Understanding the “State of Screens” | Michael Beach

David McBee: Hello and welcome to Simpli.fi TV Tv. I'm David McBee. Our guest today is Michael Beach, CEO of Cross Screen Media, a media analytics and technology company focused on making video advertising easy. Before Cross Screen Media, Michael co-founded Targeted Victory, which quickly grew to be the dominant digital agency for the Republican Party with over 800 clients and over $250 million in total revenue and more than 120 employees. Michael is also the founder and editor of State of Screens an awesome weekly newsletter, and I do mean awesome. It's one that I actually read every time I get it. And this newsletter is focused on video advertising. Michael has appeared in such publications as PBS Frontline, the Wall Street Journal, and the New York Times. Michael, welcome to Simpli.fi TV. It is a pleasure to have you. Michael Beach: Happy to be here. Thank you. David McBee: Michael. I have to confess that well, I'm a huge fan of State of Screens as you heard me say in the intro, and I've borrowed your stats on several occasions for the Simpli.fi webinar series. So thank you, thank you, thank you for that. You may be one of the most in the know people in the TV and streaming TV space right now. So what I really would like to do with this interview today is just get out of your way and give you a few minutes to share with our audience what you think they should know about the state of screens and how they can best serve their advertisers in this new world of television advertising. So if you don't mind, just please share away. Michael Beach: Well, that's very kind of you. The idea, we're going to write addition number 330 this week. So we've done it I think for seven years straight, which is pretty wild. The kind of the main reason we did it, original company was an agency that I founded and we were kind of in this weird case where we were a digital native agency founded in 2009. By 2014, we'd kind started to hit a ceiling with digital ad growth where it was growing because the market was growing, but it wasn't necessarily growing the share of overall spend as fast as it could. And mainly that was in US politics and public affairs and corporate advocacy. And so we went into linear TV buying and planning from a digital agency perspective in 2013, which is probably looking back really early. What we found was that even with great technology and great analytics, that people really were just overwhelmed by the industry at that point and everything was written from one perspective or the other. And so roughly the same time I spun our media planning and optimization software out into a new company, Cross Screen Media, exited the agency and started to sell software to other ad agencies. I kind of found that problem was the same everywhere. And so we started to put together really a one-stop shop for all things video, but trying to take all this data and make it really simple to understand here's a big trend, here's where it's going. Because that then will allow us to talk about a solution with people. And if you didn't have that perspective, they really weren't going to land on the solution. They weren't going to understand why they needed to make those investments. And so that's been a great thing. Now it's gotten into the industry and we're always getting research sent to us before it's public or other people wanting to get their point of view into there. We've launched a podcast series as well, but I think it's really that high level that now today I think the market's probably 10 times more complex than it was even back then, which is crazy. David McBee: Why do you think that is? Why is it so complicated now? Michael Beach: I think really it's just TV's different because digital grew from zero, banner ads and search and all these things grew from zero to a big number, which has been exciting to watch. Conversion TV's different because it's roughly a hundred billion market that is just changing. And everyone's got a streaming offering now. Some of the linear networks have a streaming offering, but it's the winners and losers and there's really hard to figure out. And the fact that you now have more places to put your advertising dollars than ever and it's more fragmented than ever. And then you're getting in today with salespeople that are all pitching. No one says I should be your third option. Everyone's like I'm number one with left-handed fireman at 11:00 PM on this network. And so even people that are really smart that are in research in New York that have done this for 30 years will tell you that it is more complicated than ever today. And I don't see that changing until well into the next decade. David McBee: Well, as the man who studies the data and really looks at all these trends, what are some of the things that you want our listeners to know and what direction they should go? Michael Beach: I think the biggest trend we see people getting tripped up now is using... So if you look at the population as a whole, you'll see one number, you'll see indexes and you'll see share of time spent on a device. Nielsen puts out great data every month on time spent on tv, but when you really dig into it, the people at the edges are driving everything. So if you're over 65 for example, you're watching more television than ever, which is kind of incredible to think about. And then you've got a group of people that are watching a ton of streaming at the other end and they're really throwing off both your indexes and your kind of weighted averages of the population. And really most people now are falling into this what we call cross screen bucket where they're consuming both linear and streaming together. Maybe they're only watching the NFL on linear and they're watching all their scripted programming on streaming or some other combination. But that is actually where when you look at your over frequency and under reach, all your problems are kind of in that group because yeah, you might be reaching one group of people 50 times in a week in politics right now, you might think you're serving 10 ads a week to the population, but there's a group of people that are seeing it over a hundred times in a week, and a lot of people are seeing it zero because you're taking an average and not actually really getting in there and looking at the data. And I think that to run that optimization now really requires more advanced software and data science, which is, like I said, that problem is getting more complicated in the short term. Now there'll be a time where we're close to or at a hundred percent streaming, this will be a little bit easier, right? We will have one delivery mechanism at least to think about, but that's again, probably 10 years away. David McBee: But even then the audiences are so fragmented across all the different TVODs and FASTs and SVODs and those things. It's not going to get easy anytime soon, is it? Michael Beach: No, definitely not. David McBee: So where does that leave us? What's your advice for someone who's trying to figure out this crazy, hectic world? Michael Beach: Well, it's a tremendous opportunity, right? Most advertisers are underfunded or have to make pretty hard trade offs, and if you're smart, you can really punch above your weight. I think that the idea that you have to compete with a group that's spending a lot of money the same way they are is crazy. And I think the same revolution you've seen in sports over the last 15 years with Moneyball and these different techniques that's available now in advertising, and you saw it first in Facebook and these groups that really had a good closed loop on their cost per acquisitions and things like that. You're seeing it now in a much wider area of advertising and it's a tremendous opportunity. And so the majority of advertisers are not spending a hundred million dollars a year in advertising with huge teams and everything. They're spending a small percentage of their overall revenue and need help, but I think that the opportunity is bigger than ever for them. David McBee: Do you believe this is the time that local advertisers who always felt overwhelmed by the idea of advertising against national brands can really get out there and take advantage of TV advertising? Michael Beach: Yeah. And I think one of the things we have a contrarian view on is today when you look at linear tv, you've got national inventory and you've got local inventory. And so if you're watching ABC about 16 minutes of ads, an hour are going to the national network. They sell this to national advertisers, things like the up-fronts and roughly four to six minutes of ads are available for the local broadcast station to sell to a car dealer or anything like that. With digital, the technology's there for every ad to be addressable, and most of the focus has been around the audience part of addressability. So I'm in market to buy a Ford F-150 or I am a quick service restaurant target, but the geotargeting is actually a really good thing. I know that this is something that Simpli.fi has thought about a lot because once you can actually start to parcel out that ad at the geo level, it's going to be much better for the network because the price is going to go up. Now today, they've got rules in place where I'm sure Peacock sells a certain amount of its inventory only to national advertisers and packages or with sales team, but what they're going to figure out is the most expensive ad anyone buys on a CPM basis and an ECPM basis is Facebook. And that's because Facebook has 3 million advertisers in the US in a marketplace bidding against each other every day, and people pay more for a video ad on Facebook than they do on tv. And it's crazy because someone watches it for less than two seconds. It's the size of a postage stamp on your phone, but it's not about the quality of the ad, it's about the fact that they have 3 million people in an auction bidding against each other. We think there's about 1 million video advertisers total at the local market across the United States. There's about 5,000 total at the national level. If you turn those 1 million advertisers loose on some of that inventory, it's so much more valuable. If you're a car dealership and you want to run an ad to people within five miles, a certain number of zip codes, you'll outbid any national advertiser for that inventory because so much more valuable to you. You may only want to target three or 4,000 people, but now again, back to the Facebook is kind of the model here you get everyone across the country bidding in that same environment. You can sell all your inventory, and that's why when you've seen these national boycotts of Facebook in the past, they've had no impact on their business because that's not the majority of the revenue. The majority of the revenue comes from the long tail of advertisers, and I think that's the future. Someone's going to figure that on the video space. It could be a company like Roku that doesn't really have an upfront presence now and would need to disrupt their national sales force. Maybe it is a national network, maybe it's a streamer coming in first like a Netflix or somebody that doesn't have a legacy linear sales business. But the math is definitely there because there are a million advertisers buying video advertising today in the United States, but majority of those people are not buying linear TV. And that 16 minutes an hour is not available to them, but with streaming it all could be. David McBee: That is fascinating. We are nearly out of time. I just want to give you one more opportunity. Is there anything else you'd like to share with our viewers that you think is important to this conversation? Michael Beach: No, I just think that even though things are more complicated, I think the upside from putting a little bit of time and really future proving your business is bigger than ever. And I think that there's an opportunity for people that have been predominantly in the linear TV side to become convergent TV advertisers by bringing streaming in. Vice versa. If you're on the streaming and digital side time is definitely on your side, the fact that someday it will all be streaming, but you need to learn the linear TV side now because that's probably 10 years from now when we're buying all streaming advertising. So I think both parties could really take advantage of this at the same time. David McBee: Great. Last question, do you have a favorite podcast or a book that you'd like to share with our listeners? Michael Beach: Oh, so many good podcasts. There's one called Founders Podcast that is part of the Colossus podcast network. Patrick O'Shaughnessy, Invest Like the Best, which is another great podcast, but Founders, David Senra reads a biography and then just does like an hour riff on it. I think he's over 300 biographies now and it's phenomenal. I think some of those I've listened to multiple times. David McBee: Sounds like a good way to consume some biographies on an abbreviated basis, huh? Michael Beach: It's high value for sure. David McBee: All right, and what is the best way for people to reach you if they'd like to get in touch? Michael Beach: Company CrossSreenMedia.com. I'm on Twitter at Michael Beach and that's probably the best place to find me. David McBee: Awesome. Michael, thank you so much for being our guest today on Simpli.fi TV. Michael Beach: I appreciate it. Thank you. David McBee: And thank you all for watching. Simpli.fi TV is sponsored by Simpli.fi, helping you to maximize relevance and multiply results with our industry leading media buying and workflow solutions. For more information, visit Simpli.fi. Thanks for joining us today. I'm David McBee, be awesome, and we'll see you next time.