What is an ad network these days? Amazon has an ad network. Uber Eats has an ad network. Doordash has an ad network. Gaming company Zynga owns an ad network. CVS and Walgreens recently launched ad networks too.
We’ve seen more upheaval in Adtech in the past two years than perhaps in the previous ten. We had 7 billion-dollar acquisitions and mergers in just the first quarter of 2021. We’ve seen ad networks buying gaming studios; studios buying ad networks.
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So what’s happening?
In this episode of TechFirst with John Koetsier, I’m chatting with Mark Ellis, the CEO of Liftoff or … Liftoff + Vungle or … name-to-be-revealed-at-some-point-in-the-future. Check out the story at Forbes, or the interview and full transcript below.
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Transcript: How the new titans of adtech are consolidating to challenge Facebook & Google
(This transcript has been lightly edited for length and clarity.)
John Koetsier: What on earth is an ad network these days? We’ve seen more upheaval in Adtech in the past two years than … maybe in the previous ten, and that’s saying a lot. We had 7 billion-dollar acquisitions and mergers in just the first quarter of 2021.
We’ve seen ongoing mergers and acquisition. We’ve seen ad networks buying gaming studios; studios buying ad networks. What’s happening?
To chat about that, we’re discussing these issues with Mark Ellis, the CEO of Liftoff or … Liftoff + Vungle or … some as-yet-to-be-released name. Welcome, Mark!
Mark Ellis: Thanks, John. Good to be here.
John Koetsier: Mark, you’re a big part of all this aggregation, this consolidation, what did you recently do?
Mark Ellis: Well, we brought the best of mobile demand together with the best of mobile supply when Liftoff and Vungle joined forces; we closed end of Q3.
And really we’re able to offer an entire app growth cycle platform to mobile marketers — from user acquisition, to engagement, to monetization and analytics — all through the combined Liftoff + Vungle platform.
John Koetsier: Right. Can you talk a little bit about the scale of that combined platform?
Mark Ellis: Sure. We have a global customer set. We are, when you compare us to some publicly traded companies in our space, we’re one of the largest.
And most importantly, we are independent from the perspective that we don’t own content or other assets that may compete with those customers we serve. And so we truly are that scaled alternative to Big Tech — Facebook, Google, and others — able to really help the mobile marketer build and grow their engaged mobile audiences.
John Koetsier: So let’s jump into this conglomeration capability in a moment, but let’s start here: what’s driving all this aggregation and consolidation? What’s happening?
Mark Ellis: A few things, I think, there certainly have been some changes that have been imposed with Apple’s SKAN and ATT framework, formally introduced in April of this year, announced June of last year. And I think Google is also starting to take some steps in a direction that’s meant to support greater user privacy around user data. I also think we’re in a phase of this cycle of industry evolution where there is some consolidation and vertical integration so that there could be fewer more-scaled partners to marketers that are able to do more. It helps the customer have more efficiency, both with leveraging their customer datas and their ad budgets, and allows scaled partners to be able to drive better outcomes at scale.
John Koetsier: That’s a really good segue, actually, because as we see this conglomeration of capability, all this consolidation — there’s probably pieces where maybe that’s good for the industry and there’s maybe pieces where there aren’t.
You actually hinted earlier in saying there aren’t, because you said, ‘We’re independent and we don’t have pieces that maybe compete with our customer.’ Let’s ask the big general question first … is all this aggregation good for the industry?
Mark Ellis: Very much so. If you look through business history, typically you’ll have some big tech or big dominant players, and then two or three skilled independent players. And the reason why that is good, is to have some variability to be able to work with independent scaled players who really put the customer’s needs front and center on a top line of prioritization and don’t compete with their businesses.
And so it’s very good for the industry, while certainly Google, Facebook, and others will have an ongoing role to play.
I think a growing number of customers — we hear this on a regular basis — are nervous with putting all their first-party data in the hands of would-be competitors and/or subjecting their future to the agenda of these companies’ ultimate goals.
And so, while they have an important role to play, we also have an important role to play being that independent scaled solution, helping them both democratize the app economy and also help drive growth of their business.
John Koetsier: Well, and there’s a couple different directions to look at that, right? Because you can compare it to the duopoly, you can compare it to the Facebooks and Googles and say, ‘Hey, we need strong, independent players vis-a-vis them.
You can also compare it to the other major Adtech companies, the new titans of Adtech that are coming up that are building massive platforms that include first-party data gathering efforts like gaming studios, app studios and development, and stuff like that. Do you feel the same way with regard to those types of players?
Mark Ellis: I think there are some great success stories that have come before us, and as you said, very indexed on the gaming side of the mobile economy. I would say from the Liftoff + Vungle perspective, we approach it more from the total user. And we’re all users. We go throughout our day or our week and we have different interests. Depending on the time of day or the mood we’re in, we may be into games; we may be into food delivery; we may be into commerce or a host of other activities.
And so we have built our machine learning models, our prediction engine, our creative design and methodologies around the total user and really being able to communicate and identify with all those interests, not only indexing on the gaming side of the industry. And so as a result, I think that’s another reason why the industry really needs a scaled platform like Liftoff + Vungle’s, because we really understand the entire user.
John Koetsier: What’s also happening is we’re seeing the evolution of the space as we’ve got players who’ve gone public — maybe via SPAC, maybe via IPO or something like that — they have access to significant amounts of funding. You have other players like yourself that have private equity backing — Blackstone, I believe, in your case. Do you plan to be acquisitive in the future?
Mark Ellis: I would say we have a lot of ideas around new product innovation and unfortunately we only have so many people on the building side of Liftoff + Vungle and so we will certainly continue to push a lot of organic innovation and new products, but yes, we will augment that with inorganic or acquisitive growth. And so we’re studying the market and seeing what opportunities make sense to complement what we’re doing organically.
John Koetsier: That’s a cautious yes. Excellent. Let’s talk about privacy. You hinted at it earlier, you talked about iOS 14.5 app tracking transparency from Apple.
You’ve hinted that you think Android 12 or maybe 13, Google will come in with something, some kind of replacement for the Android App ID, Google Ad ID … first-party data is driving a lot of this consolidation. How valuable is that and how are the emerging titans of Adtech able to use that?
Mark Ellis: Well, I would say first-party data is certainly a factor. We though, have always believed from the early days of Liftoff — and I know this now to be the case on the Vungle side as well — that there would be a day when contextual targeting would be an important aspect of what we do, and so we had been for a while preparing for that reality. And then last year, June 8th, Apple gave guidance that they were going to be rolling out a framework that would really increase the need to have contextual targeting capabilities.
Having said all that, 85 plus percent of our tech stack remains the same as it was prior to 14.5 being rolled out on Apple’s side as it was post that being rolled out. So, it’s not only about first-party data.
And while that is important, we have found that contextual targeting allows us to really drive great outcomes for our customers as well.
Now, as it relates to first-party data, yes, it is also helpful to have big customers or, on the publishing side, access to first-party data to complement what we’re able to do on the contextual targeting side to ultimately drive the best outcome for our customers.
John Koetsier: Mm-hmm. What does the industry need right now? We’ve talked about the changes in regard to privacy and the massive acquisitions and mergers. What do you see is the biggest need in the space?
Mark Ellis: I think it’s about having transparency, about really understanding how different parties are driving the outcomes.
In the case of some of the bigger tech, they are self-attributing networks. So in essence, they grade their own homework and they set the standard by which they say how they did with regards to a customer’s campaign. I think that customers should demand more, should demand greater transparency and really some uniform way of assessing how their dollars performed in one environment versus another.
I think, second, customers really are going to want to have fewer, more scaled partners that can do a range of things for them, from helping to identify and build their audiences; keep them engaged; monetize them depending on what that mobile experience is; providing real time analytical feedback so they understand how to tune both campaigns and the mobile experience itself. And so I think there’s going to be a growing desire to have more solutions underneath one partner’s overall platform offering.
John Koetsier: And it’s interesting that you brought up self-attributing networks, because with iOS 15, Apple is now directing success postbacks wherever an advertiser wants them, so they’re able to actually check the homework that SANs were grading themselves earlier. We’ll see if that happens on the Google side — probably a little less likely there [laughing].
Mark Ellis: Right, right.
John Koetsier: Let’s look into the crystal ball … what does Adtech look like in a decade?
Mark Ellis: Well I think there are elements of what we are experiencing today that will still be around 10 years into the future. Consensus view is we’re going to continue to see a growth in the number of mobile apps that are available.
We’re at about 3.5 million today in both iOS and Android. That will grow to about 5 million in the next two to three years. I think, hours spent on a mobile device are incrementally creeping up, it’s about 4.2 hours today, each day we spend on a mobile device. That’s going to go to about five hours next year and so on. So, some of what we know today will still exist.
I think influencer marketing will see an increase in leveraging influencers for advertisers to get their message out and engage users. I think we’ll see a combining of different environments — think connected TV with mobile. So those will be some of the trends. I do think there’ll be greater and greater transparency around how users are sourced, how they’re messaged to. We’ll probably see some new ad experiences make their way into the overall advertising fold. So those will be some of the developments that we’ll continue to monitor and believe will be in wide use if we take a 10-year perspective.
John Koetsier: What about measurement? Do you think there’ll be more or less visibility into all the things that a customer or a user or a subscriber does before a purchase of any kind?
Mark Ellis: If you look through time, I think that has been one consistent trend, whether it be TV, offline, print … and while there’ve been different degrees of fidelity with how to measure that, the advertiser accepts lower fidelity and then with an evolution within a space they expect more and more higher fidelity of how to measure.
So, I do think there is going to be an increasing desire to be able to measure how dollars are being spent and the return on those dollars that were spent. Measurements may go through, or the measuring methodology will go through an evolution based on how the environment is changing, but there’ll still be a high priority on being able to measure.
John Koetsier: Right, and whether it’s granular or not, whether it’s aggregate, whether it’s privacy safe and other things like that. That will evolve over time. Very interesting. Well, I want to thank you for this time, Mark … and maybe get you back after your next acquisition.
Mark Ellis: Appreciate it, John. Always good to chat.
John Koetsier: Excellent.
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