I shared some notes from Jeff Green’s fireside chat at the Needham Technology and Media conference on the premium boards yesterday. I have to thank Anthonyms, who asked a fantastic follow-up question and led me to go back and get a key statement that I missed when I was whipping through the video. Thanks, Ant! So now, here’s an improved copy for Saul’s page.
One of the things I am working on is following these “fireside chats”, where executives talk one on one with analysts. These seem to happen occasionally throughout the year. I started listening to these for the company that I ticker guide for, Stitch Fix, last year, and I absolutely LOVE the format – it is more candid and in-depth than the Q&A’s during conference calls, and the videos are all less than one hour, so they’re easy to listen to. If you have time, go see if your top companies have made any appearances at investors conferences – it’s an easy way to glean more info straight from the company’s leaders. Sometimes there are transcripts made of these events, but sometimes not.
Watch the Needham conference video for yourself here, it’s the first link:
Otherwise, my type-up is below.
How has COVID 19 impacted the business and long term effect
– Started the year with unbelievable growth, accelerating YOY in January, Feb and the early part of March
– Midde of March, the world went on lockdown, especially in US, and we started to see a decline
– That decline stabilized in the middle of the month of April, and then we started to see some recovery
– The trend that I’m especially excited about is that while it’s frightening to see the advertising spend cut on the way down, seemingly indiscriminately, everybody was just sort of pausing, saying I don’t know what the world’s gonna look like, and everybody paused. I think there was a couple weeks there where everyone in the business community was trying to figure out what the future looked like and that meant especially for advertising that you pause, indiscriminately, pause whatever you can. Programmatic, it’s agility can work against it.
– But in the recovery, what happens, everybody biases toward what’s measurable and what’s comparable
– The recovery has been very deliberate and data-driven
– Covid’s been a mixed bag for us, there’s a downturn year over year, negative growth for the first time in our company’s history since being profitable, but it’s land grab time, we feel like we’re really going to benefit from the downturn although we would never wish that on the world.
Does it expand your tam?
– If you believe data driven is going to take entire global ad pie,no
– In short term, what % of pie
– Watching more on-demand than thought, linear declining faster
– Naturally expands tam, although we would have got there anyway
– Pie divided, by # of players, downturn has pushed players out, less eligible
– more immediate opportunity for TTD to take share from companies that would have stayed alive
– most adtech companies not profitable, weak will go away sooner
Lower cust aq costs?
– you pay a little less attention to cust aq costs in land grab phase
– I’m more focused on land grab and preparing for opportunities
Rep in market outstanding – integral ecosystem – more brands coming direct v. agency – how do you navigate w/o threatening agencies?
– philosophy is most tech companies boast disrupters, I’m more interested in empowering people to tech-driven world, advocates for helping agencies change, but we also have conversations w/ brands when they are concerned with protecting and deputizing their first-party data. We have to have a contractual relationships with them about how their data will be used, we will get closer to brands, they will be more data drive and more prescriptive about what they want, brands will do a better job of defining success and goals, agencies will continue to consult, advise and execute plans. Relationship w/ agencies as helper. Now programmatic should be the place where everyone tarts. We should expect brands to expect more and be more involved.
– Land grab and winning market is #1. Growth, grab land. #2 Making money, #3 take rate
– North star is 7-year time frame, adv will be global trillion industry, How can I get as much as possible. How can I get people to say – what do I buy in x? what do I buy in y?
Ad spend is falling – it will be less? Pricing pressure, companies going out of business
– Overall market trillion in 7 years. Equation of success - coefficient on marketing is going up not down.
– Going to market is more important, supply chain shorter, difference b/w success and failure is marketing in data driven way
– Overall accelerates growth, think marketing pie will continue to grow
Connected TV? Covid acceleration? New developments?
– Upfronts almost nonexistent
– More watching at home than ever
– Helping CTV grow, put pressure on linear
– Decline 4% cut cable/year
– 11% plan to cut this year
– more on-demand
– #1 reason people held cable (60%) live sports – now on pause
– 30% surges in March and April in inventory
– compare what getting from salesforce as content owner, seeing strong surges in premium content
– CTV is leading the recovery, exciting because it is the most effective
Things moving faster b/c Covid?
– People will go to upfronts and make plans, everything trickles down
– pressure on scatter market
– I want to lock things in so I have the assurance
– CTV - how much is available, makes more sense to move to spot market where more agile, know what you will get
- 2020 has decreased a little bit, cutbacks
– most will be redeployed in scatter and spot market
Roku is 100% CTV, TTD is 25%, why not buy ROKU?
– ton of respect for ROKU, big fan of product
– time with execs, important partner
– Why us… unique, objective, we sell that we don’t own any media, very important in TV, if you are FB or GOOG, markets are built for monopoly, TV no one has monopoly, no one will. We are neutral, help buyers buy the best with objectivity and access to everything, very important, only company in the world with many partnerships at the same time
AVOD vs SVOD? Will there be subscriber fatigue post COVID?
– I have answered this question wrong in the past. False paradigm of AVOD vs. SVOD. Netflix eventually has to have ads, it’s just the math. Some pieces of content, very premium content Netflix, starts SVOD, in ABC,CBS,NBC starts AVOD. All end up with consumer choice // free with ads or pay for no ads. Both are right. When we look at Hulu, Spotify, provide consumers choice, 80% of consumers prefer ad-funded option. As content market gets more competitive, pressure – easier to get people w/ads. Big, robust library vs the ads. Most content ad funded like linear tv.
ID - what impact ID solution providers - how supplement 3rd party data? capture more value with ID data?
– Over the last year Google has been doing – DOJ taking an interest, changed some behavior in Google, in Chrome. Policy change 10 months ago - I love - simply a blog post, a few months, a different solution, cookieless environment, Google can control more of targeting. Risk comes re: antitrust and privacy. Content owners will not just say Google will pay my bills, more logins, most websites move to that model, more robust data in that environment. Spend time w/industry talking through 5 steps ahead and not just today’s pressure. I think no matter what TTD will be better off in future in being able to use data. Strategically – let’s do the right thing, fair for consumer, what would we want as consumers. Make sure compliant. Benefits publishers, benefits advertisers, consumers see fewer, more relevant ads while increasing their privacy.
Update with Western companies in China. Challenges in China, how address?
– Never more bullish on China than I was in January. Important partnerships, hires, we had single digit employees, now exponentially bigger.
– COVID - Shanghai and Hong Kong work from home, it’s hard. Definitely setback. On the uptick, encouraged, slow road, a lot to be done to win in China. Difficult market. We are deliberate and take time to explain value proposition. Takes a lot longer to build trust.
– On the macro, election year, negativity toward China not good.
– It is huge, mutual dependence, can’t be stopped with political rhetoric
– Sentiment vs. actual policies
– Ultimately will hurt global economy if done in extreme way
– Business as usual with more sensitivity
Good idea of underlying growth rate in “new normal”?
– Team look at recovery curve, v, w, u shape, there is a part of climbing out of trough.
– Every advertiser a different part of that line. Sports - at the end, Travel - near the end, Auto, sooner, CPG and brands that help, already spending aggressively. Think about where everyone is on the continuum.
– We get back to normal at some point, don’t know when, depends on slope of line.
Sense of verticals coming back?
– Strong recovery, Fast food - earliest, CPG, health and wellness, auto is around the corner, a lot of prep in that space, Tech has been great, accelerated spend.
Key structural risks? Competition?
– Most companies in ad tech not profitable, can push players out
– Every day, asked to do a convert and get asked to buy a company, pressure is out there
– Thins the competitive landscape, makes it easier for us to win
– Pricing -how do we justify our relative value? Are we providing more value than we charge?
– Make things measurable and comparable we will know what we can afford to charge
Moderator: Fantastic balance sheet
Local vs. national and how changing?
– The content coming online first is national, bigger content, in the skinny bundles, biggest media tries to find outlet, very good for us, substantial accelleration in our access to that.
– Freewheel/Freewill? I get 2 minutes of 8 that happens in an hour, I get 2 and now over the last months, we get all 10 minutes. It’s amazing. Not new shows necessarily but all the ads in an ad break. Massive expansion+ more coming onling. Less – game show network, no OTT offering, a lot of those in the long tail are gonna struggle, no original content, those business models under pressure in linear.
– Surge in inventory from everywhere where there’s premium AVOD.
Three reasons why people should buy TTD today:
– In this for the long haul, massive tam, soon a trillion industry
– in the same way we say we’re going to buy stocks, the same things with ads
– best companies will have objectivity, not walled garden
– best in CTV because of objectivity, we will earn our keep, we do far more than contro reach and frequency
SFIX ticker guide, long TTD