Code Media Summary

By: Aaron Peabody

Code Media, like many premier technology conferences in California, was met with anticipation and excitement for what the 2016 speaker line up had to offer. Peter Kafka, senior editor of Recode, and an all too familiar face of digital media, interviewed guest speakers at the event ranging from John Ridding of the Financial Times, to Mike Hopkins, CEO of Hulu. The focal point of the 2016 conference was to assemble established and emerging influencers from the world of media in order to discuss the future landscape of the industry. However, what the conference attendees were greeted by sounded much more sinister and candid than they were expecting. The man responsible for tearing back the veil of ignorance? Gabe Leydon.

Many of you reading this article may not be familiar with that name. Prior to watching the video of the Code Media event, I’ll admit I didn’t know who he was either. However, it would be safe to say that you’ve probably heard of the his best selling mobile game, “Game of War”. And if even that doesn’t sound familiar, certainly you saw the Kate Upton advertisements.

So who is Gabe Leydon? Mr. Leydon is formally known as the CEO of Machine Zone, the corporation behind multiple best selling games distributed in the App Store, Google Play Store, and Amazon Marketplace. He is also known for promoting his games heavily via Television and online display advertising, featuring icons such as Kate Upton and Arnold Schwarzenegger. This is quite contrarian in the world of Mobile App companies which often operate under the notion, “If we build it, they will come.”

After Leydon answered a variety of surface level questions from Peter Kafka concerning Machine Zone, a conversation ensued, around time marker 9:29 in the video, regarding the future of media buying. As Leydon stated confidently on the stage, media companies have a sore misconception about the future of digital advertising. With shocking credibility and persuasive articulation, Leydon began to pull the industry apart piece by piece.

His first criticism of the media industry was that it is stricken with a false impression about the future of selling ads. He says the industry seems to think it has the possibility to return to old advertising methodologies such as fixed CPM’s and native advertising, or better said as stepping away from programmatic buying altogether.

In the words of Gabe Leydon:

"There’s a fundamental misunderstanding of what the Internet means for media companies. It means that we’re very quickly getting to a point where we can value your eyeballs. We’re not going to just talk about how many you have anymore. That’s gone. Forget it. No one is going to give you money because you have eyeballs...Price discovery and value discovery is happening."

What Leydon is prying at is that in wake of the gross amount of fraud and non-human traffic on the Internet, the principles of media platforms traditional impression value assessment have been diluted. Media buyers are beginning to question how many of those eyeballs are real, if they perform, and how they perform--According to Leydon, questions that have been withheld for far too long. This all stems from a lack of proper quantification on ad spend for buyers.

Leydon goes on to say:

"Within the [media] market there is a push to avoid quantifying their media. They want to actively avoid pricing their media. They want to set prices out of thin air and say, ‘I have eyeballs.' ...The publishers are kind of dipping their toe in the water in digital, and they're only doing it halfway, and they’re getting really scared by it... [Publishers] want to be stuck in the dark ages. It’s scary for them to price their eyeballs. It’s a lot nicer to just say I have five million people. Nobody knows what that means. Five million where? Doing what? Who are they? Do they actually buy things? Do they click on things? Are they real people? The reason media is collapsing in on itself is because there’s a denial on what their business really is and what the true value of their business is--and they’re doing everything possible to avoid real value measurement of what they do."

Leydon then made the stark statement, “Media will be quantified. Period.” Signifying media will all change.

His second criticism is that the agencies are not properly incentivised. “You can’t go through agencies because they’re not incentivised to do the right thing. They’re incentivised to spend the most money possible.” Leydon then discloses that the margins for agencies are far too thin to be focused on getting the “best” buys for media buyers. He says they focus on getting the most buys, soliciting the most money possible to keep their own operations afloat--making the system unbelievably inefficient and ineffective for media buyers.

He claims agencies are in the creative industry, not the technology industry. In the old media model where only a single technology was being utilized, attribution could be assumed to that singular medium. Now, where media is diversifying and fraud increases, instead of dealing with a few new technologies, agencies must now differentiate between human and non-human traffic and they are simply not equipped for the task with the current tech. For this reason, he claims they simply increase the media buy with a shotgun approach, improving results by volume, not accuracy. “Sales people all want to take the most money possible away from you. How do I get the buyer to spend more? Who cares if it actually works for them.”

His third criticism is that he claims ‘ad tech’ companies have not spent money as media buyers, so they are not equipped to know what someone who buys media really needs. He goes on to say that engineers don’t want to work for ad technology companies because they aren’t attracted to media. So the present ad tech companies are not only wrong in their building efforts, but they also don’t have the proper engineering talent to build it right. So we are left with lackluster solutions to extremely frustrating problems.

To summarize his points--The publishers don’t want anyone to quantify anything. The agencies just want the most money possible because their multiples are thin and their incentives for revenue are ill-aligned. And there’s nobody building sophisticated software to help the media buyers.

Leydon goes on to say:

"Buyers are universally unhappy. I do think that the market is dying for a sophisticated buyer to appear. I think that there is a real moment in time here that if a sophisticated buyer were to appear, the whole market might get repriced very very quickly… Marketing will become a justified business. You will have to justify what you are doing. You haven’t seen a sophisticated buyer appear because they need to break all the incentives that the other guys have."

Little did Leydon know that that the company he desires to see emerge already exists, and that company is El Toro.

El Toro is the only one-to-one 100% cookie free IP targeting solution. We believe an IP address is a way to connect businesses and marketers to their customers and prospects with a new approach to online advertising. We match physical addresses to IP addresses with extreme precision utilizing our offline data onboarding capabilities and patented one-to-one marketing technology to offer multi-platform personalized interactions. Meaning we only serve ads to real people.

At El Toro, Gabe Leydon’s remarks could be considered our gospel. Since our founding, we have been focused on building a platform that is both efficient and effective for media buyers. We believe in proper quantification of your spend, and we are the only ad-tech company that can produce a transparent matchback analysis on your targeting efforts deriving true attribution and ROI calculations from the campaign. We have created many product derivatives stemming from our highly sophisticated IP targeting algorithm which have yielded unprecedented results for our clients. We ourselves have been media buyers so we know the frustrations of the current system. And on top of all that, we have world class engineers building our technology.

If you’re a media buyer and this article touched on your current frustrations with the digital advertising industry, please reach out to El Toro and we’ll be sure to get in contact with you. Below we included a link to the Code Media video interview.

https://www.youtube.com/watch?v=oXBqzpExvrk

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Aaron Peabody

aaron@eltoro.com