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Our host Brian Alfond welcomes Roy Reeves, principal business development specialist at SAS, to the studio to discuss digital advertising. Digital advertisers are no longer buying their ads the old-fashioned way; the successful ones are reimagining their approach. This discussion also hits on the topics of third-party cookies (be sure to catch season 3, episode 2 to learn more) and the new frontier of advertising in the streaming service ecosystem, including Netflix, Disney+, Paramount+ and more.
Are you ready for the future of customer experience? Tomorrow’s level of CX and personalization will need to be smarter, more immersive, more trust-enabling. Tune in to the SAS Reimagine Marketing podcast as we explore topics including emerging technology, customer loyalty, data privacy and trust, and more so you can reimagine marketing for your organization.
All presentations represent the opinions of the presenter and do not represent the position or the opinion of SAS.
BRIAN ALFOND: Hello, folks. Welcome to this episode of the Reimagine Marketing podcast I'm your host Brian Alfond. I'm part of SAS' Global Customer Intelligence group, where I work with customers to find elegant and creative solutions to their marketing problems. Today I have the pleasure to speak with Roy Reeves, a colleague of mine here in SAS, about a subject that I certainly have a lot left to learn about-- digital advertising. And with over 20 years of experience as a sales and business development leader in advertising media and technology, Roy is the perfect person to help educate me.
Roy was the co-founder of PumpTop TV, which, at the time, was the world's largest gas pump TV network. And then while at Bullseye Media, Roy helped pioneer out-of-home audience measurement, which used the mobile phone as a proxy for the person carrying it. Roy is currently leading the go-to-market efforts in the Americas for SAS 360 Match, SAS' first-party ad serving and management platform.
Roy, thanks for joining us. I'm hoping we can record as interesting a conversation as the one we had off the cuff-- at least I found it interesting. If I remember correctly, it stemmed from the fact that I was guilty of thinking of digital advertisers buying their ads, if I may, the old fashioned way, like television advertisers did back in the days when I would steal the TV remote control from my father. But in reality, like in all of marketing, things really have changed. Would you mind just recapping that part of our conversation a bit?
ROY REEVES: Certainly. Well, thanks for having me on today, Brian. I think when we were talking, it was about how marketers have traditionally bought ads by media channel versus--
BRIAN ALFOND: Yes.
ROY REEVES: --now somewhat buying audiences. And really until recently, marketers would do their best to identify their target audience, then do the research, or hire an agency to develop a very detailed media plan to find opportunities to reach, well, let's say, 18 to 34-year-old women. We'll keep it simple.
BRIAN ALFOND: Like the classic almost Nielsen demographics that we talked about.
ROY REEVES: Absolutely. Yeah, yeah. And that media plan might include some TV ad spots on a show like Friends, maybe some banner ads on websites like Vogue or Cosmo-- media properties where a high density of their target could be found, very contextual stuff. And this would be very fairly typical of some of the line items on a media plan years ago. And the reality of this method was that it resulted in a lot of money wasted on delivering ads to people outside of the core target of, again, the 34-year-old women in this case. So really today-- because of advances in technology, measurement, et cetera-- marketers can now really target and buy audiences in an omnichannel mode.
So, in other words, a brand looking to reach those 18 to 34-year-old women can place a single media buy to reach that audience through programmatic means. And really the result would be ads delivered to women in that age range through a variety of media channels. Let's say addressable TV ads to the right households, display ads on web pages where the first-party data or the third-party cookies match the audience, mobile ads, et cetera. So this way--
BRIAN ALFOND: You said the magic-- so you did say the magic word, though, if I could interrupt you for one second. You did say the magic word--
ROY REEVES: Yeah, sure.
BRIAN ALFOND: --which is third-party cookies, which is something that I've expressed some strong opinions on those. But you helped show those in another light to a certain degree there. I mean, in a past episode, I talked about privacy in third-party cookies, but maybe I can learn a little bit from your perspective. So maybe you could define them and then talk a little bit about how they're used and the usefulness of that.
ROY REEVES: Sure, sure. Well, let's just start with cookies, which are really just small pieces of data stored on a user's web browser. The websites use cookies to remember what the users do so they aren't asked to perform a task over and over. Cookies should help provide a better, more personalized user experience. And so now third-party cookies are a bit different. They're placed by third parties. Those are websites other than the website you're visiting. These little files collect data on the user as they move across the web and, yeah, I mean that's really what they do.
BRIAN ALFOND: Yeah, and in my episode I called the third-party ones the tracking where you're going. I call them creepier, maybe even I said something worse than that. But it does seem that the majority of consumers agree with me. But, at the same time, you mentioned personalized. And it also seems like the majority of consumers want personalized digital experiences, if they're forced to view ads at all. And so, to me, that's a really interesting paradox. I want a personalized experience, but I don't want you tracking me.
ROY REEVES: Right, right, isn't it? And that's really the way it is and what really the savvy marketers are going for. And really on the creepy end-- I mean, certainly, some people feel that way, and is really-- one of the reasons why Google's Chrome will be phasing them out, and I think they recently announced sometime in 2024. Other browsers have already phased them out.
But whether you know it or not, a vast majority-- about two of every three people use the Chrome browser. And the fact is that about 80% of advertisers and brand marketers have really relied on these third-party cookies for ad targeting. So I think they would like cookies-- these third-party cookies to stay around for as long as possible. But they really have been the building blocks that marketers have used to develop profiles on their targeted consumers. And they've used them to track users across websites for retargeting. I mean, do we all need to be reminded of that time we looked a little too long at that pink snuggie or whatever, right?
BRIAN ALFOND: I definitely understand the usefulness to advertisers of them and that need to get something a little more targeted than the pink snuggie, if you will. And if I want relevant ads, then I think that I have to be willing to tell the advertisers something about me right. But with all the privacy concerns that are going on, I think we're going to have to find maybe a better approach or a better way to do this. What do you think?
ROY REEVES: Yeah, absolutely. It's a balance. I mean, certainly third-party cookies aren't all bad. Again, for years, they've been really the targeting data for most online marketers, which is super valuable. But with all the privacy concerns, and mandates out there, and the fact that they're unable to cross devices or even between apps in this-- I call it a multi-device world-- I think they've about run their course. It's really now time for what I think is a more consumer consent, privacy-centric, really first-party data driven approach to advertising.
BRIAN ALFOND: I certainly believe that the first-party data approach is going to offer organizations a wealth of maybe untapped insight about their customers. And hopefully they can help that use that data to truly personalize that customer experience. But, as we've talked about, we have to get the customer into the funnel in order to do that. You can't just strike up a conversation with somebody and assume you're going to know everything about them, right, just based on observable characteristics. Otherwise, anybody who met me would assume that I was just a really mean, grumpy guy. But once they get to know me, hopefully we can have a more meaningful conversation as they add to that initial impression and maybe even correct it.
ROY REEVES: Absolutely, absolutely. Yeah, no, that first-party data is key. And the more you collect, the better your targeting is going to be.
BRIAN ALFOND: So this is one change that I want to talk to you about. And I'm going to ask you to take your crystal ball out here twice. You've been in the adtech industry for quite a while. So looking into that crystal ball for the first time-- as some change comes to the world of third-party cookies, what would you recommend for marketers to do going forward?
ROY REEVES: Woo. So once-- you're talking about once third-party cookies go away?
BRIAN ALFOND: Yeah, how can how can marketers pre-arm or pre-strategize, if you will, their marketing budgets their marketing strategies to deal with that?
ROY REEVES: Well, yeah, obviously, it's going to-- I think marketers need to, obviously, do things differently. A lot of marketers believe that it will definitely be more difficult to target consumers and personalize ads. And it may be somewhat of a step backwards for the industry. Without those identifiers that the third-party cookies have provided, at least some of the folks I've spoken to believe that the personalization and the ability to optimize campaign performance will definitely be more difficult, which would, of course, negatively impact their return on ad spend. So that's one thing.
Some see this phase out as somewhat of a power play by Google. I mean, let's be honest, Google's the 800-pound gorilla out there. It has a ton of user data collected for years through its tools and, what, its properties like Search, Maps, YouTube, et cetera. They have loads of first-party data. And it would not surprise me to see many marketers become more reliant on Google. And so I would say, how do I put this, an easy and, dare I say, lazy choice for marketers would be to just turn to Google Ads or Facebook for their campaigns. But, really, in the long run, I don't think marketers want to be beholden to Google or Facebook.
I listened to one of your recent shows, Brian, and I have to agree with you that first-party data is the way to go and I really liked your analogy in that-- remind me of what--
BRIAN ALFOND: The conversation? It's just it's all about having a conversation and like I led into this topic, you can't rely only on your first impression.
So third-party data is the prejudgment we make when we meet somebody. We look at them. What are they wearing? What do they look like? What's the hairstyle like? And we categorize them mentally into our head as to, oh, well, this it this type of person and this is what the conversation is going to go like. And that's just our evolutionary instinctual first impression. We try to breed it out of ourselves. We've had a couple-- I think I said we have a couple of millennia of social veneer, but we're still animals underneath that.
So the first-party data we gather when we actually sit down and talk to somebody and start engaging, well, first party, one-to-one, so we can find out that, yes, I have a resting mean guy face, but I'm actually friendly, I'm a musician, and get to know more about me that puts things in a context. And I think that's what marketers need to do in order to create that personalized experience is, sure, you get your cohort data, so, like you said, we're looking for somebody-- a woman 18 to 30. That's the cohort data.
But then once we bring them into-- the marketer or advertiser can bring them into their own property, then you can get to build out that profile with more nuance to say, OK, yes, you're 18 to 30, you lead a very active lifestyle, you prefer hiking to a cruise and things like that. We're really getting to know that person. The problem comes when people go to sell that data. I think that's where the privacy issue comes in.
ROY REEVES: Sure, sure. But, yeah, you're right, the prejudgment and, as you said-- if we rely solely on that, we're really missing out on the deeper richness, so to speak, of that individual. So, yeah, that's well said.
BRIAN ALFOND: When we were talking, you talked about that marketers are going to have to kind of gird up for a period of experimenting with their approaches, and maybe with their channels, and what they're going to do.
ROY REEVES: Yeah, definitely, I think the savvy marketers out there, if they're not experimenting, they should be experimenting. The third-party cookies are going away. It's been delayed for a year, thankfully, I think most of them would say. But if they are not experimenting, they really are doing a disservice to their company.
And if it were me, I would appoint one or two people within my company to work closely with the agency and my adtech provider to really ensure there's a complete understanding and transparency on the potential impact this change will bring about. And, of course, continuing to beef up the first-party data through lead gen forms, progressive profiling, surveys, customer reviews, et cetera. There's many tried and true strategies out there for first-party data collection. So the tools are out there.
BRIAN ALFOND: But I like your thoughts about experimentation because one thing that experiment-- experimentation, sorry, provides-- it shows a willingness and almost a necessity to make mistakes so that you can learn from them. So much of this digital marketing stuff is new to everybody and things change so quickly you absolutely have to have a mindset for learning and adapting. And it seems to me that kind of mindset is the most likely to help an organization succeed.
ROY REEVES: Absolutely, absolutely, couldn't agree more.
BRIAN ALFOND: So that does lead me to something else. Things changing so much-- something you alerted me to-- Roy, am I correct that there are soon going to be commercials in my Netflix shows?
ROY REEVES: There are. Yeah, no, Netflix, as you may have seen, has been losing quite a few of their subscribers. And I think last quarter they reported a reduction of almost a million subscribers. So really the behemoth of the industry, who touted that they were never going to an advertising-supported model, is actually now going to go down that road. I believe they recently chose Microsoft as their partner to deliver the advertising.
And I think I just recently read last week that they're looking to charge a $60 CPM cost per thousand impressions on the ads, which is really at the very high point of connected TV advertising. So it'll be interesting to see what happens there.
BRIAN ALFOND: And I wonder if the other streaming services will follow suit or how that will work out, but I guess it's all part of that experimentation thing.
ROY REEVES: It is. It is. There are many of the services out there-- I mean Disney+, Paramount+-- they all now have an advertising component to them. There are actually something called free ad-supported TV services out there, things like Pluto and Xumo and others. But it's actually a pretty interesting model and they've actually done very well recently.
And I think just with the economic pressures, I think a lot of people are starting to turn to these ad-supported services as a way to continue to get premium content. And it just makes sense. It's funny because it's going back to the old TV model, but really the ad loads on these services are much less than on your broadcast TV.
I mean, on broadcast, you're looking at 16 minutes probably per hour of ads, whereas on these they're closer to four to six minutes per hour. So, yeah, it'll be interesting to see what happens. And a service like Netflix could be cannibalizing some of its subscribers, getting them over to the ad-supported offering, but, yeah, we'll see what happens.
BRIAN ALFOND: I guess it just depends on how badly you watch do you want to watch The Umbrella Academy or some of those shows, right, maybe even can pull them over to that.
ROY REEVES: Right, right.
BRIAN ALFOND: But it will be interesting. And if the ads are, theoretically, more targeted and, as you said, the ad load-- I mean a 30-minute sitcom is 22 minutes. So do the math there, yeah, you're getting 14, 15 minutes of ads. If I can watch an hour show and three or four ads that might actually be relevant to me, in a way that is improving that customer experience as well or the least we could do the experiment to see if that improves the customer experience.
ROY REEVES: Yeah, I totally believe it. And I think that's why you're seeing many of these fasts, as they call them, and the larger subscription services now going toward this ad model.
BRIAN ALFOND: Well, that's something to watch for, if you're a Netflix fan or any of that-- and any of those streaming services. Roy, I want to thank you for joining me for this conversation today and I look forward to you helping me stay up on what's happening in the digital advertising world.
ROY REEVES: Absolutely, it was fun.
BRIAN ALFOND: We'll do it again as events warrant. Absolutely. And I hope to have more conversations about a variety of topics in upcoming episodes with other people like Roy, other experts I know.
In the meantime, if you have any thoughts you'd like to share with us, you can head on over to sas.com/reimaginemarketingpodcast-- all one word-- and join in the conversation. You can also subscribe to the series on your favorite podcast platforms. Just search for Reimagine Marketing.
And I'd be pleased if you shared your topic or guest ideas, like we had Roy on today. Just email us at reimaginemarketingpodcast@sas.com, where, once again, Reimagine Marketing podcast is all one word. Thanks for listening and please consider joining us next time. Until then, this is Brian Alfond, hoping all the important things in your life are good.