $2 billion of GMV a year for our partners.

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And so we know that our product recommendations, when our editors are making them, that they actually inspire people to kind of click on that link and purchase. So that is and has been a big and important area for us.

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As far as the lines blurring, our feeling is we have to have our editors making these recommendations. I'll in- we'll insert a native commerce ad into that moment so that a marketer can be relevant in front of them.

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Mm-hmm. But we're not gonna have the advertiser... If the editor doesn't believe that that recommendation is the one that should be made, that is the story they're trying to tell editorially, they're not gonna make it.

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They control that decision. And so I think that's- Yeah... important to me. But I just mean in, like, the, in the advertising itself.

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Like, advertising, you know, I wouldn't say it used to be separate from commerce, but, uh, uh, you know, it seems like with, with Aura, like you're, you're trying to combine, you know, the advertising and commerce elements.

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Ah, yes. Because then a lot of publishers... You know, when commerce started, I would joke a lot, for a lot of, for a lot of people, you know, commerce was really just affiliate links, right?

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And it was, it was almost separate from advertising. I think this is something that we're seeing in publishing is, you know, subscriptions used to be, you know, viewed as almost oppositional to advertising in some ways.

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Yeah. Right? When you have a subscription program, it's like, wait a second, that's gonna mean l- less a audience, and that's gonna mean-It's gonna be harder to sell. We're not gonna be selling as much ads.

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That's what I do, and that's a threat. I don't like this [laughs]. Yeah. What it actually means is a more engaged customer, right?

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If you have somebody who is willing to pay for something, they're more engaged, and that's more valuable for an advertiser. So I think there's kind of more synergy on that side.

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On the commerce side of advertising, yeah, I, I do think they're coming together, and I think that when we think of Aura, we think of... And this is, these are the signals that we're bringing in.

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I mean, we have three hundred million people around the world experiencing our content, and so how can we understand what they care about?

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We look at their interests, we look at their behaviors, we look at their shopping patterns, right? We actually can, with Aura, map the affiliate who's clicking on an affiliate link. Mm-hmm.

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And that's an important signal.

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It's not the only signal, but it is an important signal 'cause to your point about owning the funnel and really understanding their jour- the, the consumer journey, we need to be able to see, you know, where they are, at what stage they're in.

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Mm. And so that's really valuable for us, and we think we're the only ones doing it. And I'll also say Aura is AI-enabled, which is allowing us to basically predict new audiences. And if...

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I'll tell you, I see- meet with marketers all the time, and the, the biggest theme that they share with me about how we can help solve their problems is, "Help me find new audiences. Help me unlock new audiences."

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This tool is designed exactly for that, which is about if you are...

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And I'll let Jen speak to it because she's really, she and Mike Nuzzo, our head of data and insights, are really the architects behind the Aura product.

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But if, if you are a pet food shopper, and you also happen to be a trail runner, 'cause we know, we're watching all these signals, and we're blending them, that there's a high correlation between those two things- Yeah...

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then why not kind of also extend your targeting to, to trail runners? Yeah. Right? Because those people are, you know, predict- in a predicted way, we know that they are also pet food shoppers.

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Marketers haven't really tapped into that because targeting hasn't been sophisticated enough.

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But what used to take years to do with AI now takes months to do, and so we've been able to really scale that and are excited- Yeah... about that opportunity.

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But it's also, I mean, programmatic was a lot of just retargeting. That's right. Let's be real. And, and that's not creating new audiences. That's, you know...

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I mean, I always go back to the, when I first started writing about this industry, my family would always ask me why they got pop-up ads, and then it moved on to, "Why, why do I keep getting followed around by those shoes that I looked at one time?"

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Or that I already bought. I, I really think that the, the retargeting led to a lot of the, like, GDPR and things because it just- Yeah, terrible... really creeped people out.

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And again, it's some-something that's not, like, in a spreadsheet. It's just, like... It's got its...

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You know, and the people don't like that 'cause they're like, "Stuff's going on behind the, the scenes, and I don't understand it. I don't like this."

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But yeah, talk to me a little bit about what Lisa was talking about, how, how you look at being able to, to, you know, take the data and, and be able to bring signals to the market that are, that are different, you know, in some ways because there's a lot of people out on- Yeah...

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that cross set who have a ton of data, ton of data. Like, how do a, how does a publisher win at that game? What is the unique signals that a publisher can bring that an Amazon and a Google and a Meta cannot?

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Well, I think at Hearst Magazines, our lifestyle audiences, we definitely have interests. We can see their behaviors through content consumption, and that's not different than a lot of publishers.

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But specifically, our audiences are consuming about lifestyle and from food to fitness to fashion. So that's one of our core tenets on the first-party behavioral data. So, like, contextual. Well, that's the...

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And that's the behavioral. Okay. And then we move to contextual. Okay. Then it's knowing deeper what that content page is about.

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If it's about running, is it about training for your first marathon, or is it about I'm actually interested in the Olympics, and I'm not a runner at all, but I really wanna watch the track and field stars?

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There's a difference there, but they most, they both might be categorized as running. And then the third one is really the crux of finding that incremental audience.

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And so maybe this was called lookalike audiences before. Mm-hmm. I'm with you that before retargeting, quote, "worked," but that's all related to measurement of a last click. People...

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A lot of times, people were gonna, were gonna convert anyway. That's right. It was like the Obama line where he's like, "You didn't, you didn't build this."

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Like [laughs] And we've learned that, you know, in the, uh, we call it the post-retargeting era, now that the cookie is eventually going to deprecate, we're already kind of, our mindset is already there, that, that those kind of creepier techniques- Yeah...

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didn't perform as well as what we're building today in the first-party space. That's really our whole thing is let's make this product at the axis of both privacy and performance.

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And if we can do that, then you don't have to follow people around and serve them ads that, you know, are no longer relevant because they already- Mm... bought that pair of shoes or that bag- Yeah... or whatever.

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You know enough about them. You know more, but you're not actually, you know, being creepy about it. Yeah. But how... So this is just gonna be on Hearst properties. You're not gonna be able to go and, and- Right...

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on a DSP and use this data, it, to run ads on other sites? Jen, do you wanna speak to that? Well, right now it's gonna be for our premium targeting on our direct. Yeah.

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And we will do it through programmatic direct but not open auction at this point. No. Any reason? [laughs] I think publishers, I think publishers are still trying to figure out what makes them differentiated. Yeah.

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We have a all-up prem- We have a premium ad strategy, so it includes our formats, our targeting, and our direct business. So this is really a premium direct- Yeah... product. So we'll see. Yeah.

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You know, we're in the early days, and we're understanding what works for us and for our advertisers. Yeah.

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I'm predicting less dependence on open programmatic going forward, so we are really leaning in on moving marketers up toward that, that kind of more premium programmatic experience.

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We want them to engage with us in automated ways. We just want there to be kind of the h- them to be the highest quality, most- Right... controlled ways to buy. To automate the, the process- Right... but not...

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I mean, I think open programmatic has, has proven to not be that great of a deal for most publishers. Right. Right. It doesn't work, right. [laughs] That's a good way of putting it. Right. It doesn't work. Awesome, cool.

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Well, thank you so much. Really appreciate inviting me over. It was great to have you. Thank you. Enjoy your rest of Cannes. Yeah, thanks. Great to have you out here. Thanks, Jen. [outro music]