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DAVID HERTOG: Hi, everybody, I'm David Hertog.
I'm a product marketing manager at Google for
Doubleclick Ad Exchange.
I want to welcome you to a series that we're calling
Programmatic in the Future.
Last week we spoke with Curt Hecht, who's CRO of the
Weather Channel.
And this week, we're welcoming Mario Diez, who's CEO of
quadrantONE.
It's a brief conversation about this space, and we're
really happy to have him here.
Mario is a veteran of digital media.
He's led businesses and sales strategy for organizations
like "The New York Times," PointRoll, and Centro.
And of course, now he's here speaking with us today about
his role as CEO at quadrantONE, which is a joint
venture between four of the largest
brands in local media--
Gannett, Hearst, The New York Times Company, and Tribune.
And under Mario's leadership, quadrantONE has really been on
the forefront of thinking about the
programmatic channel.
They built the premiere private exchange and audience
platform for local media.
And this is why we're really excited to
have him here today.
So Mario, welcome.
MARIO DIEZ: Thank you.
Excited to be here.
DAVID HERTOG: So we have about 15 minutes for this
conversation.
So before we dive in, a reminder to the audience that
we're going to be taking questions on the comment
stream on the G+ page.
So if you have any, we'll do our best to get to them, so
please submit them there.
Now Mario, I guess if you could just start by just
giving us a quick background on how and when and why
quadrantONE was formed, and how that vision has evolved in
recent years.
MARIO DIEZ: Sure.
You know, quadrantONE was--
I've lost count, but it started about four
or five years ago.
And it was based on the initial strategy that we had
to create a valuable marketplace for both national
brands and also local publishers.
So on the national advertiser's [? standpoint ?],
our value to them was a scale model to essentially localize
their national marketing programs.
And if you ask, really, any national brand, what almost
all of them will say is that every
customer's a local customer.
But the real challenge of it is how you scale that.
How do you create intelligence around it?
And how do you make it easy, and how do you make it smart?
So we wanted to address that.
On the publisher side, through any joint venture, the big
value of a joint venture is when you can all contribute to
something and reach markets that you may not have been
able to get on your own.
So the value on the publisher's side was that we
took all of these high-value local environments and we
aggregated them in one simple platform, and we brought that
to the national marketplace.
So you see two different value sets.
You see value to the national advertisers in localizing
their messages efficiently and easily.
And then for the local publishers, we're also
bringing them exposure to investments and media assets
that they normally wouldn't holistically be able to
get on their own.
So we have value on both sides.
What's really interesting is that it's evolved from simply
being a sales organization to being almost a managed service
of technology and technology services.
And one of things that you mentioned earlier is that we
were one of the first-- and I think we're still one of the
first, or only, multi-company exchanges out there.
So it's been an exciting time.
Lots of opportunities, lots of challenges.
But we still stick to that core vision.
We want to create value for both sides of the equation.
And now we're just doing it more with technology services
as much as we are on the [INAUDIBLE].
DAVID HERTOG: And so there's--
we were talking about this even before
we started up here.
But there's so much hype and there's so much information
about the programmatic space.
I mean, what do you think some of the biggest misconceptions
are about programmatic, and what's been your experience?
MARIO DIEZ: So I think it's interesting.
Right now, there's a lot of talk, and the big
misconception is that sales teams and media-planning teams
are going to go away.
And I think we just need to calm down a little bit,
because, that's simply just not true.
There's no mistake that the act of selling media and
buying media is a challenge with a lot of procedural
inefficiencies.
And one of the advantages that programmatic can add to that
is scaling that efficiency to make it easier to sell and
easier to buy.
I think one of the misconceptions, as I mentioned
before, about changes to the sales teams and changes to the
planning teams, there's somewhat truth to that,
because there's a transformative effort
that's going on.
How individuals are going to be working with different
advertisers, how advertisers are going to be working with
different media entities, it's all changing a little bit.
But we're still very much in the infancy, as we talked
about prior to our going live here.
And I think the smart publishers right now are
structuring their organization in ways that can take
advantage of that, but also learn from that.
And one of the other big misconceptions is that it's a
plug-and-play, and you're off to the races.
It's very much powered by the human relationship and
strategic relationships that you can strike.
Because everybody's learning here, and that comes through
relationships.
And if you don't have individuals that can further
that, then well, you'll be in a challenging spot.
DAVID HERTOG: And so those two last points, these are really
interrelated, of course, right?
Because how you structure your organization and your direct
sales teams, those are obviously
relationship-based efforts.
What are some of the lessons that you've learned, or what
is some of the effort, the things that you've done to
reconcile both the programmatic and direct side,
in terms of team structure or compensation or anything in
that realm?
MARIO DIEZ: You know, it's interesting because we're all
selling to different people.
And I think when you look at--
one of the things we talk a lot about internally is the
frequency curve of what inventory and what products we
have, as well as what the advertiser's
really looking for.
And traditionally, it had been that you had a sales
organization that sold anything that was essentially
guaranteed.
And now what we've come to understand is that an
advertiser really has a number of different needs, quite
possibly for the same initiative.
There can be a need to generate impact.
There can be a need to generate scale.
There can be need around acquisition.
And what I think programmatic has done for us is given us
more tools to work with different buying entities.
It's also exposed us to different revenue streams,
different advertisers, and really, different
relationships.
And that has also helped feed a lot of our operations around
what we're selling direct.
Now the conversation that's happening a lot in the
industry right now is based on, what's premium, what's
direct, and what's not?
I kind of view things as, and what we do here, is that
whatever a client is looking for, we want to be able to
offer as much of that tool set as possible.
So if they needed something that's impact, we have
operations that can handle high-impact units or
customized units.
The other aspect of it is if they want control over their
optimization, then we have an exchange that
can offer them that.
If they want to DR solutions or dynamic creative--
what a publisher has to really understand is that it's not
one-size-fit-all anymore.
And your investments should mirror what the advertisers
and the market is doing.
But I'd also caution to make sure that you're talking to
the advertisers that are supporting you the most.
Because those are the ones that are going to tell you
what they're looking for and what they're not.
DAVID HERTOG: So how do you think embracing programmatic
has affected your relationships with your
advertisers?
It sounds like you have more arrows in your quiver, which
is a great thing.
Because has it affected the back and forth, in terms of
negotiations?
MARIO DIEZ: You know, it's an interesting spot.
I think if we're being honest with everybody, the idea of
programmatic is still in its infancy, very much so.
But I think it's still very much in its infancy of what
exposure it has the advertisers directly.
I think where we're spending a lot of our time right now is
in the context of what's happening from the advertising
agencies, what the clients are employing them to do.
And what we've heard from the marketplace is we need to do
more with less.
And it just so happens that this idea of programmatic is
letting us do more less.
And what I mean by less is that we're spending less time
on wasted procedural aspects of our business.
So I don't think there's any salesperson that wants to
chase down $50,000 orders, and I don't think there's any
media buyer that wants to take 100 phone
calls for $50,000 orders.
I think what's programmatic is starting to really open up is
the idea that the sellers and buyers can now have strategic
conversations around--
for us, specifically, we're a local channel.
And there are a lot of premium brands that value local
channels, whether it's financials, or retail, and
others for that matter.
And what that's allowing us to do is open up conversations at
trading desks or holding companies, and just buying
entities as a whole to help them
operationalize their efforts.
And that's really helped us become more relevant.
It's helped us open up to other advertisers.
So it's been a big advantage for us in that capacity.
DAVID HERTOG: And so it's interesting.
You've spoken before, and here, about how your company's
aimed at helping national brands
localize their strategy.
And you've spoken, of course, in the past about the
importance of data in that.
What advice--
there's a lot of talk in the industry that publishers, and
I think there's truth to this, are sitting on a
gold mine of data.
Or the data isn't utilized, they're not utilizing it to
its fullest extent.
I know it's early days, but you've been very active and
proactive in this.
What are some pieces of advice you would have for publishers
who are looking to make the most of their data and really
think strategically about it?
MARIO DIEZ: So I'll share with you a little bit of
perspective.
There was a chart that I think [INAUDIBLE]
put out a couple years ago where--
I called it the five-to-one slide.
It showed where a marker had $5 to spend, and by the time
it got down to the publisher, it was $1.
Well, that's changed pretty dramatically over the last
couple years, to wear originally, it had a network
share out of there and some other intermediaries.
What's happening right now, especially in the programmatic
side, is what I call micromarkets, that's happening
in between the publisher and the buyer.
And these micromarkets are being monetized by channels of
either audience data, the verification and so forth.
And when you talk about publishers sitting on a gold
mine, all of the audience data that's being compiled out
there is coming through somewhere, and it's coming
from the publishers that are out there.
And if done correctly, I personally think that the
investment into your data infrastructure is probably the
most important thing that a publisher can do right now.
The reason being is that in the current stage environment,
what's happening is that the publishers are seeing revenue
for the media that they represent.
Now what's happening above that is you're seeing revenue
that's being secured in data markets, and so forth.
Now if a publisher can aggregate that, and aggregate
it in the way that buyers want it, this is where the promise
of the private exchange comes in.
Because doing a private exchange, where you're
exposing value points of either viewability, above a
fold, priority access, maybe exposure to first-party
intelligence that's passed pre-bid, that represents an
opportunity for you to say to a lot of buyers, to say, hey,
we have the first-party intelligence.
We're going to ask for a little bit more revenue.
You'll probably pay a little bit less than the open market
of what you normally do.
And everybody kind of wins there.
So I think what we're starting to see is these different
market setters that the publisher's starting to be
more aware of.
And I think the data side of our business and the ability
to segment according to that will be the next wave of the
programmatic channel.
DAVID HERTOG: And so obviously from a technology standpoint,
doing all these things, things have evolved very quickly on
the publisher side, just as they evolved
quickly on the buy side.
Where do you think--
as a publisher, where do you think the biggest gaps are?
What are the biggest problems that you think haven't been
solved or we're just sort of starting to scratch the
surface on as an industry?
MARIO DIEZ: So I think the biggest gap right now
is that a lot of--
and us included-- a lot of publishers are putting forth
strategies based on an unknown.
And one of the things that we look at here internally is
that if, let's say for example, we lose an advertiser
and they're going to use a different party to place buys
or so forth, normally a publisher may say, oh, we're
going to block them from the open marketplace, or something
along those lines.
It's a typical tactic.
But what we kind of say, just say, well, why are they going
over there?
What are they doing?
What kind of technology are they using?
And so we've taken some strategies that made efforts
to say, let's deploy a couple of buy-side tools and see what
a buyer would see.
And so we may be buying from ourselves, in some cases.
But what's really fascinating about that is it gives your
organization a view of how the buyer is looking at your
inventory, especially on the programmatic side.
And what's great about that is that then you can start to
develop the right tactics to go to the buying market,
because you know where the value points are.
And so that's one effort that we're starting to do a lot
more of, in helping just understand really what's
happening in the exchange space from both a
seller and a buyer.
DAVID HERTOG: I'm just checking on our time here.
I think we're actually close to--
I think we're close to wrapping up.
A couple more minutes.
I guess just really the last thing I would, to sort of try
to tie things up, is you know, it's end of the year.
We're going into 2013.
There's a lot of big trends on the horizon
for this next year.
There's a lot of things sort of converging on
the space at once.
What are the ones that you're really thinking about, that
are top-of-mind for you in your 2013 planning?
MARIO DIEZ: I think there's a lot of technology out there.
We will always look at the future that's always going to
be based on supporting our vision.
And our vision, which is creating a valuable
marketplace for both buyers and sellers to interact in a
premium fashion.
Now for that, we see technologies that can help us
with ease in execution, whether that's programmatic,
another optimization technology, I think that's a
prime target for us.
The data infrastructure is also a prime
investment for us.
And the other side of it is from a business intelligence
side, all of these tools.
And what's probably the biggest value out of the
programmatic channel for us so far, has been the business
intelligence side of seeing what's happening.
Because we can see exposure to advertisers that we haven't
worked with before and have different
conversations with them.
So there's a lot of internal investments and structural
investments that we're looking at making.
And who knows?
2014, there's probably going to be 14 different
technologies that we're going to have to evaluate.
DAVID HERTOG: Well, look, I really want to thank you for
your time, and thanks for joining us in this
conversation.
Your insights are really helpful.
We appreciate it.
MARIO DIEZ: Great.
Psyched to be here, and have a great holiday season.
DAVID HERTOG: Thanks again.
You too.
MARIO DIEZ: OK.
Take care.
DAVID HERTOG: Bye.