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[on-hold music] This episode of the Rebooting Show is brought to you by KERV Interactive. KERV is an AI-powered video creative technology that creates shoppable and immersive experiences within any video content.

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KERV is the only platform that uses machine learning techniques and AI to recognize depth, dimension, and objects within any video in real time, and more accurately than you and I.

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Using this technology, KERV can deliver simplified, automated consumer-first experiences that are dynamic and interactive.

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Recently, KERV launched the KERV Active Attention Index, which measures the quality of deterministic user actions as they engage with KERV-powered videos.

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What this means is that you can qualify user attention based on the time spent and the quantity of interactions across a video creative. How can brands, agencies, and publishers leverage this index? Well, I'll tell you.

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To better inform media buying strategies, smarter in-flight creative optimization, deeper content analysis, improved user experiences, and that's just a start.

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You can learn more about active attention and download the free guide by visiting KERV.ai. That is K-E-R-V dot A-I, or request more information by emailing attention@kerv.ai. Thanks so much, KERV.

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[on-hold music] What is your take on all these efforts to quantify attention? I feel like attention is the new viewability. I absolutely am fascinated with attention, right?

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So we've talked about an attention economy for a while. I don't know that anyone's figured it out yet, but I do know this.

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[on-hold music] Welcome to the Rebooting Show, Riviera Edition.

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I'm Brian Morrissey. This is day two of Cannes, although I'm recording this on the evening of day one. It actually kind of feels like day two. This is quite an ordeal here in the Riviera.

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We wrapped up the first day of the new attention economy at the KERV Café, and the major thing is that the mayor of Cannes did not shut us down. And so that is a big win.

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The following is a conversation I had with Kirk McDonald, the CEO of North America for Group M. We discussed the state of ad spending as the economy continues its strange trajectory.

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And a big takeaway is that Kirk believes that the shoe that many thought would drop in the first half of the year just didn't drop. But that doesn't mean it won't drop, at least in the back half of the year.

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And we also discussed what responsible media means in practice, and also why AI is unlikely to replace most jobs in ad buying. I hope you enjoy this conversation. [audience clapping] Thank you. All right.

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Now I want to bring up Kirk McDonald. It's been a while, Kirk. How are you? All right. Kirk and I go back a long ways.

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I think one of the first times, like, I was in the audience as, like, a cub reporter taking notes, and you were, like, at Time Inc. attacking ad networks. You've been on, like, all sides of this business, right?

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What is one thing publishers get wrong about the buy and the tech side? Actually, really great question.

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I think the publishers actually misunderstand the value of any single individual impression when you buy impressions across thousands, if not tens of thousands of properly.

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So as a publisher, you have to know and believe in the uniqueness of every single one of your impression, impressions, but that's not how the buyers view the world.

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And the platforms sit in the middle, probably too consumed with the thought that the enablement is really the magic.

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And ultimately, I think the buy side, to be fair, also confuses the fact that the scale of the buy and the efficiency of the buy trumps the individual engagement right back at the publisher level between one particular user and the content that they're looking for.

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So the translation is hard because we don't actually have a measurement currency that, that talks to all three different perspectives. Okay. So basically, everyone thinks they're more valuable than they really are.

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Well, no, it's not than they really are. It's in all in the context of the moment, right? So ultimately, this industry is about consumers and their connection with content. That's what the whole industry is around.

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And that content is either in the form of an ad message or this podcast, right? And that engagement between consumer and this content affords some really powerful things.

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It affords an advertiser an opportunity to steal attention for a little bit, and that's what they're doing. 'Cause see, the consumer wants the engagement with the content, and advertiser can jump in.

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Now, what's most important? Enabling the ad showing up, the fact that the ad underwrites access to the content, or the fact that somebody is trying to create optimization in the way they buy that?

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All are equally important, but they're equally important to different constituents. And the group does not really spend a lot of time trying to figure out how to talk to each other, which is the problem.

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Broadly speaking, do you think, like, the ad tech tax is too high? Broadly speaking, I believe that the tax on enablement is probably something that shouldn't be as high as it is in certain instances.

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And I don't wanna call it an ad tech tax. It's just all of the enablement efforts to make sure that the ad gets to the right place, right time. I think the dollars invested in that are a little bit still too high.

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And it's because we're still figuring out if all of this data and targeting is worth it. I think for a moment in time, we're over-targeted, and we're overly dependent on data.

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I don't think we've truly figured out attribution yet because we're still geeking out on, you know, onBut because we can do it and we couldn't do it two years ago or five years ago, then it must be cool, or it must be valuable.

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We haven't really figured that all out yet. Okay, but you don't call it a tax because it's this-- the enablement layer, right? Is providing a service. They're bringing, like, data.

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They're, they're bringing real value to a transaction.

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And the question is just, like, because of the measurement techniques and attribution, we're just not clear if the value that that layer is extracting is commensurate to the value that they're adding. Right? Exactly.

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And again, I don't want to sound abstract for a podcast. I'm trying to be as real as we can be. But here's a provocative thought for you for your podcast. Advertising was working before we used behavioral targeting.

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Advertising was working before we used data to inform where an ad went. It worked. It worked in a different context, moment in time.

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Did the ad-- additional layers of data and technology cause the ads to work better, or did they cause us to measure better? And I don't think we've ever decided which one's more valuable.

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Now, do I believe that data is the currency of advertising? Absolutely. I think it's the only way that you get through and cut through the clutter.

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Do I think there's tons of value associated with this requirement for the future? Absolutely believe that. What is exactly its incremental value?

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And it's gonna be some forms of it, particularly the more quote-unquote, personal forms of it, are gonna become just harder to, to use. Correct? Yeah, absolutely.

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So it'll be harder and harder for us to use, and maybe rightfully so, harder and harder for us to rely on personal information to be a signal that we-- you can again piggyback on.

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And I believe that for a while the cost is gonna still stay high on its usage. At some point that's gonna come down, but for a while the cost is still gonna stay high. Yeah.

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So one of the things that Group M has been pushing for is this idea of responsible media. I call it, like, sustainable media, but I actually like sus-- responsible. I might, I might steal it from you, too.

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Yeah, please do. Because it's, like, broader then, 'cause I mean, like, I think first and foremost, you know, this industry needs to be a sustainable ecosystem. Every ecosystem needs to be sustainable, otherwise it dies.

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And the pathway to having a sustainable ecosystem is one that's responsible.

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[on-hold music] First of all, by advocating for responsible media, is that like, by definition saying that the current system is irresponsible in many aspects?

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I think the language comes in addition to the fact that we have so much to invest. You have to be thoughtful about the fact that you want the ecosystem to last for a while.

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So in our mission statement, we say we wanna actually be responsible for shaping the next era of media where advertising works better.

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So if you truly are gonna say, "Look, we're thoughtful enough to recognize that being the largest investor of advertising dollars around the globe, we should be thoughtful about where we place ads, how we place ads, all the tools that we do."

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Yeah, that's the effort on our part. We're in no way turning around and saying the way that everyone else is doing it is irresponsible, but we can own responsible, and by responsible we can say, we care about journalism.

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So we wanna actually make sure that journalism lives on lot longer than our lifetime and our time in the space. We care about sustainability.

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How do we actually reduce the load, the actual carbon load that we put into the way we create advertising and deliver advertising?

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Again, all of that programmatic buying that is relying on all these server costs, what are the things that we're doing to make sure that when we use all of this targeting, it's worth it and we're not just keeping computers on for no reason?

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How are we thinking about brand safety? How are we thinking about data ethics? All right, so we put those two words together very intentionally.

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Just because I know something or can ge-- grab information, should I use that information?

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Or even if it's legally compliant, have I created a creepy experience for someone who now sees an ad that they're wondering, how did that ad know to find me?

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And then the last pillar of what we do is DE&I, really again centered around this idea of what do we do to also make sure that all of the underserved, underrepresented aspects of the ecosystem are given equal opportunity.

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And in some cases, we've got to be very intentional here, put dollars into diverse creators, diverse-owned properties that would not normally have the same opportunity that others do.

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So it isn't an effort to criticize others, but it is an effort on our part to own, own our place in the ecosystem. Yeah. So tell me why, just to be totally blunt, this is not like a zero interest rate policy phenomenon.

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Because, like, we saw a lot of stuff, like, you know... Like you've been through a lot of cycles, you know, when times are good, you know, it's like, yeah, this sounds like a great idea and stuff.

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And when times are less good, it's like, where's the performance again? I mean, we see this with ESG, right? Like, the backlash to ESG is happening. I didn't think, like, that would happen.

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I'm like, who, who's against ESG? Yeah.

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So I actually am a believer that everything that we've put in our responsible investment framework and all the things we just talked about are, are ultimately very valuable and are the kind of behavior that leads to a, a longer-lasting ecosystem.

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At some point, you've got to replant the seeds. You just can't keep pulling out of the ecosystem without, without paying some consequences down the road.

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So yeah, I, I believe that all of the things we've done are working well.

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And for clients who have actually been very interested in us doing this, we've been able to show and demonstrate the direct value between doing and changing these behaviors, both in terms of either reduced costs or greater performance in their media strategies.

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So for clients that sayI'm on board with this. I want-- Let's just say, start with journalism. I wanna support journalism. It is a social good. We need to have sustainable systems for journalism.

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It shouldn't be a luxury good. It shouldn't all be behind paywalls. We're like, "I'm on board with this." Can you, like, actually measure how much more money is now going into, like, news publishing as a result of that?

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I think that we... I don't know I can measure how much money is going into news publishing broadly. Yeah. I can tell that we are-- we know how many more dollars we're putting in to news environments, and here's why.

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So you are. So it-- you are definitely spending more on news environments than you were before.

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We have clients, individually clients, who have realized that because there has sort of been this sort of run away from news, the environment's now prime for advertising to be a little bit more standout, right?

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So where there is not a lot of noise, but there is a lot of attention, you can actually stand out very well. It isn't that news properties are being read less.

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They're, they-- And again, in a digital space, you buy, especially in digital space, you buy only the impressions you want to buy. You have an ability to actually, in those environments, stand out very well.

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Same thing in the case of DE&I, where you know and you've intentionally bought into properties where you know your audiences read the information, consume the information, watch the information with a different lens because the context matters.

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All of this has been, been the kinds of things that our clients are holding us accountable for saying, "It's not just that I wanna do it for good. We have to do it for business."

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So on that specific, are clients following through?

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Not that clients would ever say one thing and then do another, but are they following through on the pledges they made after George Floyd's murder to actually, you know, 'cause I hear mixed things, you know, and it really depends.

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Some people say, "Oh, it's really hard to spend on Black-owned media." Do you actually see the money moving i-in the direction that people said it was gonna move?

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So per the statement you just made, both can be true, so people are spending more, and it is hard to spend on Black-owned or, or other diverse-owned media.

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Both can be true at the same time, so let me walk you through how I think about it, right?

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So in terms of spend in those environments, because those are s-scaled, smaller environments, often they're not as big as some of the places that you can buy, the infrastructure has needed to be built up and needs investment for us to, one, be able to plug in to get the kind of reporting accountability that we've needed to have it be an equal-ish comparison to traditional places that you've been spending for five, six, seven, eight years.

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That's just the nature of any new property that you put on, and it means that it is difficult to spend in these environments.

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At the same time, we went out and invited some, at the start, some thirty-five-ish clients signed up for this. Now we have over seventy, so just by doubling the number, we know that more dollars have gone.

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All of those clients said, "We already are buying the audiences," or, "We thought the audiences were important, but now we are concerned that we also invest in the creators and that the, the owners of these properties are, are also getting a share, very intentional share."

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And we've seen that number go up easily.

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I think we've been public b-- in saying that that number's gone up by significant increases because, again, two percent of the advertising dollars of some fifty to seventy-five advertisers adds up to a meaningful amount.

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Yeah. But we've, you know, with individual properties, we've tripled the dollars they were getting before.

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[upbeat music] So we're right at the midway point of the year, and I think it's, like, safe to say it's been a weird year so far because the economy has mostly held up okay.

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You know, inflation is still a problem. You know, ad spending typically tracks how the economy goes. When people get nervous, they pull back on ads.

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But overall, from your report, but I don't wanna put words in your mouth, like, what do you think the top line is from the first half of this year?

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And then let's flip it into, like, what we should expect for the second half. Sure.

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So I, you know, I think I characterize the first half of the year as the, you know, the, the thing that never happened that we were worried about, so we're believing that the economy's crash didn't crash, and what was supposed to be sort of this controlled rapid descent is turning into a pretty smooth landing, smooth-ish landing.

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I do think that there has been nervousness, though, and that nervousness caused, you know, behavior that anticipated the crash, and, and that behavior was to hold back.

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So over the course of the first half of the year, though, it's actually held up, and we've seen the dollar's still there.

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I don't think that we're seeing the kind of fulsome growth that we may have thought coming off of '22, and it's to be seen what happens in the second half, and I still think there are, there is caution around how clients wanna move forward just because there's still some uncertainty.

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Okay. So you- Not about the economy, but still uncertainty about the space. What, what's the uncertainty for you here?

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I actually, I think individual clients are looking at whether or not they're going to see the performance in their individual piece of business, so... But again, the thing we were worried about didn't happen so far.

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Is digital advertising itself, like, still a growth industry in that...

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A-and what I mean is, like, if we go back to a nearer time, Inc, like, the Mary Meeker slide was being brought out, like, you know, every single time. The LUMAscape was just a few logos. It was a simpler time, really.

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[laughs] But, like, you don't see the Mary Meeker slide anymore because it happened. But it also leads to, you know, we talk about the post-zero interest rate policy era.

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It leads to a question about this industry, in particular the digital side of the industry, not being where the share shift has happened. Like, they've taken a lot of the share shift.

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Or is there still money that is going to be coming out of traditional channels and going into digital channels?So more than fifty percent of what we do now is digital.

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I don't know that it is a sheer shift because I think channels are converging. All right?

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And I do think that, that traditional TV, for example, that gets done in the upfront, while dollars that are being done in the upfronts are continuing to be less because actually there are fewer and fewer people watching that way.

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That is turning into sort of a video converge TV conversation with almost all of our partners, because every single person that we'd normally have that conversation with is also doing a streaming services, and streaming services showed up very robustly to the upfronts this year.

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So we're still having those forward future market conversations. We're just having it with different players.

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So I don't know that we're looking at it more so as a from to as much as this is just the evolution of the way we'll operate and buy media in the future.

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So just to stay on, like, CTV, I mean, 'cause that was one of the gr-real growth areas, right? There's a lot of opacity in that. Not that the programmatic world would have a lot of opacity, but there's a lot in there.

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Like, so when a client comes to you and is like, "Look, I know with traditional TV, I know that the, the audiences are getting smaller, they're getting older, I know the GRP is not perfect and all the rest of this stuff," but seriously, like, who's watching this, Kirk?

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Like, I mean, like, I get it from Netflix, and I get it from Hulu, but a lot of this other stuff, like, how do you assure them that they're getting what they're paying for?

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So that's-- it's too broad a question to answer that way. Like, I love the question. I know, know why you a- I know exactly why you asked the question that way, but it's too broad to answer it that way.

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Increasingly, we need better measurement tools, and they haven't m- all matured.

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They have a lot of promise, and we have some old measurement tools that need to improve and, and come all the way forward, and the new measurement tools all have some unique flaw in them individually, and none of them are scaled.

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And it... We're in a weird moment in time where if you think of the challenge of a buyer again, again, this goes back to your earliest question, which is how we don't speak to each other.

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A buyer is buying across multiple properties, so even flawed old tools are easier so that I can actually look backwards and use it to predict forward.

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New tools show up, and they don't have any history to them, and they also show up with some flaws, and it begins to be very, very difficult to buy into all of these new CTV services without having confidence in the measurement tools and the currency- Yeah.

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-to describe the value of what you're getting. But now our clients overall, I know it depends, is the money moving into CTV moving from, like, linear TV, or is it coming out of what I'll call traditional digital?

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It's not either/or. It's both.

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So clients that have been buying traditional digital and believe that you can get a better value for it or a better experience for the user are actually putting dollars there as well as, uh, we are still seeing some old traditional TV dollars get bought this way as well.

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Okay, so the other big growth story I believe from the report was retail media, and it's a good question. What is it?

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Because, like, what I wonder is, like, it's advertising, but a lot of it is, like, a different form of, like, advertising. I mean, it's closer to the shelf takers than it is to TV ads or something.

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Where is the money coming from that's moving into retail media? Is that coming out of traditional digital too? So I like the language you use, right? As shelf takers, right?

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So there has always been dollars that were specifically designed for in-store, you know, whether it's an end cap or those types of promotions, and I think there are dollars that are brand new to advertising that were those dollars that were promoting in-store activities that got held not just at the corporate level of some of these companies, but individually at the product brand level, and those dollars have showed up.

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I do think that you have some digital dollars that are also actually going over, and it's-- Sorry that these questions all are not all either/or. A lot of them are ands. Yeah.

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So yeah, those dollars are also looking to make sure that they're supporting now an environment where you know that shopping is taking place. You know that someone's already in that mode.

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How can I either support products that go along with it, what this person is seeing, or increasingly we're seeing dollars now where someone's saying, "Look, I know who you are because of some of the things you've bought, and the environment is sharing that with me, and because you match that profile, here is something that is unrelated to what you just bought- Yeah.

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-but still something that we think could be interesting and valuable to you."

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So the accountability of those dollars over time is, has to be measured, and I think the big ask we would have of retail partners primarily is don't just show me reports that say, "It's working."

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Show me whether or not it, how much more it's working than what was happening before. Yeah. Because in every single retail environment, the person that's there is there already doing purchase activity.

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[gentle music] So an ad has already worked on that person.

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When you add advertising in the environment, what is the lift that I'm getting over what has already been done as the foundation to bring someone into that environment?

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And that's more work needs to be done there to make sure that we can- Yeah. -get that kind of- 'Cause I think that's the question. It's like regular content publishers really can't compete with retail media, can they?

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I mean, 'cause, like, the amount of data they have, and we've seen this a lot, like, obviously, performance is the biggest part of this industry, and there's a lot of people around the hoop, like, right when it gets down to the sale that wanna take credit.And the people who were creating that demand oftentimes, well, at least from their point of view, do not get enough, like- Yeah, it's the-- We used to-- Well, remember we did the research on last click attribution, right?

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Yeah. So now this is a version of that, right?

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I'm already in shopping mode, and I'm in an environment, and the data that a retailer can share there is a different type of data, different signal than what you could get from a quote-unquote traditional publisher.

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So I don't know that they should be competing, and that's why I don't think these are either/or questions.

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One of the values I think we offer as an agency, one among many, I hope, is that we're able to look across many more categories, many more partners, many more types of advertisers that begin to come up with the kind of information that you see in something like this year, next year report.

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But we then carry that into a more detailed conversation with our client partners to help them understand the incremental lift. Like I said, it isn't just that you can show bet, quote-unquote different reporting.

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It's not always better, just, m-you know, more detailed reporting. I think it's really important that we show the value that, that the environment has given as incremental over what was happening previously. Yeah.

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What do you-- what is your take on all these efforts to quantify attention? I feel like attention is the new viewability. I absolutely am fascinated with attention, right?

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So we've talked about an attention economy for a while. I don't know that anyone's figured it out yet, but I do know this. We're, we are, we are battling an impossible equation, right?

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So for the consumer, who I think is the beneficiary right now, for the consumer, there's more robust, high, very, uh, you know, high-quality content for me to consume all the time. The podcasts are all getting better.

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All the on-demand or streaming video is better than it's ever been and keeps getting better.

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Stories have to get better, even as people think about using tools like AI to supplement and support some of their content creation, that will get better.

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It creates the perception for a consumer that they have a near infinite choice of things to do.

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Not always empowering for anyone who wants to sit and figure out what they're gonna watch tonight as they sort of flick through the, the, the menu of, of their favorite streaming service for thirty minutes- Yeah...

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you know, not being able to make a decision. But this idea of near infinite information, near infinite content, and finite attention is not gonna work.

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So I think it just keeps putting pressure on content creators, more pressure on marketers and advertisers to make sure that they create more valuable engagement, more valuable relevance in every single one of those impressions that they take advantage of using.

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And that's a good thing overall at the end of the day for the consumer. Yeah. Final question, then I'll let you go is AI. You mentioned it. It was actually the first mention. It came off the bingo board early.

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So how many people are in Group M North America? Like twelve thousand? Eleven thousand? No. Group M North America? No, we're about seven thousand. Seven thousand. Globally, we're at thirty thousand, something like that.

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Okay. How is AI going to change what Group M does over time? And does that organization become, like, two thousand people?

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So AI over time used sort of very responsibly, another place that we wanna put responsibility in front of.

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First off, these large language models version of AI that we have today are, I think, tools that can complement work in the hands of reasoned, thoughtful practitioners.

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And I believe that this tool, the version of generative AI we see today, is complementary to people that are already very knowledgeable, very experienced in the work that they do and can use it to actually increase their productivity.

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That increased productivity should actually mean that we can generate a better quality work product overall, and we will keep iterating from there.

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I believe it will create more opportunities for our marketers and advertisers, and today we're looking at it, making sure that our teams are figuring out how to become more proficient at using it.

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If in some future, does it mean that some of the tasks we do today don't require as many humans? Again, both can be true.

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We cannot need as many humans to do the tasks we do today, but need even more humans because this has created new opportunities. But it's like programmatic, right?

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Like, I mean, programmatic was gonna, like, wipe out, like, the need for media buyers and sellers. Let me tell you, there's a lot- There's-... of liquor I can. [laughs] Exactly.

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It's just we, we, we kinda, you know, aggrandize these things, turn them into this sort of bigger narrative that just isn't true about it. That's all. Awesome. Kirk, thank you so much. Appreciate it.

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Yeah, great to see you. [upbeat music] And thanks so much for listening. Thank you to Jay Sparks for producing this podcast.

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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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