Rewarded Interest on Marketecture

Ari Paparo from Marketecture got a chance to sit down with Scott Spencer, CEO of Rewarded Interest, to discuss current events, the invention of RTB and how Rewarded Interest can help consumers take back their identity online. Check out the section on Rewarded Interest or listen to the full podcast.

Marketecture Interview Transcript

Intro: Scott Spencer’s DoubleClick and Google legacy

Welcome to the March podcast. This is Eric Paparo. I'm here with Eric Franchi and our guest today is Scott Spencer. Uh for those of you who've been in the advertising technology world for a while, he's a legendary product manager and leader who has spent enormous amount of time at old DoubleClick and then at Google. We're going to ask him if he invented RTB, which I've heard he did. Uh and he's back with a new startup called rewarded interest that you know the elevator pitch is it like blocks the cookie pop-ups, but it's a lot more interesting than that. So, we'll hear his perspective on privacy and trust and consumer choice and all that sort of stuff. Um, Eric, do you spend a lot of time on those subjects? 

I haven't. Now, I've known of Scott for a long time. I think I might have been on like an IAB committee or two with him like way way back in the day. Um, he was a he was a big leader of all that. Yeah, I you know th this uh compensating users for consent, you know, having you know a consumer facing business, it's just there's been so many companies that that have gone after it and and what's interesting about Scott is he's bringing true ad tech chops and expertise to trying to crack this problem. So I'm interested in hearing what he's up to. Yeah, it should be interesting. Um and so this is our last guest of the year.

Year-end notes: Marketecture Wrapped and MadDB.ai

We have one more episode coming of the March podcast. I know you're sad about that, but one more episode's great. We're going to do our our wrap-up. We'll call it uh architecture wrapped uh where we'll do look at our predictions from last year, predictions for next year, favorite episodes, stuff like that. I think we're going to drop it between Christmas and New Year's. But just keep updating your Spotify and you'll it'll it'll hit you at some point uh during these weeks and then we'll be back at CES. Um and then uh we have a new product announcement. This was a little bit under the radar because it's my Mad Scientist project. Um, it's called MAD DB. Uh, did you try it out, Eric? Yeah. Um, I was, uh, a beta tester. I think I gave you one small bit of feedback. You fixed whatever it was. And this thing has been awesome. I start my day with it. It's a, you know, recap of the of the the top news from the companies that I have declared that I care about. And it's good. It's getting better every day. Like, I really enjoy it, man. I'm not just saying. I really really enjoy it. I appreciate that. 

For those who don't know what we're talking about, um, I I created I sort of I don't want to say I vivecoded, but I did vibe code a little bit. I created a new product. It's called Mad DB.AI and it's a news reader. We pull in thousands of articles every day from every publication we know of, including the blogs and the podcast, but also Adage and Ade and all those um about advertising. And then there's so much that uh I wrote an AI algo that uh ranks them and associates them with companies and with people. So you can follow people and say this is someone I'm interested in following. And then um it gives you a personalized news feed and also send you emails every day with the latest news on the subjects you're interested in. It's free. I'd really encourage you to sign up at it's again mad db.ai uh or the market advertising database. Um it's not there are no ads or anything. It's really like a personal experiment. I'm having fun. I'm sort of semi-retired. I do the podcast. I code a little bit. Uh looking to figure out what to do with the rest of my life. So, um, anyway, try it. I will I will respond to feedback as well if there are things you want or don't like. Um, and, um, give us your feedback. All right, with that said, let's jump in. So, we've got Scott Spencer from Rewarded Interest, uh, right in a moment.

Scott Spencer and Starting a company

All right, we're here with Scott Spencer, a legend of the advertising ad tech world. Uh, he's here to tell us about his new company and tell us a lot about uh, what's going on with like privacy and compliance and all that sort of stuff. Scott, thanks for being here.

Thank you, Ari. I can say longtime listener, first- time caller. 

Yeah, we had the Double Click reunion episode like a year ago, but you were notably absent. Um the uh so we'll have to make up for that. Uh but we want to talk about uh the subject at hand. So you after a long career, really long career, we'll talk about that in a bit. Um in uh in advertising at Google and DoubleClick have decided to go out on your own with a startup. How does that feel? 

Uh it is not, you know, it was not something I intended to do. Uh after I left Google, I was living in a small town in northern Massachusetts. I had a garden. It was very weird for me. I realized very quickly that uh there were things that were just still, you know, I kept thinking back to uh that were left undone that I wanted to go do. And so I started talking to people and and trying to figure out how can I you know start to address the challenges that exist for consumers about privacy. I had built, as you may know, the Coalition for Better Ads and I saw that that really had an impact on users because they uh the coalition of better ads for those who don't know basically did a huge UX survey to find out what was annoying consumers.

Okay. And what is annoying them? Ads?

Uh well certain formats of ads. Certain formats of ads. Okay, now these were unskippable ads at the time. Uh different formats of pop-ups, those were those were still in existence. And by creating a standard that said these are the most annoying and getting industry agreement to say we're not going to use these anymore actually reduced the ad blocking rate. So it was a great thing that you know when I was sitting at Best

I'm like that was cool. We were able to make things better for consumers and make things better for the industry because lower ad blocking rate, more monetization can happen. The industry is happier. Consumers not being annoyed, they're happier. So, you know, basically when I was up there, uh, you know, I I kept thinking to myself, there's there's still interesting problems to solve. And I had really been uh intrigued by the consumer side of things. How do I start to help consumers in a way that's not just beneficial for consumers but also beneficial for industry? 

Rewarded Interest

Okay. Yeah. So, uh, so you started this company, rewarded interest, and you're getting rid of the cookie banners. Is that the is that the, uh, elevator pitch? Let's get rid of the cookie banners. 

Uh, well, so it's certainly part of what we're doing. But to understand what we're doing, uh, you have to understand what's going on. So um you know earlier I think it was actually earlier this month Mosilla did a survey about 8,000 consumers and in that survey um they found out the number one frustration still today is the use of data without consent and that only 16% of people felt in control of their privacy choices. So there's a huge challenge still existing where consumers are just feeling like they're being taken advantage of and cookie banners are broken. Like that is just not the right interface, the user experience for people to be able to manage their consent. They're annoying. They're not consistent. You you don't really at this point you're sort of like go away. I don't want to deal with it.

And that defeats the whole purpose of control because control needs to be informed and you need to know what you're doing when you're doing that. Yeah, there's a real problem. Consumers want control and the solution is terrible. It doesn't actually solve the problem and it's ad hoc and everyone's doing it differently. Um and it may and has legal compliance issues. It's not a clear bill of health on the legal side either, right? Um so uh so how are you solving that problem? 

So so that's that's what we set out to solve. We figured there has to be a better way than the cookie banner to be able to create the privacy control. And so we started with the premise of how do we get a consumer able to take back control of their identity? If I think about it as the thing that the the privacy stuff, it's all this tracking. I want to consolidate that and make that something that they can be able to control. And so um by starting with that premise to say this is my thing we started to come up with a bunch of stuff and the idea is you can manage your settings in one place across the web and eventually across other devices as well. You don't need to have consent banners cuz you already set your settings and we can communicate that programmatically. All these publishers have great tools at their disposal to get you to say yes.

Consumers need a tool to be able to manage those things on their behalf. And so we actively set your settings. We actively block unwanted trackers. You're really in control. And most recently, we're adding the global privacy control, one of the latest control signals out there for any consumers who want to completely opt out. You're in full control with this tool. 

The role of Browsers

So I I guess this is a bit of a hornets nest of a question. Uh but why haven't the browsers done this? It seems pretty obvious that the browser should be a single stop for for a consumer to tell them what tell what they want and then to have it distributed to everything they visit. We have this history where do not track was a failure where Apple does its own thing where Google's scared to do. I guess I'm answering my own question. Uh but but shouldn't the browsers do this? 

There is an argument that this is something that should be embedded in browsers and for the first time you know we're seeing other browsers out there. I I've actually worked with OpenAI’s browser and their extension support's not so great. But look, in the world of agentic browsing, you want a tool that lets you understand what's happening because if you think about the analogy for a moment, like if you're the one behind the browser, you want to have control of your identity. But if you're going to hand the browser keys over to an agent that's going to do stuff on your behalf and you don't quite know what they're going to do, maybe you want to have a different identity for that.

You need to be able to have that kind of control and you don't want it consenting or not consenting or doing other things that you don't know. That's not a thing you want probabilistic. You want to actually be able to say this is what I want to do. Here's my settings and go manage that. So, um, absolutely. This is something that we think needs to be, it's not just in your browser, though. It needs to be almost at the OS level or cross OS because you don't want to have to set those settings when you log into your TV. You don't want to have to set those settings on your phone. So this can be done something where you do it once and you now cross device, cross environment, your settings are done. 

Can Rewarded Interest help with minors?

Well, there's this interesting debate that's going on in Congress right now where uh they're competing bills about whether age gating of apps should be the responsibility of the device or the app. Um, and it's heavy lobbying right now because the Facebooks of the world want the devices to know your age and the uh Apples and Googles of the world desperately don't want to have liability to know people's ages. They want Facebook to figure it out. Uh, and it's kind of analogous to what you're doing a little bit. 

Very similar. As a matter of fact, one of the features we have is we have a minor mode. We built a restricted mode into it. So, as a parent, you can install this. you can then lock out your child, your minor from being able to do any consent because they can't actually consent. They don't legally have that ability to do that uh as a minor. And so we built it with a you know similar kind of protection if you use screen time. So you can put this on and then that user is going to get no tracking whatsoever. All of the privacy pieces are turned on. So absolutely there's this need to give consumers control, give them a tool that can help them manage their digital identity and part of that digital identity is am I above the threshold of consent? 

Is managing privacy too much work?

So have you found that the devil's advocate would say uh that consumers say a lot of stuff but really they want like they don't want to spend time on this. They want to just like block everything or don't care at all. Um, so you're giving them all this control in your tool. Basically, your tool, if we if it's not obvious, is like a browser plugin. Uh, uh, and, um, it does have a lot I've been a beta tester from early on and it has a lot of control. How what are you finding in terms of consumers? Are do they care about granular control?

Uh so it's a great question and part of our design philosophy is to do this in a way you know considering GDPR you can't have defaults to make this as easy as possible for consumers and so as a result you part of what we have in here which we'll get into is you we have rewards we have an incredibly high opt-in rate of people just saying they're defaulting and say yeah I will I'll happily optimize my settings for rewards they have uh by putting all this control there most people don't have to do anything. You install the extension, 30 seconds later you're done and you never have to think about consent again unless you want to. And that's the key because it's not something you want to think about every time you go to a website. But it may be that you hear some news out there about something going on. You're like, you know what, I don't trust this actor anymore. How do I go and block that vendor from ever dealing with it? Oh, I can go do that once and never have to deal with that vendor again. So, it's the idea of make it you need all the control not because you're going to use it every day. You don't go and adjust your side view mirrors on your car every day, but you need that control when you want to actually adjust your car because it's not safe.

GDPR and The Digital Omnibus Package

Um, so let's talk more broadly about this issue about consent and privacy and all that. What's going on in Europe right now? There are various headlines like GDPR is dead, the reconsidering, uh, no actually it's the same. It's kind of up in the air. So give us your perspective on on the European situation. 

Yeah. So for for those who don't know, there is the uh digital omnibus package that was put forth which is a significant change proposed to GDPR that would reduce some of its uh sort of coverage, what is considered personal data, what things are required for consent. It doesn't get rid of them completely. So there's still lots of things that require consent require consent banners unfortunately. Um, unless there's a better alternative. Well, that's good for you. They got rid of the consent banner. That would be tough. Well, I mean, part of So, part of what we offer is the consent banner, but what we're really offering is that control. And if this GDPR package does go through, there's a lot of Europeans who are going to feel that the rug's been pulled out from under them from a protection point of view, and they're going to seek protection. And for the industry, I think it's much better to have a tool that helps solve the privacy problem versus everyone just saying, "Oh, forget it. I'm just going to get an ad blocker and there's no monetization. Content's harmed. It's just not a good outcome for anybody.

So, uh, you know what GDPR, what the omnibus package is, it's a set of reforms. It does propose some things, but it's very unclear whether or not that's going to happen. So, uh a lot of people are lobbying. There's a lot of activity going on in Europe obviously for that. Um I don't know what the betting I haven't looked at the betting odds yet. Uh but it's certainly not a shoe-in that this is going to go through.

Well, well, so as my the biggest change in my understanding is is that um in in GDPR, these anonymous or pseudo anonymous identifiers like cookies are covered as personal data. Um and I always felt like that was one of the key flaws of the of the regulation. And my understanding, tell me if I'm wrong, is that um the standard changed to being able to reasonably identify the user. An ID has to be able to reasonably identify the user in order to be considered personal data and require consent. Is that is that am I correct in that explanation? 

So I I'm not a lawyer and in terms of always interpreting laws is always fun. But uh my understanding is yes. In essence the the criteria for a pseudonmous identifier to be considered personal data is whether or not you as a company can I can associate personal data with that user. uh and and actually it may even be that you do so. Not that you could do so, but you actually do so. And so that would decrease the burden for those synonymous identifiers significantly. And you know, that's a double-edged sword because it's good in the sense that great all these kinds of identifiers can then be used in the industry, but it's not good from a consumer perspective because all of a sudden, wait a second, now these trackers, these web bugs, whatever the people want to call them, they're now being used and the control just got reduced. So we, we think that it's important to be able to control all aspects of your sort of identity. And so even if that changes, that doesn't mean we would say, "Oh, there's no control. You can still decide to turn them off." 

Are consent banners going away?

A and the cookie banners, you know, one of the misnomers or misunder common misunderstandings is that the cookie banners were called caused by GDPR when actually they were called caused by a previous regulation called e- privacy or e privacy depending on if you're US or Europe. Um so um the um so my understanding is also the cookie banners are sort of debatable because the e- privacy said you needed consent before placing them on a user's device and this omnibus package may get rid of that requirement. Is that correct? 

Um, so my again the preface of not a lawyer. Um, but there's a lot of things that require uh a consent interaction with the user uh to get their permission to do things and the consent banners have been a tool for that. Certainly privacy is was one of the first things but that required the sort of flyby notice. You could you could initially it was opt out then it had to be opt in. uh that part of the requirement if the uh cookie is no longer considered to be personal data is not required. But if you want to do things with that, a lot of things that would be done, you'd still need to get that permission. Uh and you have to get that permission at the site of the of the publisher because there's no other way to do it. So there's still a there's still a need and that's all in Europe.

So keep in mind in the US, California has created a significant need for privacy banners. there's been a bunch of uh lawsuits that have happened in the US with regards to the collection of data um there. So um there's another you know the US the US is sorry Europe is only one regime that needs that and then um the US has a bunch of things then there's Brazil has Japan has all these other countries have uh different things that are requiring this and the internet doesn't really like geographic borders.

On entrepreneurship

Yeah. Okay. So uh so you were standing in your garden thinking about this decided to do entrepreneurship. How how's it going? Like there's no cafeteria, no free food at rewarded interest. Uh I imagine uh that is true. 

That's true, we have no cafeteria. Um but it's been look, I love to build things. So for me it's been a lot of fun to build something to help consumers. uh to find a way to try and align incentives across the industry because one of the key things we're trying to do here is to create something that is good for users. You don't have to deal with all this frustration. You have much more control, but it's also good for advertisers. Clearly, there's addressability. And most interestingly, we found it's really good for publishers and ad networks because ad networks, there's a high cost to putting an ad consent a consent banner on 10,000 sites. And if there's a way that you can use some of those uh know frequency sites, then the one recipe someone goes to, [they can] use it as an opportunity to get someone to install rewarded interest and then never have to have that user encounter a consent banner on any of your other 900 9,999 sites. That's a huge benefit. So, we've had some interest there and a little bit of pull from the industry to do that. And that also makes me excited – doing something where we can make a solution that's better for consumers and better for industry. Um, that's sort of what I wanted to try and do. 

Eric, uh how how does uh the finance community feel about privacy tech. Um so there's privacy tech and then there's tech that is like you know consumer engagement tech. I I don't know exactly what what we would call it, right? So you might want to bifrcate it. 

Um there's uh yeah I mean there's been a history of companies that have done things in the privacy space both large and small and I think some of the large ones have you know just become like these large consent management platforms um you know uh and there's there's a couple of them and then there's a bunch of companies that have uh taken a stab at what Scott is building with rewarded interest which is I mean the the name speaks for itself right rewarding um consumers uh for data and and you having a privacy angle. Um we've yet to see a break out there. Um but it is such an enormous market that there's always the attraction of smart operators like Scott to get after it because if if a company figures it out, you have an opportunity to you know do something that's enormous. Um so I think um you know because of the fact that there haven't been breakouts in you know my experience it's been challenging for these companies that are you know consumerf facing to like you know really raise a lot of money and scale very quickly. Um but that doesn't mean that there won't be a success in the category. 

Um well you heard it here first Scott. So if you're looking to raise money you know Eric's email. 

Who invented RTB?

Uh um so let's go, Scott you and I have known each other since I entered the ad tech world. Um, I I didn't report to you, but I remember like my first PRD at Double Click, I had to get approved by you and you were like, I don't know, it's rich media. Who the hell knows what this is? Uh, more or less was your reaction. Uh, the um, so let's set the record straight first. How many years were you at the combined double click Google? Cuz you you're close to having the record. 

Uh, and I don't think I had the record.

So, it was 22 years from Double Click to when I left Google. That's amazing. Um, okay. Uh, true or false? Did you invent RTB? 

Well, it depends if what you define as RTB. Um, what I definitely did invent was what we called network proxy bidding. No one's ever called it that. Well, so the uh that's the patent that's what's on the patent. The uh Oh, your pat. Okay. You didn't invent it, but you have the patent. Okay. 

I have the patent on it along with Joerg Helig who who uh co-invented it with me. But so what we did was if you going back to like early on figuring out the doubleclick ad exchange, we built it on a merger of what was then DFA and DFP. And at the time we used this thing called the internal redirect, the INRED. And the reason that I was focused on the inread because it had something super cool that nothing else could do. Inreds could say no. So, if you were to just ask a third party for an ad, the tag went out, an ad had to be delivered, but an inred was cool because an inred could say no. Meaning the publisher could say no.

The advertiser could say no. Okay. The advertiser could say no. So, the publisher would say, "Go call DFA." And if DFA had an ad, great. And if it didn't, it would say, "Don't have an ad." And it would fall back. And then you would have uh DFP would go to the next ad in its queue to go select uh an ad. And the other cool thing was it passed all the parameters. So DFA didn't have to go refigure out the geolookup. It didn't have to refigure out any of the targeting elements. It passed the parameters. 

Yeah. So just for context for those people who don't know what we're talking about, we're talking about the buy side of doubleclick and the sell side of doubleclick interoperating on an ad server level before exchanges really were a thing. It was called an in red or internal redirect. So that just give a little more context. Go ahead, Scott. 

Yeah. Um, and so when we use that in red, that's how we built the original exchange, right? So we used that in red as the mechanism. We added a price to it as a parameter. And so now we could do with the auction side of things. Now fast forward a bit and doubleclick gets bought by Google. Uh, we have to rebuild the entire Doubleclick ad exchange on the Google stack. But until then, there's Adwords wanting to bid on the DoubleClick ad exchange, and the only method we had was an internal redirect. So, we needed to come up with the external way to do that. And so, Joerg Helig, and I sat down and figured out a way to proxy the bid call from DFP in order to go to AdWords with all the parameters associated with it. And eventually that concept of being able to pass that information over to a third party, you know, third party to the two different infrastructures um with the bid pricing and all that. That was what we then said, hey, others want to buy on this. Great. We created, converted that into that external uh proxy bidding thing and then, we renamed it real time bidder. 

Who who was the first buyer? Do you remember who was the first impression bought by RTB outside of AdWords?

Um, we opened it up, if I recall, it was like there were like 14 buyers that were immediately buying on it. It was not one. It was when we opened it up cuz we had we had a bunch of buyers who were working because we we actually give there was a buy side of addicts at the time. I don't know if you remember this, but 

Yeah, you had to like upload a tag and stuff, right? 

Yeah, it was it was a full buy side little thing because there were no biders. There was no anything else. And so we actually built a full buy side. So all the people were using the buy side. We're like, well, I I want more robust solution than this buy side thing. And so we had a bunch of buyers ready to go. And when we turned that on and they made it available, they were all able to plug in. 

This is fascinating. Um I I tested this out this question out um prior to uh to recording. Um I asked Gemini and I asked uh Chad GPT who invented RTB and and they wildly different answers by the way. Um, but uh the one thing that both said was there was this moment in the early 2000s where like multiple companies and multiple people were all working on this thing. Um, Gemini actually gave a very thoughtful answer and name names. It was like Brian O. Kelly at Wright Media, Jason Nab at SDC, Dr. Boris at IPON, right? Like all kind of like you were working on this thing at the at the same time. you certainly deserve a mention in this um based on the uh the doubleclick stuff. 

Yeah, for for better or worse, you know, the Ai systems, they base on what information's out there uh on the web and we never we never went through and sort of talked about the the creation of RTB or or or the signal at the time. I mean the funny part was it was super organic because for us we had to connect Google and doubleclick and the data centers you their different locations uh and all that stuff and so we had to come up with this just low latency way to pass the information across uh and I remember I so they're like you got to use protobuff and I'm like I have no idea what a protobuff is but uh yeah.

For the record you know I wrote a book about this so um you know Scott um unfortunately wasn't able to speak to me during the course of the book because of his ongoing involvement in litigation. Um, but what I found was um, Rajie at PubMatic thinks he was one of the first people. He says he he literally wrote out the spec on a word document and sent it like by email to various people and there were some early transactions with like turn and invite. He didn't say he was first, but he was he thinks he was quite early. Uh and um and O Kelly uh believes that he sort of hacked something together related to eBay as an advertiser uh buying on um on sample websites on like mic on ads which was a blog and some things like that. Um so uh but I I think it's true that it was extremely uh diverse group of people working on it. It was all in like the 2009-ish time frame 8 n and uh and that is the history. 

Any regrets?

Um, I'll ask one more question, Scott. Like, okay, I I know there sensitive topics. You've been on the stand and things like that, so so feel free not to answer, but like we're here. We're 15 years or more like 17 years after the invention of RTB. Um, would you any regrets? Would you do anything differently? If you could uh if you could talk to yourself in 2008 and say, "Actually, this RTB thing should be a little different." What would you do differently? 

Uh, it's a it's a fun question. you know, the process of creating the exchange and the integrations all was fairly organic. It it was not like uh there was a master plan behind things. I remember anxiously tracking every day the number of transactions that went through the doubleclick ad exchange uh on a spreadsheet. There was no automatic reporting even at the time. Um, and it was just exciting to, you know, to figure out a way to take what had been, uh, working so well with CPC based ads in the second price auction and move that over to display. Um, you know, that I was just really excited about moving that thing forward and being able to create the transactions. At the time, most publishers hated it, right? So, you have to keep in mind that uh when I built the double click ad exchange, publishers were like, "This is terrible. You're going to hurt my direct sales." That's all they cared about. Um, you know, in in terms of regrets, there's always things you go back like, you know, that could have been done better. 

Uh, but I think my biggest uh regret is not, you know, taking more time to step back, watch, and be excited about what was happening. was so in it to build it um that didn't get a chance to really understand just how amazing the transformation was and celebrate with the people there the amazing work that was done to change an industry. Um so uh technically you know things will happen the way they I think they sort of unfold uh uh more organically than people think. Uh my biggest regret is just that there's some amazing amazing people forgotten to time who are responsible for uh this transformation that it it's amazing. Yeah, it's a it's a two-sided co coin of uh working for Google. You make a lot of money but no one knows who you are and you never update your LinkedIn. Um the um All right, this is an awesome conversation. Uh so if you want to get uh rewarded interest uh what's the what's the URL? rewardedinterest.com.

All right, go to rewarded interest, download it for free. I I've been using this as a beta. Big big fan. Um, and we'll be back in a minute with the news of the week. Scott, thanks so much.

The Refresh

Okay, we're back folks with the refresh. Um, we have a bunch of stuff today. We have, oh my god, a scoop um with Google at uh found Meta and Chinese ad fraud, some AI announcements, YouTube versus Netflix. It's all over the place. But before we do it, Ari, what you got? 

Quick correction from last week. I told the story that the coach of the Michigan college team was caught by Door Dash um when he door dashed a plan B. Turns out that was a disinformation, misinformation on the internet. I fell for it. My bad. Sorry. You got got I got I got got. My bad. Wow, man. What is this world coming to?

Okay, let's move on. All right, before we even go to the news, I think we need to talk about something. We do. Um, let let me pull up something for the people that are watching on YouTube. So, for those that are on YouTube, you see this. For those that are not on YouTube, we're looking at a screenshot, the first frame of this um TV ad that uh Vibe uh are you you recently were were on the on the board of the company. I'm sure you're an investor. um did and posted to X. It is a frame by frame um copy of the of the can't even say the the the the American Eagle uh you know uh viral ad from earlier this this this year. And Arthur has blonde hair. He's wearing um prosthetic female body parts in like head to toe denim. And again, it's a total copy of the American Eagle ad. Arthur, he's he's got Cindy Sweeny's boobs on somehow. How is this possible? You said it. I did not.

He has facial hair, but he does kind of look like her. He has 4.5 million views to date. It has all of the ex meme accounts jumping in, doing more. I mean, hats off to Arthur for one of the most creative things we have seen, I think, ever, with adtech advertising. Oh my god, this thing is moving. Off though. Yeah, audio is off. We're not going to get copyrighted. I thought it was AI. I thought it was AI, but it's prosthetics. It's makeup. Uh, he did the full production. I think he said in a in a thread that cost 50 grand to produce this ad. Um, and this is what happens when French entrepreneurs move to the US. They they lose their brains. Uh, and I I just love it. Well done, Arthur. More of this, please. Um, this is fantastic stuff. Scott, did you have a chance to uh to see it? 

Yeah, I just I just saw it there. I like the tagline. Streaming TV has great leads. That to me is is definitely the the winning part. It's a total copy of the of the American Eagle uh Sydney Sweeney ad. Um, well done, Arthur. Again, more of this. All right, you got scoop. 

What's going on with uh Google? Yeah, this is a this is a kind of interesting scoop. Not because of the uh implications, but because of like well because the implications, not because of the reality, which is um Google just quietly changed a bunch of things that they've been asked to change in their court cases um without before a ruling came out or in reference in response to the EU rulings. Um, so one of the most controversial uh product changes that Google made in the course of its adtech saga was this thing called unified pricing rules or UPR where they disabled the ability for publisher customers to charge different amounts uh for different exchanges. So typically a publisher might um have a higher floor price for Google AdX than they do for like index exchange because they might have like a deal with index or uh Google's AdX is known for having higher take rates so they might want to you know charge a bit more. Um and Google removed that ability in like 2016 2017 is a big aspect of the court case cuz you know from a legal perspective uh removing a feature is the antitrust equivalent of increasing a price. Um, it's the same kind of concept where monopoly power allows you to do something like that. Google argues this is a nothing burger, but whatever. Um, so this week Google just removed it.

They changed the name from unified pricing rules to just pricing rules and they removed the feature. So, um, with no fanfare with a very minor blog post. Um, they also took their revshare on open bidding, which is their server to server connection to other exchanges from the usual 5 to 10% to 0% in the EU or at least for EU based publishers. Um, and I did some reporting on it and what's happened in the background is that uh Google responded to the EU's findings of their monopoly about uh in September with various proposals. These are two of the proposals which they just executed. Good for them. Uh and then the third obviously the third thing is that the EU still wants them to spin out AdX and they don't want to. So that's still contentious and obviously that is the main, uh, crux of the DOJ's case that we will get a ruling on in January or February. Um I think the next shoe to drop is when uh ADEX starts bidding into pre-bid instead of directly into GAM. Uh, and that's something they've agreed to in the US, but the question is, are they working on it now? Will they just do it whether or not the court requires um so good there's good news for publishers. Um, good for the whole process of unwinding this mess. Um, and, uh, it's kind of funny the way it just came out. Yeah. Why would they just go ahead and do this? Do you have any, you know, kind of board chess thoughts around it? I think this one particular thing, unified pricing rules, was so obviously wrong that they knew they were going to have to remove it, so why not? They I don't think they lo they they gained more leverage of goodwill than they lost in holding holding this card. Got it. Got it. Um Scott, want to take a pass on this? I assume.

Uh unfortunately, I think until until there's any rulings, that's something I should probably not uh not comment on.

No problem. All right, we'll move on. We got something juicy here. So Meta, so Reuters did a piece on the um the the scam ads uh coming on Meta largely, you know, via China and other other sort of kind of non- US operators. A couple weeks ago, um they came back with another article today that basically estimates that 20% of Meta's Chinese revenue is coming from scams and gambling and other banned content. So, I'll walk through it. So, they got a hold of some internal dots that estimated $18 billion. Basically, more than 10% of Meta's revenue comes from Chinese advertisers targeting foreign consumers. Reminder, Meta, you know, is banned in China. So, this is just like Chinese advertisers targeting everybody in the US and around the globe. 19% of that amount, so $3 billion was linked to scams, gambling, other bad stuff, including illegal content. Um, now this is where it gets a little weird. So Meta uh apparently internal docs allegedly cracked down the spend went down. The spend went down by half and then abandoned the crackdown. Um maybe because the spend went down by half. I don't know. All all allegedly. This is a weird thing because if it we'll link to it. It's a very long article. It's a very interesting article. The Chinese market is very opaque. So Meta works with 11 resellers, big big companies, who then work with intermediaries like agencies and networks and god knows whom um who, you know, basically it's the wild west and you know they start doing all all this bad stuff and it gets very very difficult to track because you can't have a target on the back of one of these 11 um resellers. So seems like it's part of the complexity of the Chinese market. You're more apt to see these types of things, but it's a mess and it's a lot of revenue. Yeah. Uh this is this is continued uh you know damning reporting from Reuters. Uh if 10% of the advertising from the second largest advertising company in the world is should be illegal is illegal should be banned and uh they I wouldn't say they're they don't do anything about it but they take a reactive stance. They they wait for complaints. They wait for things to come to their attention instead of proactive. Um, we had uh Rob Lean on the show maybe 6 months ago or more and he basically was saying that it's overwhelming the number of new ads they get every day. They don't check every single one. It's reactive. Um, so, uh, I'd be interested in hearing Scott your position since you did work in trust and safety at Google. You know, how hard is this problem? How active maybe not specifically Google, but you know, what's your perspective on this problem? 

Yeah, look, so that this is not good data. this is this sounds like a a real problem that they have. And when I was managing uh trust and safety, you the goal was trust. So, uh if you have this much uh bad ads running on a system, that's going to mean anybody who's monetizing through you is not going to want that those ads to run. They're not going to trust you as much uh in the long term. So, uh it's in Meta's interest to clean this up and to make sure that they've got a good environment for uh the ads. What what's interesting is the there are a lot of ads that come into any system uh on a daily basis but the technology for uh assessing ads is also kept uh pace and so one of the questions that I would have for that team is you know how how much are they using AI and ML to pre-screen those ads and looking at a combination of heristics and uh other things to understand that we knew that the number of hops that you had between ads directly proportional to the probability of it being fraud. And so there's a lot of heruristics that can be brought into that even in China to go and and protect. So, you know, I'm sure there's some tough conversations happening in that trust and safety team to clean that up. At least I hope that there is. What uh you know, what about the point of view that um the more barriers you put uh between an advertiser and a spend, the bigger impact you have on revenue even for the good guys?

Well, there's always a trade-off, right? If if you get rid of a bad actor, you lose revenue. Uh, yeah, but let's say you're willing let's say you're willing to do that, but I'm talking about the good guys. So, so I've heard from this perspective, especially it's actually especially on the publisher side, like we want to onboard as fast as possible and the more we try to get rid of the bad guys, the more the good guys suffer and it slows revenue throughout the whole company. 

That's, it's true, right? you you uh you're going to get some good actors that are going to be restricted when you're trying to protect against the bad. That's always a trade-off. It seems like in this case, it's probably too far to one side. Uh but you're never going to be perfect. And really, where you set that dial is going to be what matters. And frankly, it's sort of how much do you put value into the long-term uh value of your audience of your consumers. I've got a website, it's going to be around for 5 minutes. Great. I'll take all the the crappy ads I can get and if those users get hurt, so what? I'm gone. But if I have a a brand that I really want to invest in and those want those consumers to come back, uh then I can't have the article that says, "Oh, I got malware because I went to this site or, you know, I clicked on an ad and it ended up being for some guy who robbed me." So, um it's it's always a balancing act. Clearly, you know, sometimes things go off the rails to uh one side or the other. Um, but it also requires a lot of investments. Like it's it's not a an inexpensive problem. Uh, at one point, uh, I believe the trust and safety team was the single largest user of ML at Google to try and and and deal with this. 

Makes sense. Just to underscore it, um, this hasn't been, uh, confirmed by Meta, but there's some reports that 15 billion ads per day run across all of the Meta properties. So it's operating at a scale that is just like you ML can only solve this right like there's you know there there's there's just such massive scale that it's like impossible to you know have a have a team on it. All right awesome. Um two things this week and you know this is interesting. All right. Because uh one of the things that you know you've said a few times uh over the course of the past year or two is like where's the innovation coming from you know the scaled platforms the scaled companies who should be advancing the cause in AI and you know these two announcements this week are from large companies. So the first is uh from PubMatic. So Pubmatic claims they ran the first agent campaign with Butler Till and shout out to Butler Till Butler Till they were in the ADC CP announcement. They've been like all over this stuff um in the agency up here in Rochester, New York. So here's here's the explanation. Um so using ADC CP ad CP, Butler Till submitted a campaign brief in plain language through Quad. Um PubMatics agents then took over basically translating the brief into a media plan and setting up and then executing. So it starts in Butler's AI tool. They didn't name it and then ultimately Pubmatic takes over from there. So there's no DSP involved in this one from what I understand. Yeah. And I wrote this in my coverage of ADCP, my sort of critique of it. Um, not using the word in a negative sense. Um, in that it appears that this is going to open opportunities primarily on the sell side. The buy side is going to say here's what I want. You don't need a lot of tooling for that. The sell side it needs an intermediary because individual publishers don't have scale, can't do performance. So this is actually a really big opportunity for sellside intermediaries, be them SSPs or Swivel. I know you invested in that's been I I had I had a holiday party conversation with um with um um some Swivel folks who were saying they're like basically running campaigns or very close to running campaigns. Um and um this is if I was on the sales side, I'd be jumping all over this. I don't know the mechanism if it's going to be guaranteed buys, audience buys, performance buys, and that's also what I wrote in my critique, but I'd expect a lot more of this. Yeah, agreed. This is super interesting. Scott, you have a POV on this one? 

Oh, yeah. So, to me, the world of Agentic uh inventory creatives, this all hearkens back to like early days of display. And what was needed then, I think is needed now, are intermediaries to come in and figure out how to make that friction lower. Uh, ad networks were one of the earliest things that came up to try and bring that inventory together, help the buyers buy it. Uh, I think we're in the need now. We're going to need players to come in and figure this stuff out and make it so it's really easy and effective for advertisers to get the ROI they want and for publishers to get monetization. And they're going to have to do that messy middle stuff to make that work. It’s a great opportunity. Uh who knows uh who wins now may not be the winners long term. There was a huge shakeout in that world but I think we'll follow the same pattern. We'll be there will be the performance networks of the agentic world for a while until it starts to become standardized and mainstream. 

I don't think we can jump to the the st there's some standards required to sort of start things but I don't think it's going to jump to the where it lands uh for quite some time. Also, Eric, we didn't cover in the notes, but the Agentic people created a new association, the Agentic, I for what's it called? Agentic Advertising dot org. Check me on that one if I'm if I'm wrong. And um interestingly, Randall Rothenberg is um is either involved or or leading it. So, you want somebody that knows how to get an industry standard in place, he he is your person. Definitely. There'll be some very lengthy keynotes at their first conference. I think that was a a huge uh boost of credibility for them. A huge benefit for them to bring Randall in. He's a great person for doing this. He has uh gone through that arc many times and so uh congratulations Randall. Congratulations to that or that's that's exciting.

Absolutely. And then on the other side and this is interesting. I think it's interesting because we just talked about how this is a big sellside opportunity. This comes from a buy side company in Filon who owns a number of assets including um Media Math. they launched something called the agent connector. So this lets AI agents basically plan, buy, optimize um you know without a dashboards and then b to optimize in any system. Um so it is like it's kind of like a buy side solution without the DSP. Is that your take on it? Yeah, I mean I think that the buy side has a lot of workflow that is AI uh ineligible. Um and being cross channel makes a lot of sense. Let's tie this to the other news item that we haven't gotten to yet, which is Fluency raising $40 million. Um so it's really similar, right? Fluency offers cross channel optimization using AI. That's at least what they claim to offer. Um and the you know the difference between planning and optimization is kind of you know a dotted line in this stuff. Um, you know, I think buyside really wants this like be going beyond a once a year media mix model and instead saying this week, how should we move budget? What should we do? What's working? What's not is great stuff. AI should do it. It's not that hard. It's not that hard. There's a lot of companies doing it. And you really can't move much besides budget. Uh, that's, you know, you can't optimize very much when you have channels like Meta, Google search, and trade. What can you mix between those three? What learnings go across them? not a lot. Um it's budget and it's maybe flighting and a couple other things. So um I think this is really uh valuable but it's it the it's sort of he head hemmed in by what it could ultimately deliver.

Yeah, that makes sense. Um I mean on the other side I love to see you know again these scale companies start to push forward. Um and maybe the launch of ADCP and MCP was what we needed um to uh to see this adoption. I think we're going to be overwhelmed by the number of press releases about AI enabling legacy ad tech companies. Um, you think you think CES might see one or two? We might see a couple at CES. Maybe I'll keep count. Let's do a counter. How many how many times I hear I'll have like one of those things you keep in your hand to count stuff. Every time someone says AI, I'll go I hear AI is going to be big. I I'm not sure actually, but you know, I hear it. I hear it. Well, thankfully there's a new tool tool called uh MAD that's helping me track all of this stuff.

Um, absolutely. So, all right, let's uh let's talk about YouTube verse Netflix. This thing is like coming to a head out of out of nowhere for two companies that say they don't compete. Um, so, uh, YouTube, I think, leads the the market in terms of podcast downloads, podcast streams. Netflix just signed a couple of big podcast deals. So, iHeart, they signed a video podcast deal with Netflix. Bar stool video podcasts are going to Netflix. This is definitely a shot across the bow to YouTube who obviously has YouTube music, but it's a place where you will watch the video format of podcasts. Yeah, YouTube had us dedicated or Google podcasting used to exist. They shut it down about a year ago, started pushing everyone to YouTube. YouTube supports taking a RSS feed from your favorite podcast studio and putting it in. It is widely uh discussed in podcast circles that it's great for discovery. Um whereas Spotify is really bad and Apple Music are both really bad for Discovery. Um so people are investing more and more time there. Um it's interesting these two deals, iHeart and Bar Stool both very conspicuously said. They're exclusive with regard to video podcasts. You can still get your audio podcast anywhere you want to listen to it, but if you want to watch the video, you have to go to Netflix. Um I think it's I think these are super interesting deals. I'd love to know what Netflix's plan is. If they're going to create different products out of this or if it's just going to show up as a card on your Netflix when you're at home and you just start watching whatever bar stool or whatever. Um, you know, um, so I think this is this is pretty interesting. It is. I watch a lot of podcasts on YouTube. It's very natural to YouTube. It's become a habit for me. I'm tr It's a little bit of a stretch to think and maybe it's cuz I don't watch these podcasts. a little bit of a stretch to think I'm gonna use my Netflix time to, you know, kick back and watch a pod when I could be watching like something much different. But again, maybe this is just a habit that needs to needs to get broken. I mean, maybe if I was Netflix, I'd be thinking maybe I need a dedicated app like on the phone to have a podcast listening app that's that's got a mixer of audio and video. Maybe. I don't know. I I don't think it's enough just to put it on the home screen. I mean, I think it's interesting because YouTube's YouTube is really focused on the discovery problem. They've made it easy to discover new content, related content, new formats. That's why I watch so many pods on on YouTube. It's going to be a challen It's going to be a challenge to for Netflix to do on on impossible challenge. Maybe they'll do it with a different app. Maybe they'll start to change that format. But look, we'd be remiss if we weren't first to say shout out to Neil for making the Times CEO of the year. Oh, yeah. Lovely picture there. That was fantastic. Oh yeah. Know Neil for many years. So it was exciting to see. So you reported to Neil for for quite most your time at Google, right? 

Uh yeah. I mean I've reported to him different times, not reported to him other times back and forth uh many times, but I've known him for a long time. He's a fantastic person and uh just a great, a great strategist, a great CEO. So it's great to see him getting the recognition there.

Absolutely. Is quite a run and I've reported to him for three or four years. Uh he's a great guy. Um speaking of Neil and YouTube, so you got podcasts going to Netflix, the Oscars are coming to YouTube. Bit of a unbelievable. Unbelievable. Starting starting in 2029, the Oscars moved from ABC to YouTube. Talk about a bell-weather of the state of legacy media. It is incredible what we're seeing. It really is. Yeah, that it's incredible. Uh coup. I mean, we've seen a football game here and there. Um, you know, we've seen, you know, uh, a little bit of content, some, you know, MM MMA, whatever. But to have this like tent pole event, one of the most important broadcast events of the year, go to YouTube, I mean, I'm looking forward to the day where my whole family is like, "How the hell do we watch this on the TV?" Uh, that's what's going to happen in early 2029 to me. Um, but it's it's a big deal. Well, the one of the things that if it's going to go to YouTube, there's no longer a broadcaster uh uh that is doing it. So, the rules are off in terms of what gets said there. All of a sudden, let's let's see what happens now that we have, uh, no more beeping. No bleeding. I I think I just want to make one more point uh which is like we're heading into this uh Netflix uh discover Warner Brothers deal and a lot of the conversation is like, oh well Netflix has a monopoly. They're such a big streamer. Uh, and they're smaller than YouTube. Significantly smaller than YouTube. By any account, they're the second largest streamer, not the number one streamer. Uh, which you could still argue shouldn't be allowed to bar buy that company. But, um, the, uh, the conversations, especially on Twitter, like Tim Woo, who's a former Biden administration official, saying that they're not competitive is just a joke. I mean, they're head-to-head the two most important companies in streaming competing. Absolutely. Absolutely. Um, all right. I think that's a good place to uh to end it. Yeah, absolutely. It was a great conversation. Um, Scott, thanks so much for being here and giving us your insight. Uh, reminder if people want to download it, it's at rewarded interest. Um, and we will be back next week with our last episode of the year, our year end, uh, architecture wrapped. Um, so please tune in to that. Take care everybody.