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What I Saw Happen -- Q3 2018

Overalll -- Hire more analysts and put more effort into training

  • Benchmarking is critical, we need more of it in the ecosystem. 

  • Benchmarking allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance

  • Still hard for Publishers, Agencies and Ad Tech to hire quality talent; if you can't hire the talent supplement them with top notch hands on consultants

  • Every company should hire more analysts, please

  • Train everyone, then train them some more  For Direct Sales in 2018, I am seeing a tale of two cities, 2018 seems to be good for some new breed (7-10 years old or less) and video publishers but not so good for existing/traditional publishers

  • Most companies spend so much time living quarter-to-quarter/month-to-month/day-to-day and very little time thinking about next year, and more importantly, the next 3 to 5 years

  • Many companies we know and love that are not called Google, FB, Amazon, Netflix, Amazon or Microsoft are consistently decreasing in top line revenue, welcome to a world of uncomfortable yearly expense cuts

  • Recurring revenue streams win -- Amazon Prime is the best example of this at $119 per year, Salesforce as well where payment is made upfront  

  • AGGREGATORS/PLATFORMS -- Companies with the best first party data continue to thrive YouTube does a much better job of generating revenue for publishers than Facebook doesOath CEO departs amid lackluster performance -- hopefully that change helps the organization regain what it could beAudio (e.g., Alexa and Google Voice) is most like the Facebook news feed we should call it the audio feedAudio monetization will be huge one day, I just have no idea how  When will a VC write a check for $1B and build a search engine from scratch to compete with Google? Or is that just impossible in today’s market?Snap hired a CMO to run sales -- this is what happens when you have a self-serving consultative sales organizationAmazon hired my friend Arianne Walker as Evangelist, Alexa Automotive at Amazon -- best title everOne of the Murdoch’s will end up running Disney after IgerSnap probably went public too early, was not ready and made many mistakesOwning a news organization is like owning a Sports franchise -- high level indirect influence like the recent Time Inc purchase by Marc Benioff and, of course, Bezos buying the Washington Post

RETAIL -- Amazon is linking Retail and Advertising like never before 50% of retail consumers start their search on AmazonAmazon has 49% of all US digital retail sales -- amazingVoice is easier to interact with then the screen, just a matter of time until it is monetized -- manicure your orders via Voice may be nextMalls go to a We Work model -- short leases with more pop up storesClick and Collect is critical for grocery -- Walmart and Amazon win long term, Whole Foods high end and Wal-Mart low endRetail still needs to make big bets in technology and TRAININGMore mergers in CPG and/or retail to fight the growing power of Amazon    Are Amazon prices too low, do they stop competition, what happens if they eventually raise prices and we are all stuck since there is no competition
PUBLISHERS Digital, TV and Print  -- OTT is still hot Publishers Direct Sales organizations need to change to keep up with the marketing ecosystemPublishers need more analysts -- replace one highly paid salesperson with 4 analysts at the same priceQ3 Direct revenue for traditional media companies is down again looks like Q4 will be down as well -- each Quarter is down 5 to 10% Year over Year.  What to do with your Direct sales team? Consolidate? Reduce? Hire more senior people? Only go after large deals? Go 100% programmatic? Can't maintain status quoEvery publisher should be organized and/or have VERTICAL/CATEGORY expertisePublishers need clean programmatic data and benchmarking dataFrom David Carrie of Hearst -- the degree of difficulty of running a money losing business is zeroMost publisher sales people hate using SF this needs to changeShould pubs think differently about the advertising  experience that subscribers vs non-subscribers receive?Connected TV is a $1 billion advertising revenue business for Hulu and $250 million for RokuThe frequency of ads on Hulu is horrendousConnected TV usage is huge and growing -- 180M+ in the US, most popular are Smart TV’s Roku and Amazon Fire plus some game consoles   Podcast advertising is tiny across the 70 million monthly listenersPrint needs new ad products to better measure attributionI don’t believe this about Print, but according to emarketer, there is a very pessimistic outlook for newspapers and magazines. TV  radio and out of home advertising is resilience but Print is notNon TV based Video is very hard to fill and monetize across the board -- 40% is goodToo much CHURN in the Branded ContentBrand Safety becomes critical as too much content is mistakenly classified as inappropriate in order for the ecosystem to be ultra conservativeAccording to LinkedIn Vice has over 3300 employee that’s just crazyOTT is the future of television advertisingOTT has 6 to 8 minutes of advertising and traditional TV has 16 minutes
MARKETING -- Time to differentiate yourselves    AI and Machine Learning will underpin all of marketing in the future, the large Marketers will have a significant advantageSmart Marketers want to deal with small niche agencies that specialize and are nimble, not the holding companiesMarketers need to become storytellers, some are well on their wayAdvertising is not allowed on smart speakers but sponsorships are, when do we see some true form of advertising on these devices?Many DTC brands have never worked with an agencyDTC spends marketing $’s wisely and are very disruptive to traditional brandsAlways test new initiatives, like radio, to see if they move the needle. I have heard that radio works on many occasionsOTT is hard to buy If you are a marketer, trying to figure out how to unify a buy across all forms of video, whether it may be linear, addressable, OTT or digital, it’s very difficult -- we need a unified, standardized way of being able to plan and buy media this is a HUGE opportunityMost DTC companies are not engineering led but product driven and they rent the complete supply chainAttribution modeling still suxMarketers still use agencies for Radio and TV buyingDTC can outsource everything but customer data and relationship managementNo real Chinese global brands -- is this an opportunity for one of them?
AGENCY/CONSULTING HOUSES -- agencies need to rebrand themselves Agencies should change their name to marketing consultants. The agency name is toxic in the industryIPG’s  Acxiom acquisition is a sign of desperation for the agency worldNo talented individuals want to work for OLD school agenciesAgencies are happy with having flat revenue YoYAgencies like Mediacom, are building more tools on top of the marketing and media buying technologies of Google, Facebook and Amazon -- they need to do this to surviveAll holding companies are looking to grow via acquisitions not organicallyHolding companies just really hold marketers backAgency should not be in the advertising business but should be in the engagement businessAgencies are trying to move from services business to solutions businessAgencies need to use the arrival of the consulting else’s to push for more innovationAccenture interactive is growing at over 20% in the last Quarter, though unsure of the revenue figureWhere is KPMG?

AD TECH -- Stop fighting with each other and band together to fight the Triopoly The only company that uses SalesForce well is SalesForce. In fact, SalesForce is amazing at getting in person meetings (activities) by whatever means possibleMeasuring video everywhere is critical for the ecosystem someone needs to step up and do this rightHistorically private equity looks at later stage companies and tries to squeeze as much cash as possible from the company. In ad tech today, they think they can resell to strategic buyers like Facebook and GoogleCTV is still growingGDPR screwed up all ad tech company roadmaps in 2018Prebid is really maintained by Appnexus engineers; what happens when the AT&T acquisition is completeDirect correlation is finally happening between brand safety and programmatic CPM’sNielsen or Comscore should acquire an exchange to bring in more raw processing powerAs I said before, Appnexus is going to benefit and will have a great deal more demand flowing through them) and they are getting more resources for engineering talentBet we will see many AT&T and DirecTV ads on CNN.com very soonI am currently working on an Ad Tech OMS platform that is optimized for Firefox, yes, Firefox?  Unintended consequence of a self-serve DSP is more fraud in the ecosystemAd tech Conferences starting to finally shrink. DMEXCO, Cannes and CES as examples ======================================================================== ======================================================================== ======================================================================== Bonus 1 -- Breaking up the US based technology triopoly, the simple version. This is a piece to facilitate conversation. Though someone should FORMALLY hire me to go deeper. FACEBOOK -- Divest of Instagram and WhatsAppGOOGLE -- Divest of YouTube, ADX, DFP, Google Maps, Waze, Chrome and Android. Additionally, need to find a way to have a  Google Search competitor -- though not sure how  AMAZON -- Divest of AWS and Amazon AdsMICROSOFT -- Divest of LinkedIn, let it compete on its own   APPLE -- Not sureCHINESE TECHNOLOGY COMPANIES -- Not sureSNAP/TWITTER/COMCAST/DISNEY/AT&T/VERIZON -- Leave them alone and let them try to flourish in this new world though adhere to the new standardsFUTURE ACQUISITIONS -- Don't allow these companies to make any acquisitions for at least 5 yearsPLATFORM/WALLED GARDENS --  License identity data to trusted 3rd parties or an open standard, especially publishers who are strugglingDIGITAL ADVERTISING -- Only allow verified advertisers who need to go to a physical Store and sign up with a SS#. Non US based companies cannot advertise in the US unless they send someone to the US for verification.   STANDARDS -- How these companies monitor and police content on these platforms needs to be figured out in more detail. That is an extremely complicated task.UNINTENDED CONSEQUENCES -- This is CRITICAL. We need to think more about the unintended consequences of these ideas just like GDPR ended up helping Facebook and Google. Biggest issue may be that this allows the Chinese tech companies to thrive in the US ======================================================================== Bonus 2 -- Analysis and Reports for all Publishers with a Direct Ad Sales team to complete   ANALYSTS -- All publishers need to immediately hire more sales analysts (see magic charts below as an example of what to build). You can probably hire 3-4 analysts for one highly compensated sales individualREPEAT RATE -- # of advertisers that are running in a given Quarter divided by those advertisers that ran last year; should be 70-80%+, I like this KPI better than CHURNCONTRIBUTION MARGIN -- All publishers should be looking at contribution margin and know the fully loaded cost of running a Direct sales organization; including Sales and Sales commissions, Content Creation, Collections, Office Space, Account Management/Sales Planning, Ad Product, Finance, Billing, Marketing, Project Management, 3rd party costs like data and verification services, Ad Ops, Salesforce, etc.  Q4 2018 REVENUE FORECASTING -- When you are forecasting revenue for Q4 please look at Q3 of 2018 and Q4 of 2017 to see how they ended. I am seeing some instances where revenue does not grow once we hit week 5 of the current Quarter, mostly due to custom content slippage. Also, forecasting should be an Ops function not Sales. Sales should focus on Selling. Data should be looked at daily, 7 days a week       2019 REVENUE FORECASTING -- Please be conservative, under promise and overdeliver use as many different methods to forecast the business. Look at the business quarter by quarter  WON, LOST AND CREATED -- Religiously look a opportunities won, lost and created every day and every week. Distribute to Sales and Ops.  Make sure the data is accurate and see how the ops are impacting revenue   ======================================================================== BONUS 3 -- All publishers Sales Leadership should think about the following AD SALES ORG STRUCTURE -- What does the Direct Ad Sales org structure need to look like next year, status quo is unacceptable. Does the org need an industry/vertical expertise/focus? How many Direct sellers do you really need? Does sales compensation need to change? All commission perhaps? Long tail vs key customers how do you prioritize? Minimum deal size enforcement? Less seller to focus on bigger deals and have the small advertisers buy programmatically?AD PRODUCT -- Complete analysis of what Ad Products are working and what are not working.  Focus on opportunities that are won and lost and most importantly repeat business. Reduce the amount of ad products to make it more manageable. Make sure Ad Products have a measurable outcome.OPS LEADERSHIP -- Every sales leader needs to have an Ops counterpart and these two must become a TEAM.  Five years ago Ops reported to Sales. Today Ops and Sales are peers. In the next few years Sales will report to OpsVERTICAL EXPERTS -- Every good sales org needs vertical experts who specialize in a specific vertical, analyst calls, Industry trades and shows etc. Sales should bring these industry experts to advertiser and agency meetings all the timePIPELINE -- Keep a ridiculously clean PIPE all the time, move opportunities to lost immediately and capture lost detailed reason notes and analyzeSALESFORCE -- Dumb it down for everything, less is more don't build it out too much use as many existing SF tables and fields as possibleMEANINGFUL ADVERTISER INTERACTIONS -- Start to capture meaningful advertiser interactions (Activities Tasks/Events) in SF, though make it helpful to the sales process not forced/mandatory capture of activities. Though always focus on opportunities not activitiesSALES VS OPS -- Sales runs Sales and OPS answers all questions from the CEO, especially those in regards to revenue forecasting. Again, let Sales sell ======================================================================== BONUS 4 --  If I had $100 Million to invest in an existing Publisher/Technology/DTC business, this is what I would look for in a company. Visionary leader who runs the company -- Product or Engineering focused is bestEngineers more Engineers and Product peopleMarketing team that built a strong differentiated brandIdeally profitable, but not mandatory  Not too much competition in the category, new categories also work well -- but can’t be the only player in the fieldCan't be too reliant on Google Search FB Social, need 60%+ through the front doorIf a PublisherContent and monetization through Video not DisplayRevenue cannot be RFP but 100% PROGRAMMATICOTT is the preferred video method for long term monetizationIf DTCHigh price pointGood repeat businessStrong word of mouthIf TechnologyHas to be SAS with a recurring revenue streamMust cut across many different verticalsStaffed with over 50% Product and Engineers ======================================================================== BONUS 5 -- An interview with Scott Cherkin who, after 22 years in digital media and the ad tech start-up community, joined the Music industry He was previously EVP at Complex Media overseeing audience, product & business development for 7 years and was ready for a changeBegan job search by defining scope of what would be exciting as a next step and then began reaching out to his network who could help him get thereHe engaged with executive recruiters who he had known over the years or who peers recommendedMore interestingly, he set up many networking meetings to ask venture partners, CEOs and peers what they saw as interesting across the industry and shared what he thought was interesting.One of those networking meetings led to a series of conversations at Warner Music Group that did not start with traditional interviews, it was more of a discussion exploring different opportunities in the marketplace and how we could possibly work together.The entire process started in April / May 2017 casually and picked up more seriously by Fall ’17 when the WMG conversation started, securing a formal offer by June 2018. So, all in, it took just over one year to find, not just A job but THE job – the one he could really get excited about and dig in for a long time.There was another opportunity that was close to coming together that started originally by networking. There was no job posted but a friend knew there was a need. However, it was in straight media and not materially different than his prior company and he wanted a bigger change and new challenge so he jumped on the WMG opp.At Warner, he is founding a new department focused on building / expanding direct to consumer relationships. There are some tremendous assets within the company and he’s looking at building and buying more and really scaling the owned and operated audience and taking more control of its destiny in terms of driving monetization across existing channels, as well as new opportunities over time.He is a huge music fan and sees many shows every year so it’s exciting to be able to leverage his digital media experience and work in an industry he loves. When he moved to NYC it was always a dream to be in the music business.Another major impact on the decision to pursue the music business was Mary Meeker’s 2017 internet trends report which highlighted the growth in music as Spotify, Apple Music, and others achieved critical mass. It was those music slides and a conversation with a peer who was also considering the music business that had him reach out to Warner originally. ======================================================================== BONUS 6  -- Great companies that I am familiar with that will be around for the next 10+ years, just a sample and in no particular order PLATFORMS/Tech   AmazonGoogleFacebookLinkedIn (part of Microsoft)TwitterSnapPinterestAppleSalesforceOracle (Datalogix/BK/MOAT)WeWorkDropBoxHubSpotSlack MEDIA/ENTERTAINMENT/ADVERTISING AT&T/DirectTV/HBO/TurnerVerizonDishCBS/ShowtimeVoxDiscovery/ScrippsSpotifyNetflixHuluCriteoSonosSpectrum/Time Warner CableComcast/NBCDisneyRokuThe Trade DeskNY TimesWSJBusiness InsiderSamsungStubHubLive NationTicketmasterCraigsListSpotifyBloombergThe holding companies -- though expect revenue and expense to decline for the future SPORTS NBAMLBMLSTennisEuropean Soccer/Football (e.g., Premier League)MLSPeloton BikesBarStool SportsBleacher ReportMap My Run/Under ArmorBAMTech (subsidiary of Disney)Lacrosse (according to Matt Minoff) HEALTH Everyday HealthWeb MDHealthline NetworksOne MedicalForward23&meOscar TRAVEL PricelineExpediaAirbnbUber (now under new management)LyftTrip AdvisorLime EDUCATION Khan AcademyCourseraTed ConferencesData Camp RETAIL EverlaneWarby ParkerFarFetchJet / WalmartTrader Joe'sZaraH&MZolaShopifyBonobosAwayBrooklinenCasperHarry’sDollar Shave ClubBurrowOnline Grocery companies OTHER TeslaSolar CityConsulting Houses (e.g., Accenture, EY, PwC, Bain, Deloitte, Booz, McKinsey, BCG, KPMG, etc.)WorkdayUPSGeneral ElectricVanguardAll Berkshire Hathaway companiesUnion Square HospitalityZillow GroupBloomberg ======================================================================== Bonus 7/Request 1 -- I have twin boys in college entering their sophomore year each looking for summer internships, both sports related opportunities . Please reach out to them or me if you have anything of interest Trevor is a Sophomore at Cornell at the ILR school and would love to work for in Sports Analytics/Operations -- tjgoldstein16@gmail.com https://www.linkedin.com/in/trevor-goldstein-1ab422151/William is a Sophomore at Northeastern In Boston and would love to work in Sports Marketing/Media -- william987654321@gmail.com https://www.linkedin.com/in/william-goldstein-751875153/ ======================================================================== “What I Saw Happen” archives 2018 V15 -- Q4 2018 -- V14 -- Q3 2018 -- https://docs.google.com/document/d/1faNYxQmiAyI0Y9Zz8olNl5VQGueJSg2-KHN5yRUT6bw/edit V13 -- Q2 2018 -- https://docs.google.com/document/d/1YU7cmaYRJZT8EYyxk_1mL3pVcb2X5eo9LB8qxtLXCVE/edit V12 -- Q1 2018 -- https://docs.google.com/document/d/1lfj5WyzCqRVLCob_xAHztSzmDuzMtASQ1XVYL7c7Ld8/edit 2017 V11 -- Q4 2017 -- https://docs.google.com/document/d/1MjMQ-WYlpk4-B9FQm6ZoXJgGMrbCn67w3UcOrXC3SMM/edit V10 -- Q3 2017 -- https://docs.google.com/document/d/1ukIMeykiUxuP69rAHblQBjwZi-nZRVwNwRMs0Zi55iY/edit V9 -- Q2 2017 --  https://docs.google.com/document/d/1YlbYDGAot6QJ4q-AH3q0eaM_LRviDMirm4PyX9SuDHc/edit V8 -- Q1 2017 -- https://docs.google.com/document/d/1ASKiIy8Aef2sA1OhIYkFFNbgKEh8TxUSgOTz-2ao7DA/edit 2016 V7 -- Q4 2016 -- https://docs.google.com/document/d/1MyvWKNG8CyvT_8tw7QQwf3is93F5t9AJuJEZm2Jcl4A/edit V6 -- Q3 2016 -- https://docs.google.com/document/d/1D5WvVQD9chNbd3jRe40BV_8QKsOuNAH39HDs5W72gC8/edit V5 -- Q2 2016 -- https://docs.google.com/document/d/1wdvjZsvYXeI5cQHTacC1y--cfcfHtC157g5SkRTXtBo/edit V4 -- Q1 2016 -- https://docs.google.com/document/d/1k95jh3E6NQ5CZiZ5Ommtvbgvrofnpox702fYl94QF5E/edit 2015 V3 -- Q4 2015 -- https://docs.google.com/document/d/1C6Z0RRzMSzXq3qhkxo-FxlrAeoan1G6SK23QIsIjRYw/edit V2 -- Q3 2015 -- https://docs.google.com/document/d/1gfAdBSx-IReHHKqenjA4SxHaLULjv60NGUEVpWbQGC0/edit V1 -- Q2 2015 -- https://docs.google.com/document/d/1Bzj681ehRXH0FDuDoBQVuBCfzVwIpv-3Tgp-0znLlAU/edit ======================================================================== If you made it this far, feel free to send me some feedback -- matthew.scott.goldstein@gmail.com -msg


-msg (Independent Analyst/Advisor/Consultant)





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