Mister Beacon Episode #19
Programmatic Advertising & UnacastOctober 24, 2016
Unacast's CEO provides a jargon busting introduction to programmatic advertising and how beacons are creating opportunities for brands, retailers and proximity solution providers.
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Thomas Walle 00:04
We are at the world's largest network aggregator of data, it takes attribution to a completely different level where it gives a lot more security back to the advertisers to really understand, did my marketing spend result, people visited my store. So you get data from people that search on sports, people that read sports, but it's a completely different thing to reinforce, and watch sports. Advertising is it's all about scale. And for advertising to reach 50,000 users, that's not really that interesting. They need to reach hundreds of 1000s Millions of user in order for the ad spend to be efficient, if you are forcing the company out there. And kind of my message is to say you're sitting on gold, like you have so much valuable data that you're probably not using, you're not using for for the benefit of your clients and there's probably a way to monetize it equally. If you're an advisor for brands, you should really get your eyes up for proximity data and the value and what you can do do do it.
You're listening to The Hitchhiker's Guide to the Beacosystem with Steve Statler.
Steve Statler 01:26
Welcome to The Hitchhiker's Guide to the Beacosystem. My name is Steve Statler of Statler Consulting. This week we have Thomas Walle, the CEO of Unacast with us, and Unacast is the company that underwrites products book, the directory and the quarterly report that we do this show in partnership with. So Thomas, welcome to the show.
Thomas Walle 01:49
Steve Statler 01:51
It's very cool to have you on the topic for this week is beacon ad networks. And we cover this subject in our book, beacon technologies, the Hitchhiker's Guide to the ecosystem. And now we're going to be talking to you about it, there's a lot of jargon that surrounds this area. And what I'm hoping we can do in our conversation is to cover three areas. One is to do some jargon busting. For those people who aren't familiar with the ads business, just dispel some of the myths explain some of the jargon. get people comfortable with that. And then secondly, we want to ask the question, Who is Unacast? What do you do? How do you do it? And then topic three, let's talk about the market. Let's talk about proximity solution providers, how we can make money working in this area. So sound okay, that sounds like a good plan. Fantastic. So before we get into the jargon busting, just give us a quick elevator pitch on who Unacast are and what you do.
Thomas Walle 02:48
So Unacast. We're a company based in New York and Oslo. And we are the world's largest network aggregator of Beacon and proximity data, which means that we have built a network. Now I'm wanting to defy the in and proximity companies, they all sit on very valuable data under interesting data where people spend their time in the offline world. The challenge, though, is that this data is fragmented. It doesn't have to have scale. So we have built this platform Unacast, folks will be aggregate data from multiple companies. And we normalize it, we standardize it. And then we allow retailers and brands advertisers to use this data currently for on advertising strategies. They use this to retarget people that have been to specific stores, they use this to do attribution, which means that if someone has been displayed an ad, you can see that ad also made a customer walk back to the store. So very much going to solving that complexity and the fragmentation in the beacon space where there's so many great, great companies. But they all collect data in different ways. And the advertising industry is looking for one pipe into the world of proximity data. And that's that's what we are solving.
Steve Statler 04:07
So that's a great summary. And there's a lot there that we're going to unpack over the next half an hour or so. You used a couple of buzz words, one of them you explained a little bit, which was attribution. Just go to the next level, you talked about attribution and seeing if someone responded to an ad, and in this case, presumably you are advertising a venue of some kind. And we can see if someone when using beacons, what are traditionally the problems with attribution and what the beacons do to help solve those problems.
Thomas Walle 04:40
So if you kind of look at the history of it, you see that previously, I would have been really big PR about measuring the effects of the Advent, there was very focused on clicks, right. People clicked on the app, and then advertisers became more sophisticated so they wanted to know if I display this ad for subway Did this apples result in our people went back to my subway restaurants. And the data set, the last couple years have been used for this is geo data, like lat long, which can be collected from apps or from the app exchanges, the services that provide provide the ads, the challenge shares in that the accuracy. Because if you have a Latin long, and you notice when you use your GPS on your phone, right, it's not always precise. So you might be on the right side of the street, you might be on the left side of the street, in dense cities, it's only going to see that you are within a certain quarter. So within proximity technology and with a beacon technology is so unique is that with this technology, we can with 100% certainty, know if the customer visited that specific store, because they interacted with that specific beacon, it's Harvard deployed. So it's 100% deterministic data. In addition, if beakers are placed in different departments, let's say the shoe department of record store, then we can also know if they went into that shoe shoe department. So it takes it takes attribution to a completely different level where it gives a lot more security back to the advertisers to really understand, did my marketing spend result in people visited my store?
Steve Statler 06:24
Okay, there's a parallel there. And obviously, what you're really interested in is conversions and acquisition. We've taken that from the web web world, we've applied it to the physical world, you use this term retargeting, in your introduction, explain to us what retargeting is.
Thomas Walle 06:43
Yeah, so retargeting means in short, that an advertiser or brand is advertising to consumers based on their past behavior. That could either be that you have searched websites up in h&m dot com, and now you're being retargeted. The next day, the next few days, they even your online the havior. I think all of the all of you kind of watching this are probably experienced that that before, but you see ads following you, based on your own mind, the behavior, but that hasn't been really the fact based on our physical offline behavior. So when I talked about retargeting, I mean, how advertisers can retarget a consumer that have visited a specific store. If you've been to the shoe department at h&m, if you've been to the Yankee Stadium. Now, these two brands will say, I'd like to advertise to these people that have been in my physical location, like there's a much higher likelihood for them to react positively to that ad than someone that has. And the way that advertisers have approached this in large today is that they have bought what we call segments. So let's say that your football stadium, you want to advertise for season tickets. So you try to advertise the people that are interested in sports. So you get a data from people that search on sports, people that read sports, but it's a completely different thing to reinforce and watch sports. So with all these standards, now they have deployed beacons with the use of this data, they're not able to see to to say I like to advertise to people that have been to my stadium. So there's a much higher likelihood of that ad having a positive effect. And actually being relevant for that specific user when you use something as accurate as speaking.
Steve Statler 08:39
I'm very conscious of retargeting because I search a lot on Beacon subjects. And I find that I'm seeing a lot of adverts for our book beacon technologies KJ, and I worked on the beacon networks chapter together.
Thomas Walle 08:53
But here's the thing, if they did that, yes, we all are being retargeted. They live based on our online behavior. But still, we spend 70% of our wait time in the offline space. So the reason why a lot of consumers are kind of feel returning as a pain in the ass is that it only reflects a fraction of what we do when we are awake. And of course, we can't have an economy without ads like that's that is the fuel of the free internet economy. But what we can do is make sure that those ads that are displayed to us just are even more relevant. And for them to be more elements, we have to understand that user in a much, much broader scale than just those 15 minutes 25 minutes that we sit in front of our computer booking a holiday or searching for a new barbecue for the porch.
Steve Statler 09:43
Right so if there was more retargeting based on my physical movements, because I'm more than just someone who's into beacons, I'm also into DIY I visit places like Home Depot. I like certain kinds of food. Adding that physical component could enrich my profile and me The ads are better targeted. Let's do some more jargon busting. And then we'll move on programmatic advertising. What is programmatic advertising?
Thomas Walle 10:12
Going to how the whole advertisement space as a developer, of course, in the early days, you had to call a guy and say, hey, I want to buy X number of ads. And then someone maybe bought the front page of financial time, for the same ad was sent to millions of people. So you didn't really care who you're reaching, you just wanted to place as many ads out there as possible. Programmatic advertising, something that's come in the last couple of years, which is very much about being smart in terms how you spend your advertising dollars, which means that everything is based on automation. Everything is based on audience, which was a you, as an advertiser can say, I'd like to advertise to people within a certain segment. So that could be people that goes to sports days, people that travel frequently, people that go to pet stores, and we don't go into detail, this whole ad tech ecosystem are able to based on that request, make sure that your app is only exposed to people that fit into that specific category. And it all happens automatically. There's less people being involved, which means that this whole advertising industry is becoming way more data driven. And in order to have a well functioning programmatic space, data is key, there is key to reach your specific users.
Steve Statler 11:40
So to the extent that we're moving from rather clumsy manual advertising to programmatic advertising, the fact that we have beacons and beacons give Rich, accurate data, these two things are tightly linked, and they go well together. What's a demand side platform? And what's a supply side platform?
Thomas Walle 12:00
Yeah, so a demand side platform that is the short, it's a system that allows buyers of ads to reach multiple ad exchanges, so able to reach multiple different places where they can place their ads. So instead of use the one of the advertisers, for several that are consulting, you have to call up a lot of different publishers, where you want to place your ads, let's say it's the Financial Times, it's the Wall Street Journal, and it's a lot of other websites, you go to one DSP, and they only make sure that your ads will be distributed across a wide range of inventory, as it's called to reach your specific beaten, beaten paths. So it's a way of just doing advertising way more efficient.
Steve Statler 12:50
And what is inventory?
Thomas Walle 12:52
The inventory is the ads that you have available that the publisher has available to display to their users. So when you go on their website, and you see there are different ads on left, side by side, on top, that's the inventory. So if you have three ads on your page, then you have three different inventory elements that the publisher can sell, and where advertisers can put.
Steve Statler 13:19
And what does the supply side platform do?
Thomas Walle 13:22
Yeah, so the supply side were for the sellers of advertising. So what that does is that it makes it very easy for a publisher to manage their inventory space. So they put all their inventory all available ad placements that they have available on the supply side platform, and then this supplies platform will ensure that these specific inventory places will be bought. So it's a way of again, making it more efficient on the sell side, so that you make sure that your inventory, that ads that you have available, can be bought frequently.
Steve Statler 14:02
So if I'm the New York Times, I would have a supply side platform that would allow me to interface with a number of different exchanges and maybe manage private side deals to if I'm Procter and Gamble, I'm going to be using a demand side platform to figure out how I'm going to best drive conversions and work across multiple exchanges. Presumably exchanges are where all this bidding occurs. Anything else we should say about exchanges?
Thomas Walle 14:30
No, I think that's pretty spot on. It's, it's it's a very sophisticated technology platform that facilitates buying and selling of media in a very efficient way. And it's usually kind of based on a bidding system. So let's take an example. You have Joe Joe's sports Sports Time. And then you see that he shows up on the site, then you have two different advertisers for that specific year. person and it's all gonna fight for displaying their specific add to that.
Steve Statler 15:05
Okay, last bit of jargon DMP. What is a DMP?
Thomas Walle 15:11
A DMP is one of those terms were focused on facilitating the ad ecosystem with a lot of data. DMP stands for data management platform. And it allows us advertiser to create the target audience based on a combination of a lot of different parameters. So you can say, I like to use the DMP, I'd like to reach people that are 18 to 35 interest in sports who lives in New York, and then you use that data, combined with your DSP to actually make those beds and place those those apps.
Steve Statler 15:48
How the beacons fit in with us. Beacons give us accurate data. They can help enrich the profiles of people modeled in a DMP, they can help trigger adverts. They can enable enable retargeting. Are any of these things being done now? And are DMPS being enabled? Do they have fields in them now that have been populated by beacons? Let's give some examples. So BlueKai owned by Oracle. It's a DMP. Right. But specifically, what I'm interested in is, are these DMPS? Do they now have fields in them that are being populated with with beacons? Because like, let's give some examples. So BlueKai on by Oracle, that's a DMP. Right? That's correct. Yeah. Is there DMP beacon aware yet?
Thomas Walle 16:37
Yeah, like that one. And another one that we work very closely, which is lobotomy. So both of those have beacon data available, which means that if you as an advertiser want to reach that very specific audience, and you want to use deterministic data, then big data is available there for could load the complexity here has been about scale, right? Because imagine, when you have an according to procs book, which is the directory that we we host, there's more than 350 Different proximity companies, right. So they all collect data in different ways. Not all of them have scale individually, to kind of get to a certain data level that advertisers wants to buy. So and for from a DSP perspective, it's very challenging and complex for them to integrate with multiple different proximity companies. So that is kind of the essence of Unacast. And what what we're solving for the whole marketplace is to make sure that if you're a proximity company, and you want to use your cell, our proximity data, you don't have to integrate with 100 different ad tech platforms out there. And if you're a DP or DSP or a data exchange, you don't have to integrate with hundreds of different proximity companies, both parties can plug into Unacast. And both sell the data at scale and get access to data at scale.
Steve Statler 18:07
Okay, so you're providing a gateway to the DMPS? Yes, correct.
Thomas Walle 18:11
Because advertising is it's all about scale. And for advertising to reach 50,000 users, that's not really that interesting. They need to reach hundreds of 1000s Millions of user in order for the ad spend to be efficient. So that is why we are helping out 65% with the companies where we aggregate the data into the Unacast platform. And then we reach a certain level of volume. And that is when advertisers get in gets invested and buys this this data.
Steve Statler 18:41
I think you've implicitly answered this question, but let's really nail it. If I'm a beacon technology company, you call them PSPs. Right? Yeah. So I've started up my company, I've got my seed funding my business plan, I say 5050 chance that part of that business plan is going to be based on the value of the data or ad dollars I could generate. I'm starting to think of myself as a location advertising company. And I look at Unacast. And I say, hey, that's what you guys do, too. You guys are the competition, right? How do you have the conversation with a beacon company that has decided they're going to make money from advertising? And they look at you a bit suspiciously?
Thomas Walle 19:25
Yeah. So I think this goes much to kind of what what what the core business of every every company, right? We are Unacast is a neutral company. We are as we call us, as Switzerland between the proximity ecosystem and advertising ecosystem. So the approach that we have to our our proximity partners is that one, you might have very valuable look similar data, big data on your platform, but you might not have the knowledge or expertise or the capacity to plug and sell this data into the complex advertising space. So if that is the case, Unacast can help you to monetize that data, we will onboard all your data, you will have to care about your data structure, we will harmonize it on our side to ensure that you reach kind of a structure where the advertisers and the ad tech platforms was the buyer of this this data. So that's kind of that's number one. Number two is that for the proximity companies, they most likely, I would say in 99% of the cases, they have clients that already are spending a lot of money on advertising. So if you have a retailer that have bought your proximity solution, and they are spending hundreds of 1000s, or millions of dollars on advertising today, but they're not using this very valuable first party proximity data, so a Unacast can help with is to onboard that data is locked in a silo to the advertising platform of your desired point. So that retailer that is spending money on advertising, today, trying to reach your own customers, with the help of Unacast, they can now get access to their own own users to their desired advertising platform.
Steve Statler 21:17
That makes sense. So you have the links into the ad companies, you have expertise with the Switzerland thing, you captured it very well with that metaphor. You said it's all about scale. And so even the largest beacon providers I contact, I owe tier one, they need to work with others to achieve scale. And for them on their own, it's gonna be hard to work with an estimate or a gimbal. But they can do that through you guys. Right?
Thomas Walle 21:42
Right. And then they even though there are some great books in the companies, after picking companies today that have large, large volumes, they they still come to a unit costs because our expertise lies in how to understand how to interpret the structure, proximity in data, and how to make that data available and sold on the different advertising platforms as efficient as possible. We don't deploy beacons, we will work with retailers and clients ourselves. So there's no kind of competition there in between us and our our proximity partners, we just make sure that we can create an efficient marketplace and ecosystem that allows this super valuable proximity data to make his way into the advertising space.
Steve Statler 22:31
So what is it that's difficult about what you do? It sounds like a great business. You're right in the middle of this incredible ecosystem. What makes doing what you're doing hard?
Thomas Walle 22:42
There's there's two things. It's complexity, right? So we work with multiple sets of proximity partners that all collect data in different ways. Let us our IP, our knowledge lies in streamlining and harmonizing all this this data, because that's what the advertisers platforms are requiring. They only want one data structure that makes sense to them. They can't manage tons of different data, data structures, or a lot of our teams are hardcore engineers, data scientists that just going to live and breathe data every single day trying to figure out what is the best way to make usable value, add a follow up look similar data that we get access to. And the second part is, of course, about education. We all know and we've been in the space for some years to get our see that begins. Proximity is the only area, there's still some education that needs to be done both towards the proximity companies like well, how can they use this beacon data for advertising? Why does this make total sense for their customers, but equally also, on the advertising side? Kind of why should advertisers use proximity data compared to other datasets? But again, that that is the role that we have taken in this ecosystem to ensure that the proximity companies, the big companies, they should focus on what they are best off, that is to deploy great technology, build amazing user experiences with third sophisticated software. And then Unacast to Kate takes care of the data management, data processing, and how this data is utilized to the advertisers.
Steve Statler 24:23
Where have we got to in the development of the ecosystem using Geoffrey Moore's model? Are we about to cross the chasm, we tween early adopters in the early majority?
Thomas Walle 24:35
We are definitely about to cross the chasm and think what what we have seen we of course, follow this market very, very closely as everyone else. We also have which I mentioned that directory approx book.com, which is the directory that you're going to take the different books similar companies, they have listed a profile per use cases listed technologies can really what they do, and they All the data that we get from all this from similar companies, one of the things that we have seen in the last few quarters is that we're vegans in proximity initially was all about push messages. It was about saying the right message to the right consumer at the right time. That's still very important for a proximity ecosystem. But we also see now there's a shift now and where there's more more use of big data in analytics, more use of big data and online advertising and more use of big data in data monetization. So I think personally, that we are still just kind of seeing the tip of the iceberg in what proximity data actually can can do. It started off with push notifications, and proximity marketing. But I believe that we will see the next year the next 18 months of continuous shift into other ways that this data can be utilized. We just want to make sure that we can help all this look similar countries to get on that track and make sure that they can utilize this data in the best way.
Steve Statler 26:04
And so how long do you think it is before when the fat part of the adoption curve? How long will it be before this thing is going gangbusters?
Thomas Walle 26:13
I wish I could say that super confidently. But I think based on the recent developments out today, we have seen our proxy report, q3 is coming out in a couple of weeks. But still kind of great numbers to see from from a space I believe within a year or two. That is when we see that return on brands are deploying beacons at scale. And we see some great signs from now already from our 65 with similar to companies. So I'm very optimistic about how beacons and how proximity technology whatever the next for 30 months
Steve Statler 26:46
Good. Any last things you want to cover? Before we sign off?
Thomas Walle 26:51
No, I think you've kind of covered this pretty pretty well, I think if you're if you're a similar company out there, and kind of my message is to say you're sitting on gold, like you have so much valuable data that you're probably not using, you're not using for, for the benefit of your clients, and there's probably a way to monetize it. Equally if if your advertiser or brands, you should really get your eyes up for proximity data and value and what you can do do do it.
Steve Statler 27:24
Viewers and listeners can learn even more about who is doing what in this space from our book beacon technologies available from Amazon. Thomas Walle, CEO of Unacast. Thanks very much for coming on the show. Where did you work for Unacast?
Thomas Walle 27:51
Yeah, so me and my KJ, my co founder, we both work that title, music streaming service. And we were a part of the team at title. From the early days when piracy was a pain in the ass and the record label didn't know how to make money out of music. And that's when we started PayPal and had an amazing journey. Building the whole music Yes, gaming ecosystem. And then eventually, the rapper, the well known rapper, JC and you're buying the music service at the end?
Steve Statler 28:21
Well, that's pretty good. Excellent. Sometimes I asked you if you're interested in music, and for instance, the CEO of Estimote, he's not into music at all. He's a visual person. And I'm assuming you're into music. So which three tracks would you take to Mars? If for some bizarre reason you were going there and you could only take three.
Thomas Walle 28:42
So I actually have only two tracks that really mean something to me. And even though I work at a music company, I'm not a huge music person. I'm not a very sophisticated music first like I listen to the radio, I listen to the top top 2020 tracks people bullied me the whole time because I was so so commercial in my music taste. There's two tracks in my life that are kind of really enjoy those when I was young, I always this was my number one band, like Wonderwall is still one of my favorite songs. So it just got to because so many good memories from my youth. And the second one I would say is JC empire state of mind. Not because I always been a fan of JC but it also reminds me of a membership at a time at title. When we build a service. We listened to JC every single day I actually had a quote from JC on my business card. And three years later, JC ended up buying the music service.
Steve Statler 29:48
That's cool. Very cool. Must have been a lot of fun. Were there any takeaways from that music industry experience that informed what you've done and found in Unacast?
Thomas Walle 29:59
Absolutely, I think one of the things that both Keith and I enjoy very much is the soul complex ecosystem. And very similar to what we're doing now in the proximity space, which I will talk a bit about standing with the music space, we managed to get all these different labels, the multiple different record labels rightholders artists to join one platform, one music platform, giving end users easy access to all the music in the world. So kind of the same learnings that we have from Haidle how to make to very complex ecosystem play into once is it sort of that experience that we are now using and taking into account and Unacast as well?
Steve Statler 30:46
Yeah, that's, that's a great parallel that and I think, if you were looking for something even more complex than the music industry, you found it, so not wanting to be bored. Okay, thanks very much for that.