New York — Blockchain can play a “critical” role in the ad tech industry, providing needed transparency and helping smaller companies counter the walled gardens of advertising giants like Google, Viant CEO Tim Vanderhook said during an Advanced Advertising Summit session here Monday.
“Blockchain is going to play a critical role in advertising,” Vanderhook said, adding that one of the big concerns for ad tech companies right now is whether publishers are getting paid properly.
“When you think about the blockchain and put the payment on the blockchain for the publisher, you can now have full transparency up the chain as to who got paid what,” Vanderhook continued. “I think for advertisers, which we represent, they want transactions to make sure we deliver the dollar to the publisher that was going to get there. So I think blockchain is going to deliver transparency in spades, which is going to be a huge thing .”
He also saw the currency as a means of giving back some control to smaller companies that work with big giants like Google for their ad revenue.
“The blockchain could also help to counter walled gardens,” Vanderhook said. “Big walled gardens like Google that run centralized ad exchanges. You are basically at their mercy to get your check 60 days later. And they can change the impressions, they can change the dollar amount, there’s no real control. I think there’s something about the blockchain in creating a decentralized advertising service that the entire Open Web can tap into that no one controls.”
Vanderhook admitted that it will likely take a while for something like this to become a reality, but
“I just feel like it’s there, there.”
Vanderhook has made a living predicting the future, with varying results. One of the founders of FAST pioneer Xumo with his brother Chris in 2011, the two sold the company to Comcast in 2019, just 12 days before the pandemic hit.
“I looked at my brother and said, ‘Oh my God, that’s the first time we’ve ever been lucky,'” Vanderhook joked. “And a month later we talked to the CEO [and], he said, “Man, you won’t believe it, revenue is up 400%, usage is up 500%,” and they were off and running. Still no luck.”
But that same year, the two brothers bought back another startup they founded and previously sold to Time Inc., ad-tech firm Viant, an ad-tech firm. Vanderhooks bought back Viant for about $50 million in total value. When they took the company public in 2021, Viant had a valuation of $1.5 billion and had raised $286 million. The stock has since fallen sharply — down about 92% from its closing price on Feb. 12, 2021, the date of the IPO — but Vanderhook added that the offering served its purpose, providing the capital needed to move the business forward.
“We got the capital and have invested in R&D and the business is up and running well. The share price is still in the tank, but the business fundamentals are good,” he said.
Xumo was one of the first FAST services, but now it seems to be one of the hottest segments in the industry. Vanderhook said he and his brother based Xumo on the Spotify model, basically offering something free with ads and driving those customers to the paid, ad-free service.
Now companies that have held off on offering ads—Netflix and Disney Plus—are planning to launch ad-supported versions. Vanderhook said that could have a huge impact on revenue for both companies.
“Ultimately, free users create who you go after to create paid subscribers,” Vanderhook said. “And free is the cheapest way to draw someone into a new service. Anyone in growth marketing knows that if you roll free content, you’re going to get a lot more people to tune in. It’s a lot easier and more cost-effective than get people to sign up for a free trial of a brand new service.”
As for the revenue impact, Vanderhook noted that FuboTV generates about $7 in ad-supported revenue each month. For Roku, it’s $3.75 per month, and Vizio generates about $2 in monthly ad revenue.
“This is huge when you compare it to $15 a month for just a subscription,” Vanderhook said. “It has the ability to significantly increase their revenue.”
Vanderhook is also encouraged by the rise of interactivity on the internet, but added that he feels the industry has only scratched the surface, adding that the ability to manipulate video and place interactivity over content, such as live gambling, are steps towards realizing the technology’s potential true potential. .
“We’re still pushing videos, pre-produced and edited into a flat file and pushing it out to people, which is what linear TV created,” Vanderhook said. “It’s a great experience, but it can be so much more.”
On the interactive advertising side, Vanderhook said among the hurdles to overcome are “cookies,” the small pieces of data used to identify a user. With connected TVs, he says cookies are why ads are duplicated so often. And luckily, Viant’s specialty is delivering targeted ads without “cookies,” small bits of data used to identify a user. That cookie-less future is the direction Vanderhook believes the entire advertising business is moving toward.
“We think cookies are a very big problem,” he said. “When you come into CTV, we all have the same streaming experience, everyone sees the same ad over and over again. Why is that? There’s no user ID for a DSP like us to stop buying the ad. When that ad request comes across it looks like a new user every time, even though it’s the same one. So to resolve identity in these cookie-less environments like Connected TV, that’s what we set out to do, that’s what we has achieved — our ID works 90% of the time over the hit stream.”
