Blockchain could play a “critical” role in the ad-tech business, providing needed transparency and helping smaller companies counter the walled gardens of advertising behemoths like Google, Viant CEO Tim Vanderhook said during a session at NYC TV Week’s Advanced Advertising Summit Monday.
“Blockchain is going to play a critical role in advertising,” Vanderhook said, adding that one of the big concerns for ad-tech companies at present is whether publishers are getting paid properly.
“When you think of the blockchain and putting the payment on the blockchain for the publisher, you can now have full transparency up the chain on who got paid what,” Vanderhook continued. “I think for advertisers, who we represent, they want trans to make sure we deliver the dollar to the publisher that was supposed to get there. So I think the blockchain is going to deliver transparency in spades, which is going to be an enormous thing.”
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He also saw the currency as a means to return some control to smaller companies dealing with huge behemoths like Google for their ad revenue.
“The blockchain can also help to counter walled gardens, big walled gardens like Google who run centralized ad exchanges,” Vanderhook said. “You’re 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 is something around the blockchain in creating a decentralized advertising service that the whole Open Web can tap into that no one controls.”
Vanderhook admitted it will probably be a while until something like that becomes reality, but “I just feel like there’s there there.”
Vanderhook has made his living anticipating the future, with varying results. A co-founder 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 gosh, it was the first time in life we’ve ever been lucky,’ ” Vanderhook joked. “And about a month later we spoke 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 not lucky.’ ”
But that same year the two brothers repurchased another startup they founded and earlier sold to Time Inc., ad-tech firm Viant. The Vanderhooks bought back Viant for about $50 million in total valuation. When they took the company public in 2021, Viant had a $1.5 billion valuation and raised $286 million. The stock has since fallen sharply — it is down about 92% from its closing price on February 12, 2021, the date of its IPO, but Vanderhook added the offering served its purpose, providing the capital needed to move the business forward.
“We got the capital and have been investing in R&D and the business is off and running and doing great,“ he said. ”The stock price is still in the tank, but the business fundamentals are great.”
Xumo was one of the first FAST services, but now it appears 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 for free with ads and driving those customers to the paid, ad-free service.
Now companies that have held out from offering ads — Netflix and Disney Plus — are planning to launch ad-supported versions. Vanderhook said it could have a huge impact on revenue for both companies.
“In the end, free users create who you go after to create paid subscribers,” Vanderhook said. “And free is the cheapest way to pull somebody into a new service. Anyone who’s in growth marketing knows that if you roll free content, you’re going to get a lot more people to tune in. That’s a lot easier and more cost-efficient than getting people to sign up for a free trial of a brand new service.”
As far as 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 substantially lift their revenue.”
Vanderhook also is encouraged about the rise in interactivity on the internet, but added he feels the industry has only scratched the surface. The ability to manipulate video and place interactivity over content, for applications such as live gambling, is a step toward realizing the technology’s true potential, he added.
“We’re still pushing videos, pre-produced and edited in a flat file and pushing it out to people, which is what linear TV created,” Vanderhook said. “It’s a great experience, but it could be so much more.”
On the interactive advertising side, Vanderhook said among the hurdles to overcome are “cookies,” the small pieces of data that are used to identify a user. With connected TVs, he says cookies are the reason that ads are duplicated so often. And luckily, Viant's specialty is delivering targeted ads without cookies. That cookie-less future is where Vanderhook believes the whole ad business is moving.
“We think cookies are a really big problem,” he said. “When you get into CTV, we all have the same experience in streaming, everyone sees the same advertisement 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, solving identity in these cookie-less environments like connected TV, that’s what we set out to do, that’s what we accomplished — our ID works 90% of the time across the hit stream.“ ▪️
