Sramana Mitra: This obviously has to happen with great speed. How strong and how speedy are the APRs that you are offering to do all this?
Bill Simmons: The real-time bidding in general – and there is some variation in this – is 100 milliseconds round-trip requirement for a response. Large exchanges like Google or Appnexus have data centers on the East and West Coasts, Europe, and Asia. We have a server connection, and they send us a stream of requests and we respond to each one, one by one, with a response, which is no bid or we would like to place an ad for this. “Auto manufacturer will pay 50 cents,” for example. Then it either wins or it doesn’t. This happens 500 thousand times per second, and each response has to meet a deadline of 100 milliseconds.
SM: What are the venues that you cover?
BS: We find media across ad exchanges. Most publishers in the world are using ad exchanges for a lot of their media sales now. That is a regular online display to your laptop or desktop. We also buy through mobile media exchanges, so we get an app inventory and mobile browser. We are buying in-stream video, like the pre-roll ads you see on YouTube, for example. We recently launched Facebook ads, so Facebook now has real-time buying capabilities – the FBX exchange. It is a social display, mobile and video.
SM: Not search?
BS: Not today. This is something we would like to add in the future. There is a large number of search marketing providers, so we decided to enter that market later.
SM: What is the adoption of your kind of optimization technology among advertisers today? What percentage of major advertisers use technology like yours?
BS: The latest study I saw was 10 percent of digital media today, and in the next three years it is expected to get 33 percent. It is a large market and it is growing really quickly. It went from zero in 2008 to 10 percent today, and in three years is it expected to be 33 percent.
SM: According to you, who are the major players in this market?
BS: A major competitor is Google. They have their own offering. They acquired Inside Media a few years ago – one of our competitors. There is the Turn Platform on the West Coast and MediaMap in New York. There are approximately 30 other similar companies. There are various levels of offering. DataXu is pushing hard on not just being a media buying platform but a management analytics platform as well.
SM: Could you tell me a bit more about that part of the offering?
BS: When we talk to CMOs, CEOs, CIOs, and CFOs about what the major issues are, it seems that corporate environment marketing is one of the last departments to become very analytics driven or ROI driven. They know that when they do more marketing they get more sales and vice versa, but there is no strong correlation. So there is a desire to put in place a more scientific methodology to measure what is working and what is not working. That is what DataXu is aiming to build, and we are adding features to our analytics platform. The way we are currently helping our advertisers is not just to track the media that we buy, but the media that they buy through other means. This is to help them determine in a unified view which media are performing and which are not. They get reports about this in maybe 15 different emails from different providers, and somebody needs to make sense of it. There is a lot of efficiency to be gained just by pulling all this data together in a unified platform and unified reporting. The first thing you need to do, as I mentioned earlier, is to clean up your measurement, then your analysis. Once you do that, you can optimize.