[upbeat music] This episode is brought to you by Xco.
It might be time to upgrade your video strategy. As revenue-driven businesses, publishers need to keep their bottom line top of mind when selecting an online video platform.
Xco's new guide for publishers, Choosing The Right Online Video Platform, demystifies the selection process and empowers you with the knowledge and insights you need to make an informed decision.
To learn more, visit x.co, or click on the link in the show notes or on the Rebooting newsletter. Thanks, Xco. [upbeat music] Welcome to the Rebooting show. I'm Brian Morrissey.
This episode is part of a four-part series we're running this week tied to Advertising Week, um, and it features a conversation I had with Tom Pacas, the CEO of our sponsor of the series, Xco.
Now, this is gonna be a very different Advertising Week, and it's coming a little over a week after the horrific terrorist attacks by Hamas in Israel.
The media, advertising, and technology worlds are intertwined, and it's an ecosystem, and all parts sort of are dependent on the other parts. And Israel, in fact, is an integral part of that ecosystem.
Many of the top ad tech firms, for instance, are from Israel, as, as is Xco.
And I once actually assigned a story at Digiday about why so many ad tech companies come from Israel, and there's a lot of interesting reasons behind it.
But Israel and the Jewish people overall are in pain and angry after the stomach-churning scenes that, uh, we've all, uh, experienced from the Hamas violence against civilians.
And Tom and I recorded this episode prior to the attacks, but last week we spoke again because we felt like we needed an addendum that would play before we get into the nitty-gritty of the industry matters.
Tom's Israeli, and a good chunk of Xco's team is in Israel. And as anyone who knows, we talk about it a little bit on the episode, anyone who's ever been to Israel will tell you it's a very small place.
It's not a geographically large place, and I think that leads to obviously everyone has been impacted who is Israeli or has family in, in Israel too.
I know everyone I talk to has been affected directly or indirectly by these attacks and the mobilization that's happened subsequently.
And so I thought it was important to revisit with Tom, uh, and get some of his personal thoughts on this, 'cause I, I think these kinds of human conversations need to happen.
I think a lot of times, and Tom and I talk about this, a lot of people just sort of wanna stay quiet now, and there's a lot of fear of saying the wrong thing, and I think it's understandable.
But whenever I open up Twitter, or I guess it's X now, and I read it in the last, like, week or so, I don't see a ton of conversation. I see a lot of shouting, shouting at each other, accusations, counter-accusations.
And Tom and I discussed that aspect because this attack happened right when misinformation is in a new phase.
And so I think it is a very pertinent topic as we figure out how to have sustainable media ecosystems that have quality, quality content and information for people. It's critically important.
So Tom and I discuss that aspect, and then we get into the broader issues of this industry. I hope you find this conversation useful. Please send me a note with your feedback. My email is bmorrissey@therebooting.com.
Now onto my conversation with Tom. [upbeat music] Tom, thanks for joining me today. My pleasure, Brian. Thanks for, uh, inviting me. All right.
Tom, we're, we're just gonna record this little introduction 'cause we did this conversation a couple of weeks ago, and it'll probably ring a little bit different.
Obviously, we recorded it prior to the terrorist attack in Israel. You're Israeli. Xco is an Israeli and American company.
I've been to Israel once, and I think one of the things, if, if anyone has not been to Israel, is it is a very small country. It's like you can cover a lot of ground.
I visited it in the nineties, nineteen ninety-four, in fact. And in ten days, we were in a lot of parts of the country, so it's a small place. It's, it's a very small place, and usually I would...
That would be one of the reasons I would recommend people to come and visit Israel, because Israel is a beautiful country, the hospitality is great, people are friendly, and you can really, as a tourist, visit amazing places.
And as you said, south to north, probably a five hours drive. East to west, much less, probably an hour and a half. Exactly. I could run that. I could run the, the width of it.
But I obviously, and I was saying that not... I do recommend people go visit Israel, but- Yeah. A-a-a'cause it is beautiful, and it's, it's very interesting, but it's, it...
These, the scale of these things, of these tragic acts is, is different in Israel, and it directly, it impacts Israelis in a way that, like, I think for Americans in, in such a massive country, is difficult to sort of understand.
So first, is everyone safe in your family, in Xco, or how is that?
So to give a bit of background, on the eighth, about fifteen hundred terrorists from Gaza penetrated Israel, and there are towns that are less than a mile from the border. So it's not...
So talking about a small country, it's, it's very close. And they've performed, and I h-honestly don't wanna repeat here, and it's very...
It's all over the news, so everyone, uh, knows that they performed acts that I'll just say that if there was a director that would've made a movie with even small videos or small scenes of what we've seen that the, these terrorists did, the movie would have never been aired, and probably they would have been kicked off from Hollywood or any future director jobs.
It's hard to believe.The atrocities and the evil- Hmm... that has happened there without distinction, without ideology, just, uh, just murder, rape, killing, kidnapping babies, people, and so on.
So the small country, uh, is also, uh, physically small, but also we're all very much connected. We know each other. And because the magnitude of this event is, uh, someone said about 12 times 9/11- Yeah...
if you normalize it to the population, we all know people. I'm lucky that, uh, my family is safe, but unfortunately, family members of our employees and people in the company weren't.
Some were murdered in the peace party that Hamas butchered and massacred, and others were kidnapped, and we pray for them, for the people that are still there to come back, and for everyone in Israel to be safe. Yeah.
So one of the things that... Well, you had written a LinkedIn post recently, would recommend people checking out. We talk about the obligations. Yeah. Obviously, I don't know.
I mean, these things are happening at a time, particularly within how companies are figuring out what... There's a lot of, like, you see with...
I think a lot of companies are still figuring out their role in these kind of things, and let's, let's start by...
Let's just assume that the overwhelming majority of these people are against terrorist acts, and, um, the killing of innocent people at a peace party, and killing of anyone, right?
Like, what is the obligation of, of companies, do you think, to speak up at, with these atrocities? Like, w- wouldn't it...
Like, I'm just interested from your standpoint, 'cause I think a lot of people are probably wondering, "Well, what is, like, our... What can we do?" So that, that's a good question, and I'm not...
I think also different companies need different things, and I do believe that in the end of the day, it's a free country. People ha- can have different opinions, and, and it's all fine. I'm more bothered...
So as, as a CEO, as a company, you actually don't have to say anything, not, at least not publicly, not officially. Yes, it would be recommended, but you don't have to.
I'm worried from companies and leaders in general that chose to say something, 'cause they, uh, I guess they felt like it's needed, like it's required of them, but they said something very neutral.
They, they said that they... I, I phrased on my post the situation, uh, between Gaza and Israel. Yeah. Their conflict. Very generic things which, which that, that is a problem. 'Cause in this particular case- Yeah...
packaging the, what happened as generic, as a conflict, as both siding, essentially, is actually making a statement that these kind of things can happen in complex situations. Sure.
And we as leaders sometimes understand that they do, and I think the world, and that's the paradox of democracies, right? What do you...
If you're enabling different opinions, different views, and freedom of speech, there is a paradox there that some things cannot be enabled.
Some things cannot be allowed because the democracies would cease to exist if they do. So anyone who's trying to attack a democracy or to stop others from living their lives the way they want to, that's the line.
That's the line that needs to be drawn to say we are not allowing the murdering of innocent people.
We're not allowing the butchery and massacre of someone else, regardless of how much pain you think they caused you or what you believe in.
Because that's the only way that as a society, as a modern society, and as democracies would be able to sustain ourselves and prosper. Yeah. And I think we saw, we saw some of that with George Floyd, right?
Is there was, not all, but I think that there was probably some, I think also companies were never expected to do this before, but l- times change, and there was some awkwardness there. I mean, the same way.
I mean, there was, like, talking about, again, falling back into euphemisms, which in some ways is like, these things are very human, right? And they're caught up with, understandably, with complex human emotions, right?
And companies don't do complex human emotions well, I think. I'm not going out on too much of a limb to say that.
And I think when it comes through to, frankly, like PR statements at the end of the day, and there is a reflex there. So I was sort of... I don't know.
I, in some ways, I sort of give, I have a little bit of sympathy for companies in that, like, I'm like, I didn't expect more [chuckles] like in some ways.
And I don't mean to, like, make light of it, but like, it's, I think in some ways it's probably just companies are used to falling back to the safety of euphemisms and not being...
And this is just a difficult, it's more complex, and I think companies have to get used to it at the end of the day. I agree with you. As a CEO, I always, uh, need to make these choices.
My marketing, my co-founder, uh, always we have these debates whether we should make an opinion. If that opinion would resonate with 70% of our audience or the market, but 30% might be mad that we said what we said.
I think in this case, being neutral- Right... is actually making an opinion, and it's making the- Yeah... wrong opinion, and I think that's what is different in this case. It's, it condemning violent terrorist acts.
Yeah. Innocent people getting murdered should not be a debate. It should not be a question.
So if you choose to make a statement, making it generic, just you need to be aware that it's actually making a choice, and in this case, and in my opinion, the wrong choice. Right.
The only thing that I'm worried about right nowIsrael is a very strong country. Yeah. Uh, we'll deal with Hamas, and I hope, by the way, that not many innocent Palestinian people will get hurt. It's not vengeance.
It's, uh, it's needed. Uh, there are voices in Israel from the left wing that I can say that I'm part of that says that we're gonna liberate the Palestinians from Hamas, and it's very hard to do. Hamas M-M.O.
is to build under hospitals, to have weapons under schools. They need their civilian population to be their shields, so it's not easy to do.
The only thing that is very relevant to our industry, and I guess to our audience- Mm-hmm... is the responsibility of social networks in not only now post this event, but we have tough questions to ask ourselves.
What was their role in enticing and populating propaganda to the right people? We, we talked about it.
It was very trendy in the past, the recommendation algorithm showing you the information that you like, supporting your own narrative with your own thoughts on an event or on a complex event in this case.
But I think it's time for these huge companies, these monopolies, to take some responsibility- Yeah... on what they're doing. Yeah.
That's gon- this has happened at a time when there is a lot of questions about the role of these platforms, and I do have some sympathy in them not wanting to be the decider on these things and wanting to just follow government.
Th-this, these things should be decided on a, by societies, I believe, at least on a government level, 'cause, like, the not yelling fire in a theater, I think everyone agrees that is a, a free speech.
We, we used to always agree on that. That was sort of like the limit. And I think we've started to realize, particularly with social networks and in this world, is you might need to have...
and that's a giant societal question that each society's gonna have. You might need to have a different standard that, a-about what, what is fire.
It might not literally be fire, and, and where that lands is very complicated, and it's almost case by case. And but it's needed. I just don't know if a company...
I can understand why a company would be like, "We don't wanna be the deciders of that." Like, I mean- They, they're deciding on daily basis because there are people that create these algorithms.
There are people that have, that build these moderator, mo-moderation systems. And the, there, and I agree with you completely on, on the complexity.
But, you know, sometimes with all this vast technology, smart people, it's... I'm seeing a post on, on X, on Twitter, that says Israel is throwing phosphorus, uh, bombs on Gaza right now. Yeah.
And actually it's a video that was taken from a soccer game of people throwing fireworks. But this post, this tweet now has 15,000 likes and reshares.
I think with all the smart people around the table, at least the minimum that we can do is find these very simple cases and not let them spread. Yeah. And I think a lot of this is losing a lot of naivete to some degree.
I mean, this is the information space, like militaries like in... or they talk about the information space.
It's a different battleground at the end of the day, and I think a lot of the promises of the internet in some ways were naive because bad actors, they got the internet too.
Like, it wasn't just like the sort of idealists that got the internet. Like, the bad people got the internet too. And it's a tool, and we, we saw this during recent presidential elections.
It is a tool that is gonna be used in the pursuit of power at the end of the day.
And what we're seeing a lot of, this is political murder at the end of the day, and w-we're gonna s-see a lot more of the information space, I feel like, becoming, uh, front and center because that's just how it works.
So I think you captured my fear, and it's the only fear I have from AI. The only one is the fear of giving very accessible, easy-to-use power to people that historically did not have that power.
And I'll attach it- Yeah... to the example I gave earlier. Very simple. Even today in 2023, I don't wanna think how it's gonna look like in five years from now to build an army of bots of- Yeah...
of AIs post from- But it's the drones of the information space at the end of the day. Exactly. Exactly. But yeah, this is a different podcast.
And just to wrap up the drones, by the way, that's how Hamas attacked with drones you can buy from Amazon, attached to bombs to them, and they flew hundreds of those, which is just to show you how the world is becoming, which I support in general, we give people the power, but some people don't deserve this power, and it's so- Yeah...
accessible that even now with basic drones, you can attack a country and kill thousands of people. Yeah. Horrible. Okay, Tom, well, thank you so much for rejoining me.
Our subsequent conversation is gonna be very different, but everyone should know that it- Yeah... was recorded before this attack. And anyway, thank you so much.
Thank you, Brian, for being open and understanding that for a lot of us, the world has changed since we had the original conversation. I'm happy maybe even for people to hear both sides and what we've been through.
[outro music] Okay. So we're doing this before advertising week, but it's gonna run during advertising week.
So I mean, advertising week, I always find theseBig industry events as very stressful, but like secondarily, I find them good time to take sort of a temperature of where the industry is.
And I think I s- talk about this on this podcast all the time. I feel like we're between eras. I just don't know what the next era is. I don't know if you do.
But give me like what do you think the big themes will be in advertising week? 'Cause this will run like at the end, so then we can like mark the homework. Yeah.
So, so I'd say this, first of all, one you talked about makes everyone anxious, so the t- checking the temperature, I think in our industry, one of the interesting things is that there is always the crisis upon us or the thing that everyone talks about, and to be honest, who knows if it's gonna still stay a topic two months later.
So definitely would be interesting to see what will people talk about this time.
But beyond that, the general theme that I've noticed and is also apparent already is definitely AI is a, is a big thing, and I'll, we'll probably get to touch it, uh, during our, uh, conversation.
And measurement that keeps staying with us. It's always been where the industry has been striving for more transparency, more measurement, knowing how to spend the budgets, what works, what doesn't.
So you s- I, I saw again in the, in the sessions, a lot of sessions that talk about that.
And I guess the third theme that has been with us for a while, but is actually one of those that sticks, and we'll probably we'll see it next year and pro-probably in the next few years, DTV and television.
And that's becoming a very big thing, and I, I know from be in other forums that are not conferences per se, that it's definitely top of mind for a lot of people in the industry. Yeah.
I mean, it's interesting when you mentioned measurement, I had to like laugh a little bit because like I always had this joke that like if...
I've moderated a lot of panels, and anyone who's out there who's moderating a panel during advertising week, I'm gonna give you a secret. Anytime you're stuck, just say like, "Let's talk about measurement."
And [chuckles] it's an evergreen- Yeah. [laughs]... that will always, always be there. Yeah.
[laughs] And because ever since the beginning, I mean, this industry began with a banner ad on Hotwired that said, "Have you clicked this? 'Cause you will."
And measurement [laughs] has been-- They thought they solved the measurement problem with that, and I'm here to tell you, dear listener, they did not solve the measurement problem. Because it's- Yeah...
always a way to try to figure out who is contributing to the value that's created. And despite all of the data, despite the AI, it's still a challenge. And yeah.
And so a- and without being able to properly attribute and, and measure impact, you end up having a situation where it's like in basketball, like cherry-picking. Like people like to just hang out around the hoop.
So, so it's very-- I couldn't agree more. I, I'll even add that, hey, you know, it's a human need, right, to know as much as possible, to really get to the bottom of it.
What's interesting, and speaking not only within our space, also as an entrepreneur that worked on products and wanted to measure them, you collect so much da-data that at some point, and you hope for the data to give you the answer, right?
To give you that know, that truth. At some point, you have so much data that it's actually harder to even know what works and what doesn't.
And now, funny enough, I'm, I'm hearing a lot of talk around AI again, that basically AI can help us with all the data that we collected. So it's like we can't analyze all of that.
We can't figure out what's the answer from all this data. We might as well let the, the- Yeah... magical brain of AI to solve that problem for us. It's perfect 'cause it's a perfect person to blame.
It's not even a person. [laughs] You can just be like, "Oh, well, the AI told us th-that it was the best decision."
I mean, and we see this all the time in American football, like now anytime like a coach makes a, a crazy decision, they just say, "Oh, well it, it was analytics." And so [laughs] and it's like, well wait a second.
[laughs] You're the coach. Like you're getting paid like millions of dollars.
And I mean, obviously you use data in every single decision you do as like an entrepreneur in building your business, but you know the probably key decisions that you end up making, it ends up coming down to just taking a stand, and I think that's always important to keep in mind.
But a couple of the, you mentioned streaming, and I think video obviously is, we just did a, a video research report, and the big takeaway that I had from doing it, and we surveyed about a hundred and sixty-five publishers, was on the one hand, they saw video as a big strategic imperative, okay?
And then on the other hand, they said, "Eh, it's not, it doesn't match up as far as where the revenue is today." They see that's where the industry is going.
Obviously, the amount of internet content that's being consumed that's video is incredibly high. TikTok won the scale era, okay? Like it won. UGC won. And publishers are having to play catch up. W-what do you see?
Obviously, you guys work with publishers in order to help them increase their video advertising. What do you see when you talk with publishers?
Do you see that dichotomy between yes, we know it's strategically important, but no, today it isn't like a giant part of our business? And I know it depends.
So, so it's a complicated- There's a long preamble to- It's a, yeah, no, but it's also a complicated-- We're in a complicated situation where there is definitely a degradation of revenue that comes from this place.
So if we only look at on the monetization, on the revenue side, video revenue is great. It's the type of revenue when you look at the publisherThat is efficient.
Essentially, the real estate for value is extremely efficient. Uh, you don't need to place, uh, 10 banners, five banners, three banners to earn the buck. And users are also very used to video ads, right?
When I'm watching television, there are video ads, when I'm watching TikTok and Facebook and, and on different publisher websites. So, so it makes a lot of sense on the revenue side.
Also, the w- and, and you've mentioned the trend, users also are really interested in video. Not only in watching video, also creating video. So video is becoming a format that is very popular.
I can't see publisher not going after videos in the next decade. Okay? Not to say that, by the way, people like to have these prophecies. The article is dead. The radio is dead. [laughs] Here we're recording a podcast.
Email. Email's been dead for the last, like, 20 years. Exactly. I send a lot of it. It's still alive. Yeah. Yeah. [laughs] So I think articles are here to stay, text is here to stay.
I wanna consume that format as well, but publishers will need to adopt video. The challenge right now is the cost of producing videos.
So the revenue is there, and the publishers that we work with vocally say that this is their biggest line item when looking at the advertising part of their PNL.
So that definitely works, but the cost of opening studios, recording videos, taking the risk, right, and also having that expertise, I think that's where the challenge is still very much felt.
And we split the world, we see the world, and I hope that to change into publishers that are more focused on video content and are doing that because it's a good way to engage users and convey their message in that format.
Mm-hmm. And definitely revenue comes with it. And publishers that are dipping their, uh, toes in the water or even diving in, but more on the revenue side.
But definitely immediately, a month, two, three after, they're starting to talk about, hey, if I see the revenues coming from that activity, I also...
It makes a lot of sense to invest in the content and editorial part of it. Yeah.
The last thing I'll say about it that I think is an opportunity, you know, I've been talking with publishers about that 'cause you mentioned UGC. Mm-hmm. I think that's a big opportunity.
I think you have a lot of people that create fantastic content that all of us... I'm addicted to, uh, Tok, so- That's why I don't download the app. It's- I know I'll be addicted. Yeah. Oh, okay.
[laughs] So it's fantastic- I don't have so much time... it's fantastic content. These people aren't getting paid, and publishers are in need of content. I think there is a room for collaboration there- Yeah...
and I think publishers should, uh, definitely do that. Yeah. I, I like to joke around that UGC won in some ways, and, and it's such an old-fashioned term, UGC, that's why I like to use it, because it dates me.
But no, because there was always this divide between what was known as UGC and, like, quote, unquote, "premium content," right?
And basically, the production values have met in the middle, and I, I really think that the pandemic accelerated that because once cable news was on Zoom, the jig is up at that point, because- Yeah...
it's hard to tell the, the difference.
And the reality is, I think this other podcast I do, and my partner Alex, uh, Schleifer says, like, you either want to like your cost to be zero or you want it to be, like, millions, and the in between gets, gets crunched because it's not, there's not that big of a difference.
And expectations have changed. I mean, you can open up... I open up Instagram, and I'm in some kind of, like, Pomeranians, like, segment. [laughs] I've been in it for the last month, and like- Yeah...
two hours are gone pretty soon, and that comes from somewhere. And so I think it's a big challenge.
One of the things that we found, just to back up what you were saying, we asked these publishers what their biggest challenge was when it came to realizing the opportunity that they see in video, and it was resources.
That was by far the one that was chosen. But let's talk a little bit also about consumer ex- Would it, wouldn't, wouldn't that be also a true answer to probably a lot of other questions when asking publishers, right?
I mean, it's quite, uh, hard times, and I think they're very smart about their resources and but, yeah, I think- There's a hangover, right?
I mean, there's also a hangover from within publishing organizations from betting too much on video and creating video, and it was the field of dreams. Yeah. Pi- pivot, pivot to video. I'm, I'm dal- dating myself.
I'm, like, quoting movies from, like, 1989. [laughs] Whatever. Yeah. But like, if you build it, they will come. Yeah. And that they sort of came, but they were from Facebook, and Fa- that was like two seconds each.
[laughs] So they didn't really come. But, you know, I think that is, like, a factor.
People don't wanna get burned, and I think when you think about other, quote, unquote, "incremental opportunities," there are other opportunities that don't require as much risk, right?
Like, the reason I think a lot of publishers went probably too far into commerce, which is really affiliate, was because it's easy.
Like, I mean, you just hire someone to do a gift guide, and you put some affiliate links in. I mean, I, I know it's a little bit more complicated, but it's not- And may- You're not betting the farm.
So, so yeah, no, so it's, it makes sense. I'm, as a user, right, as a consumer, as a reader, it makes sense for me to consume also that sort of content that the separation doesn't make sense. And also- Yeah...
the same for video. No one needs to pivot into video. People just need to adopt, and it's fine to do that in the right pace that is true to your business with risk management.But just get in there, get in the game.
And one thing that is different today, you said publishers were burned in the past. I absolutely agree.
I think one of the big differences is that publishers unfortunately went after these pivots, these big decisions, because someone else either told them directly or indirectly that will be good for them.
Yeah. And I think now, twenty twenty-three, publisher doing video is not for anyone else, it's for themselves, it's for on the website, potentially opening, uh, a CTV apps for themselves again.
So it's about them and their brand and creating real engagement and real audience, loyal audience, as opposed to before broadcasting it on other platforms. Well, we'll say Facebook. Let's just say it.
Yeah, no, the pivot to video was really a pivot to, to Facebook. There's like a- Exactly... old South saying, "You gotta dance with the one you brung."
And publishers during that era, they brought Facebook to the party, and so they had to dance with Facebook. And when Facebook decided that their priorities were video, then publishers' priorities became video.
And when you lose control of your distribution, you lose control of your strategy, I think is a big sort of overall theme of this podcast.
But I think publishers can get it back, and I'm hopeful that they can in this new era.
Uh, what I notice with a lot of publishing companies now that are coming up is very few of them that I talk to are saying, "We're betting on display, just static display. We think that we're just gonna..."
Outside of maybe the messenger, but even then, I think video has to be part of the arsenal just because you get way more money for a video ad than you do for a regular display ad.
But I think the question ends up coming down to context, right? Is a lot of publishers, people are coming there for better or worse, the one that they brung was text.
And so how d- how do you see publishers squaring that consumer expectations part? 'Cause I think, like, people are used to video all over, I feel like now.
But I wonder how you see publishers squaring that expectations of most of their output is text, but then they really want video at the end of the day, and they want video ads. Yeah. So you hit the nail on its head.
I think that's, uh, when, when you take that into account and also the lack of big library of video content, then definitely that's the challenge. The publishers we work with definitely think about it.
We've been doing it for years, obviously, but the first time that really there is a whole big strategic meeting of maybe we should treat video differently and not just lay it in an article, you know, at the top, try to find the most relevant, uh, content, is now when everyone talks about vertical videos.
'Cause it's very obvious that a vertical video almost needs an... And maybe it's because we're used to that sort of experience on, on the social platforms.
But it's very obvious that it needs special treatment, and you can't just shove it. You can't just inject it anywhere.
And we're in discussions right now of, and again, it's, you can almost guess, but from having dedicated video sections to having a sort of a repeating experience, potentially on every page, uh, that almost encapsulate video that says instead of trying to weave text and video together in a new way, how about we do both, but we give them the respect they deserve?
And I think that's a big change, and it's very early days for that.
But it will allow publishers to really play in the video game all the way, both from having, we spoke about two hours just gone because you opened, uh- The Pomeranians. Yeah... Yeah, yeah. [laughs] The Pomeranians.
So I think that's what publishers should aspire to, to get you in that zone where potentially you might have came in to read something, but now you're in that sliding, uh- Yeah...
swiping- Who do you, but who do you think does a good job of it? At the moment I think everyone is working on it. I can't point at someone that nailed it. These things take time.
It's just very complex and, you know, we haven't touched it. And, and if a publisher needs to take into account both production, product and development, monetization.
There are so many aspects to, uh, take into account, it makes sense that it will take, uh, some time to figure out and, and really nail it.
But I'm very happy and humbled to be part of that 'cause I think that will shape the internet, and I think without going too much into the philosophy, it's very important to keep the internet open for everyone to be able to play in.
And as much as I enjoy the two hours on- The Pomeranian.
[gentle music] No, I think that's a great point because it's one of those things that a lot of times we take for granted, things that have been with us for a long time, and it, the open web could go away.
There are a lot of challenges. There have never been more challenges to the underpinnings of the open web. When you look at the degradation, like you mentioned, a display was always the workhorse of the open web.
And then you combine that with what is going on with the platforms. Facebook is not sending nearly the kind of traffic they used to. Google is not working the way it used to be.
And then, oh yeah, by the way, AI search is coming, and that I've, I haven't heard anyone make the case that will result in more traffic to publishers.
SoI say that this is a more with less era across the board, and publishers are gonna need to f-figure out ways to make more revenue with less traffic.
Now, the only way you do that, I think, is you either quadruple or quintuple the number of ad units you have on a page, or you figure out ways to make more money with the inventory you do have and the audience you do have, right?
Like, I don't know what the o- I mean, you can put everything behind a paywall, but I think that boat has sailed. Yeah. How much fun is it today in, in television, right?
That you have [chuckles] so many series- I don't know why I can't find any football games. I don't know. [laughs] I'm like, this is my Andy Rooney segment. Like, do you ever notice? It's, looking back, it...
That would be a very logical prediction to say, you know, it's only gonna get worse, and it's also good to work under that state of mind. But I think also constraints develop that creativity.
And one of the things I think publishers should definitely do is start adopting more technologies that can help them, and we can touch- Yeah... bigger things in the industry and how we...
that demand side can help as well. But I think publishers should become more technological, and that will allow them more freedom.
Whether it's, and I don't think ev-everyone will turn into a c- subscription-based venues, but more syndication and a better monetization.
And I'm not biased 'cause XCo doesn't do display, but I'll say that I've seen quite amazing technologies come out to improve display yield, and I think publishers should definitely adopt those and not be afraid of those.
Yeah. Well, I mean, that's more with less.
Like, more yield with, like, fewer units, I think, is a way to go about this because, like, there's not gonna be as much traffic, so gonna have to figure out a way to squeeze more from the lemon [chuckles] if you will.
But give a, uh, if you double down, and I think that's what was, to me, very unfortunate in the past decade. Don't give out. There is a question. Don't give out y-your content- Hmm... for free.
Don't jump on every bandwagon of every new social platform, and start actively bringing what works from the outside to your organization. So when you talk about UGC, bring them in. Bring them in.
I can see many influencers that would be very happy to be part of big publishers and possibly get compensated much better than they do- Yeah... today on the platforms, and that's a sort of way to fight back.
And also, again, CTV, open channels, native apps, develop the apps. Now, it's all hard to do. So- Yeah... so this type of advice, it's, it's not easy to just say, "Yeah, let's do it," but I think it's a state of mind.
I think the state of mind that I'm encountering with a lot of our partners is very defensive.
It's how to do more with less and almost the opposite of what a startup would think, how to chase an opportunity rather than how to defend- Yeah... what I already have.
I think I, I get what you're saying because, like, there's a risk of having... And I think this happens in the publishing industry, is a scarcity mindset versus a growth mindset.
Like, I'm sure, you know, coming from technology, it's all driven by a growth mindset, right? And I think a lot of times in publishing, it's very easy to fall into the opposite, which is the scarcity mindset.
There's a pie that's getting smaller, and therefore, your slice is getting smaller, so, like, it's like, how do we get, like, a slightly bigger, smaller slice? And it isn't about, like, growing the pie.
I think overall societally we probably have a little bit of this. I've been thinking about a piece about, like, publishing's degrowth movement.
But one of the things I wanna talk to you about is you did a, a piece in, uh, Fast Company recently about the difference between, like, brokers and partners.
Uh, break that down for me 'cause I thought it was a really interesting dichotomy. So it, it definitely touches what I just said about technology.
To this date, a lot of the deals I'm seeing publishers do are transactional or deals that essentially real estate for money. That, that simple, that easy.
Definitely going further away from having more control and more opportunities into that defensive mode. I know I'm buying predictability, but I'm losing the upside.
I'm losing the, the, the upside in a very strategic manner. What happens to an organization that takes technology, that it adopts technology, there is definitely a bet there.
But very slowly, that technology becomes the new reality that you can build upon. So now going back, the term broker is essentially companies that definitely bring value.
By the way, not trying to color them in any negative way, but what the publisher gets from them is pure revenue, nothing else. No strategic upside, no way to build. They just get a check. That's the value.
That's the product. Now, this company, in order to produce the check, have built amazing technology. In XCo, that's the whole philosophy, is make a bet, pay the fees, okay? Pay the license fee.
And the reason is, it's not because it's easier for me. I think it's better for them. It's actually was easier, and we speak about it internally very often. It's so easy to just come with a number and get the deal.
But what is the publisher gaining from that? Uh, nothing. Honestly, besides that check, the... And it, they don't need to compromise on the outcome, okay? That's, that's... I wanna make, uh, things straight here.
Adopting technology doesn't mean you're compromising on potential revenue and the impact you're looking for.
It just means that you make a smaller or a, a bet that essentially or theoretically doesn't exist when you do a minimum guarantee or a fixed deal.But the upside is just incredible.
Now, about that, these minimum guarantees and p-pop that balloon. Even the Excel sheet is never what happens in reality. And I decided that the page user, not the page use, the geos are not the geos.
I thought the ti-- the dwell time would be higher, and all these small letters in the agreement, and you end-- the publisher ends up with a deal that they can't get away from that isn't paying what they expected, and also they lost the margins.
So I agree, and also in some cases, it makes a lot of sense. In some cases, you just don't wanna deal with it. Definitely video is not that case, and I'm happy to say publishers nowadays understand that.
So Tamir, I think the big question i-is how do publishers increase the pie? How do they get the yield up?
So one thing that you know that we've been developing and investing a lot of time on is a real yield that is machine learning based that does the following things.
A, it predicts the price that the inventory is worth for a specific user, meaning a user that comes in a few times a week, living in New York, now on their mobile, should get a completely different price than someone else.
More than that, having direct connections, and it ties to the brokers, means that the buy side is willing to spend more.
So it's not only the optimization is actually able to increase the pie, and we've seen that publishers literally got from the same inventory, same audience, same traffic, thirty to fifty percent more revenue without additional ads.
And I think that's without additional ads or more frequency and actually no bid density and all these type of terms that people talk about. Just pricing it right, choosing the right ads, and being consistent.
And I'll give an example, an analogy that explain why this works. The ecosystem is so complex that I can compare it to the real estate market. Let's take a simple example.
If you have one house for one million dollar and another house for three million dollars, and now you have a buyer, you have a buyer that has a million dollars and a buyer that has three million dollars.
It would be inefficient to let the buyer that has three million dollars to buy the one million dollar house because y-you'll be left with a vacant house that is now cost three million dollars and a buyer that only has a million.
That's an emerging character that relates to AI that happens in our ecosystem, that happens in the programmatic chains, meaning if you ask from the buy side for a four dollar ad, you're gonna get a four dollar ad.
You're gonna get, even though it's first price option, you might get a four and a half dollar ad. You're not gonna get a nine dollar ad. And it's not because the buy side is evil.
It's not because anyone is trying to reduce the price and so on. It's just efficiency. It's an emerging character of efficiency in a complex system. There is a seven dollar ad waiting there to be picked. Mm-hmm.
But you requested for four, so you're gonna get the four 'cause it's just more efficient. So prices is one example, but you can go even further, which we do, and say maybe a fifteen-second ad or a thirty-second ad.
The fifteen might pay a bit less, but now I can play two ads. So the sum of these two shorter ads would be bigger than the thirty-second ad. So you're saying that the, the publishers focus too much on price?
Is that- The, the publisher were told something that is not true, that if they just run an auction- Yeah...
and have the best price win, they are now done everything they could to optimize their inventory, and that is not true. I think that's the problem.
Problem is there is much deeper layers to go into that essentially allow the publisher to just grab again the right ad, same real estate, same density, no extra calls or things like that.
Not in the gray area, just in the pure technology-based solutions that the buy side have for years, okay?
For a decade, the buy side has built ML algorithms to buy inventory, and the s- the publisher is just running a simple auction, and the latest news around that was from a second price bidding to first price.
That's not news at all. The news is to really adopt technologies that allow them to increase the pie, and there is n-no question about whether it works or doesn't. Yeah. Okay. Thanks so much, Tamir. Thank you.
Thanks for listening. Thank you to Jay Sparks for producing the Rebooting show. If you have a podcast that you're considering making, you should check out Podhelpus and what Jay can do for you. Go to podhelp.us.
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