Peter Kafka

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Digital-Ad Vet Mike Barrett on Facebook, Ad-Tech IPOs and a Cookie-Free Web (Q&A)

michael-barrett-ceo-admeld-oMike Barrett hasn’t had a job since December.

But, before that, he had a lot of jobs in a fairly short time, with top ad-sales gigs at AOL, Myspace and Yahoo. There was also a stop along the way to run AdMeld, the ad-tech startup Google bought for $400 million in 2011.

Barrett said he’ll be taking a full-time position soon. But, in the meantime, he’s keeping busy by investing in ad startups, and occasionally joining their boards.

Last month, Barrett added two more board positions to his resume: Tremor Video, the video ad network that went public this summer, and MediaMath, the ad-tech startup many expect will go public soon.

So, while Barrett has a last remaining bit of downtime, we figured it would be a good chance to pick his brain about the state of digital ads. Here’s an edited version of our conversation:

Peter Kafka: Six years ago, you were talking about targeted ads at Myspace, where you could help marketers find Web users with very specific attributes. That never took off at Myspace, but it’s now commonplace on the Web, via behavioral targeting. Why didn’t it work when you tried it?

Michael Barrett: It was a strong idea, but the reason it wasn’t executed at the time was that the plumbing wasn’t in place. In order to trade on that data, it has to be in real time, and you have to be able to make millisecond decisions about who to show an ad to. The whole ecosystem of the industry wasn’t there. So building out a proprietary platform that couldn’t even do real-time targeting … that was a great idea, ahead of its time.

There are sort of two flavors of this happening right now: One kind happens all over the Web, with information people gather from lots of different websites. And one kind is supposed to be unique to Facebook, using Facebook’s own data about its users. Can Facebook succeed where Myspace failed?

I think Facebook’s really interesting, because of scale and the amount of information it has, most of it volunteered by real people. So they may be able to run the table in terms of using their own ecosystem that has their own ways of doing things.

But I think, by and large, it’s going to be third-party data that’s being brought to the party, where it’s information from the advertiser, or reputable third-party sources. People are going to be using that data as part of a big piece of the puzzle.

Targeting on the Web depends on Web browsers with cookies, and there are lots of people — most recently Google — talking about doing away with cookies. What happens if they really go away?

If that really were to move forward the way it’s being proposed, it would have a fundamental impact on advertising and the economics of sites.

You don’t mean a good impact, right?

No, it would be fundamentally negative.

But aren’t cookies going away anyway, because they don’t exist in mobile, and everything’s moving to mobile?

Yeah, but if you look at the rates people are monetizing mobile right now … most publishers, if they suddenly had rates plummet on the display side, it would be crushing.

But aren’t many of the companies you’re working with trying to lower ad rates, with technology like programmatic buying?

There have been winners in the programmatic push. Just not premium publishers. There are publishers that couldn’t catch a cold, couldn’t get an advertiser or marketer, because they didn’t have the sales wherewithal to get in front of them — now their inventory is available on exchanges. As to whether they’re building a brand for themselves, probably not. But their fill is high.

And, for premium publishers, what we’re seeing across the board is higher sell. Lower CPMs didn’t necessarily translate into less revenue — it did dictate into lower CPMs.

With standard display units, it’s going to be tough to be rebound, it’s going to be tough to raise pricing. But that’s why you’re seeing a big push into nonstandard, unique, native formats for some publishers. And I think you can definitely recoup value on that side.

For a long time, there was skepticism that all of the ad-tech companies that were raising lots of money could ever go public. Now we’re seeing a few. Are any of the private companies where you’re a board member [MediaMath, Tapad and Hook Logic] IPO candidates?

There’s a lot of rumors about companies trying to rush out before the holidays, in light of Rocket Fuel’s success. None of the companies [I'm working with] are going to be in that list. But it’s certainly plausible in 2014 that some of those companies would be mature enough to go to the public markets.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik