Erez Levin’s Post

Transcript

Hey everyone, my name is Era. The Internet is about to change. It's going to bring us into what I call the gated age and the subtext here is why now is the time for the rewarded web. So I'm just going to jump right into it. We've got a huge disconnect in the media landscape, so time and attention from consumers. We know it's a scarce resource, it's really finite, but somehow we've convinced everyone that add inventory ad supply is infinite. It's bottomless. There's always more of it and somehow it's always growing. This is a gigantic. Disconnect and we're gonna have to eventually square that. So what's going to happen I believe is that we're going to experience a huge supply crunch in the industry. And now supply the way that most people think about impressions and avails is not going to decrease. But the way that buyers assign value to that supply, that is what's going to shrink materially. And there's a couple of different things that are happening in the market. But to understand it's how do buyers sign value to media? And there's really one of two ways today, especially in the digital area, but even beyond one is with some sort of user identifier. That's been cookies for targeting for attribution and those are going away sometime and it's going to make a huge difference in terms of how much supply is there for buyers to to target and to monetize. And the other way that buyers assign value is just this concept of like premium high attention media. And there's a lot of different ways to look at that. But one very clear scaled signal that we've seen in digital is this like in stream video, right, like premium sound on large full player video that's very high. Attention that that standard was not ideal. It had sort of been corrupted overtime and so that got reclassified. But right now most of the industry out there is not really in stream. When that reclassification from two years ago actually proliferates, hopefully in the next couple of months, we're going to see a significant reduction in the amount of this sort of instream supply that buyers assign value to just because it says it's in stream. Those two changes along with other changes that just sort of decrease the amount. Have had, you know, time that users would be spending on ads, being exposed to ads is going to contribute to the supply crunch and that's going to lead to a massive change into the media landscape. So a couple of sort of high level trends. We came from this era where, you know, the broadcast era, most media could not be tied to an actual purchase in an outcome. And so most media was there to drive awareness, mental availability like a TV. You would remember that brand when you're at the supermarket and make the purchase, but you couldn't actually tie that back and do that direct attribution. The Internet changed that in this precision era that we're in, which is you were able to actually tie at least attribute, right? Or correlation than necessarily causation. But you did see that campaigns impressions, media that was able to say, hey, I served this ad to a user and then the user bought this product, they got more and more budget. And so we saw the bottom of the funnel overall grow at the expense of the top of the funnel. What we're going to see now as we sort of lose those identifiers in this prediction era is a better balance and we're going to see budgets start to come back toward that middle and upper funnel because. It's just frankly going to be harder to do that direct attribution for every single media impression that someone is buying. So I think this is going to lead to a big deep commoditization. We've basically had media become a commodity. If all you do is focus on the audience, you don't really care where they are. And so you're just paying based on who that user is and the likelihood of them buying a certain product. And you don't care if they're on the New York time or they're on some random site that you've never heard of before. What we're going to see is the commoditization. I believe it's going to be based on these sort of two dimensions. One is whether you have a lot of audience data or something sort of meaningful in the audience data for that. Sort of publish or that impression or you don't. And then the other dimension is how a high attention that ad is, right? How intrusive is it? How hard is it for someone to avoid or ignore they're gonna have to notice it versus these ads that are really kind of more adjacent and run on the side. And so we're going to see a really a bifurcation there based on the relative balance of demand and supply for each of these quadrants and that top right where you have high attention. Kids that do have audience data attached to it it's gonna be a lot of demand that's what all the buyers, premium brand buyers want but there's gonna be very little supply and so the prices there are gonna be through the roof relative to others and we're going to see a little bit of a change I'm going to go through this really quickly but ultimately you're going to see that highest quality highest value medium the top right those other two quadrants where demand and supply are going to be a little bit more same balance are going to be in this sort of medium quality and medium value and then you're gonna see where like. Infinite supply, right like AI generated sites and made MFA, there's gonna be so much supply, but most of the demand doesn't want it. So it'll be the lowest quality you're going to see prices adjust and so not just prices, just the the supply versus the demand how much spend is going to go there how that spend is actually going to transact in reservations and guarantees and PMP's and then that relative range of the CPM's not actual CPMS that top right, it's saying 8 to 10 that's on the scale of 10 those who are going to be. With the $100 plus CTV ads with a first party audience are going to be very, very expensive, but you're gonna see sort of more moderate prices, but buyers are gonna start to pay according to where that either that publisher or that impression falls within these 4 quadrants. And now really important point that most of the solutions that people are talking about today are focused on getting more of that audience data, universal ID's and other ways to to to find audiences and to do sort of the measurement and attribution. There's not as many folks focusing on that bottom sort of like creating more of that high attention media. And I do think that at a high level, we've seen that imbalance in price to value. So value I think. Based on the sort of attention and quality of an ad or the attributable sort of incremental impact that it has to an outcome versus the CPMS versus what buyers are paying. And this is way off kilter right now. You see a lot of these different unique or merging formats are below the screen line. In theory, everything should be right on the screen line. The more value you have, the more buyer would pay for it. What we're going to see when the market shakes out everything above this line comes down everything. Below this line comes up and the size of the bubbles change. And so standard displays overvalued, Standard out stream is overvalued, search is not here, but search is definitely overvalued given sort of how much buyers rely on last click and brand search and things like that and give it too much credit. And so you're going to see those circles, those pies shrink and those budgets are going to shift. And so everything here below the line, I believe 1 is going to get more expensive, but you're also going to see those pies grow and that is very relevant. To to sort of what I think is going to be some of the, the changes. So the Internet is sort of, it requires a balance, users, publishers and advertisers. You need to have a perfect balance where everyone is getting that fair value exchange. The problem that we have is that the Internet, we've sort of came in with the premise that users thought the Internet was free. It wasn't free, but it was an implicit tradeoff. A user came, they got the content and they didn't have to pay for it. They gave up usually their data usually without consent and theory. Your time and attention. But in reality, most of the ads were running adjacent to the content and they were mostly ignoring them. Not to say that some of them didn't work, some of them didn't get attention, but most of them did not. That's going to change. What we're going to enter is a place where a time where we're going to have an explicit tradeoff. Users are going to try to get to content, and in order to unlock that content, they're going to have to pay for it with their money, with their data, or with their time and attention. And that's what brings me to this. Would have gated age, unlock media, whatever the sort of name is going to be called. But you're going to see premium sites like this. I've got a bunch of subscriptions like you do. I've got subscription fatigue as well, like you do. I'm not subscribed to The Atlantic. I love the Atlantic. I love reading two articles a month from Jonathan Hyder, whoever else, and I go there. But now when I go, it says subscribe or scram. And so I don't subscribe. It's too expensive for me for two articles a month. What we're going to see is that publishers like this. Are gonna start offering a different choice for users and they say thank you for coming to our site it costs US money to produce this content in order to support us in order to access this here are your options. You can watch this short ad. You can answer a survey you can give us your e-mail you can become a subscriber you can make a micro payment Every publisher that has unique valuable premium you know content that can't be it's not it's distinguishable it's not something that somebody can just go and get somewhere else. Is going to be able to offer this. Now, the beauty of this is that the the video landscape is about to experience this drastic change. This is in theory the four different types of video ads, the placements that are available today according to the new standard. And so in stream is what you know, it's the sound is on, it's sort of that premium content. You have these two in the middle that's like traditional outstream, those are muted. And then you have interstitials, which historically was apps and games. Now it's expanding beyond that in stream. Right now only the walled gardens and sort of CTV players can create that. And when we're going to see this supply crunch when sort of the faux stream is is properly proliferated, you know that the new standards proliferated. We're going to see that in stream get really expensive because it's very scarce and it's really concentrated. So the CPM's for that are going to be 50 a hundred plus dollars. The only other place that buyers are going to be able to get sound on video besides that and at any sort of reasonable price. Is going to be this interstitial here. And so today that maybe is mostly absent games, but in a few months you're going to start to see that in these premium publishers. And so today if you were to run an ad here, the CPM would probably be 3 or 4 or $5 fairly cheap for what it is. But what you're going to see for publishers is that in a year or so that CPM could be $20 easily because it's all relative to those different amounts and for buyers rather than. Paying another $50 or more for an instream impression. If they can get that interstitial, which is pretty much just as much attention and value in this premium environment, they would be happy to buy it at 20 or even more. And so this doesn't work for everyone. This is just a list of publishers that have unique, premium, valuable media content that frankly, a lot of users are willing, first of all, to subscribe and pay for, but not everyone is. But they would be willing to give up their data, give up their time and attention to get that content. You're just looking for a Turkey chili recipe. No one is going to watch a 32nd ad in order to get that because it's a frankly commodity. But if you have something unique and. Valuable people will stay, people will watch. There are a couple of companies that are working on this today or working on the edges of this. I'm excited to see some of them develop. I have more confidence in some of their strategies than others or their ability to do it. I do hope to see more of them really focus on this. I assume most don't understand that the CPM's are going to really explode through the roof in the next year or so. And so I think it's a huge opportunity and there's probably others that are going to get into the space as well. And then last point here is sort of what to do about it. So ultimately we need sort of this balance across the the three entities that make up the ad supported web. So for publishers and anyone that's sort of supports them on the sell side, if you have that unique and valuable content, it's time to start experimenting. If you have subscriptions, if you're sort of offering a paywall, if you're just trying to monetize with ads, now is an opportunity to try to introduce these dynamic paywalls, try different messaging and content and see what happens. See if someone says, yeah, I'm happy to watch this ad. Not everyone will, but if you get 50% of the users to watch an ad in order to unlock the content that they were trying to get to, that's really meaningful today. Minorly meaningful at the three or four or $5 CPM's, but if that's $20.00 in a year from now, that's really impressive and and valuable to your bottom line. Advertisers and your partners, most importantly, stop buying photostream. There's a lot of, you know, fake stream out there. It's really easy to identify. Is it in stream and has the sound on that is fake. Are you paying in stream prices for it? Stop doing that right away. Start looking at different attention and quality measures to really understand what the value is, not just of these different video placements, but placements overall. It's going to be really important, especially as you look at different objectives and creatives and things like that and then start expanding. We are targeting to interstitial something you've probably avoided doing for a long time because you think of it as sort of just absent games. It's not just that. And so find those opportunities to understand, hey, there's a lot of engaged users, premium sort of media brands, brand safe, etc, where you can get that high attention value correlation to outcomes that are really, really good price. And then for users, for you like the internets, not free, it never has been free and we need to accept that. And so that content that you want, somebody has to pay money to create. Be ready to pay for it. It's going to be with your money, with your time or with your data. And the sooner we sort of acknowledge that, the sooner that all three of these sort of entities move in this direction, I think we're going to see a healthier industry and media landscape and a better world for all. So that's it. Thank you all. Hope this was interesting and looking forward to seeing this innovation continue.