Fireside Chat: The evolution of online advertising - Amal Harb / Terry Kane

I have a million questions for you. Oh, delighted. Okay, it's a topic that everybody is interested in, and I think with the way the online advertising has evolved in the past five years, what we know today is like obsolete tomorrow. It's just an ongoing learning curve that we're going through. So I'm really interested to hear from you how it has evolved and where are we going, and specifically the shift from the traditional to digital platforms and its impact on advertisers.

Well, how long have we got? We got 30 minutes. Yeah, there's a long conversation here, and there's just so many moving components of it. When I think back to when I first started in hospitality in the travel industry and working in digital strategy and tech, this was pre-internet era, and media was bought on a basis of magazines or outdoor or out of home. And there was always that old analogy that 50% of your money spent on advertising was wasted, you just didn't know which 50% it was. And I think very high level, those days are going, not fully gone, but going. And the advancements in technology that we're seeing today is almost leapfrogging where the last 10 years have been in terms of proving effectiveness of media. And a little tidbit, when my days at Jumeirah, I joined Jumeirah almost 20 years ago. I moved here just as Jumeirah Group was going through a massive expansion, and great to see so many familiar faces in the audience, it's like a homecoming. But the days of Jumeirah then, there was very little bookings coming on websites, and the OTA world was just in its infancy. Mobile wasn't a thing at all. SEO was a word, and in fact, I used SEO as a word to get out of everything with Gerald Lawless. Every conversation we had around Opex or Capex was 'Gerald, the SEO, okay, that's great.' But that world of 20 years ago, and then we went immediately into mobile, and that shook the whole industry. Suddenly the world needs to, is going to book on mobile. Again, a Gerald story was I was sitting in the boardroom with Guy Crawford, and we were discussing the investment levels in a mobile development for Jumeirah Group, and I distinctly remember Gerald saying, 'Terry, no one is going to purchase a hotel like the Burj Al Arab standard on a mobile device.' Okay, that's a bet I wish I'd made at that time, because we know that the world moved rapidly into mobile because of the innovations in the hardware. Not only that, the mobile devices were there long before obviously Apple brought them out, but the application software world, and it changed everybody's life. Our utility is mobile, and that was in reality that only happened about 15 years ago. So in that period of 15 years, our world has moved on to mobile. And then after that came social media, and social media really brought this ability for small businesses, brands, individuals to have an open and ready conversation on platforms that effectively were in their own control, and businesses to drive business in a way in what we call the walled garden environment, where it's easy to get an advert up and running in a couple of seconds. But also then on the flip side of that, that organic reach, the stuff that you invested in content and developing content, suddenly became non-existent because you couldn't reach the audience that you'd built up. So there was a pivot in the social media world. And then obviously what's happening now, we've gone from the internet era to the mobile era to the social media era, and what we're seeing now is just a massive leap in a whole new direction for the future, which I know we'll get into in a conversation. But this is probably one of the most exciting times in my 25 years of working in tech in terms of the things that are coming our way. And AI has been mentioned a lot, but it's not just AI, it's the compute power that globally is being enabled. Because one ChatGPT question is the same as doing 100 searches on Google. So the power to derive ChatGPT and all AI technology is enormous. So there's a power problem there that we need to resolve. The battery scenario of powering all of this AI-driven technology, beyond your household devices, making it fully mobile, automating it for robotics, automating it for your home use, automating it for outdoor use, that's still a massive issue when it comes to the future. So building that battery power and then the cloud computing side of things, look, we've come a hell of a long way, and that issue around managing storage is almost a non-issue anymore. But that compute part to drive GPT or to drive AI is taking it to a whole other level. So exciting, and I've no doubt that in the hospitality world, everybody's thinking to themselves, 'Well, how do I get onto this conversation and what do I need to be investing in?'

You know, it's a great question because there's just so many components to this. And let me start with where we sit at The Trade Desk, and it's not a sales pitch, but to help you contextualize the world of...

Oh, there you are, you're in throwing distance, so I'll be careful. So look, the world of programmatic, there's really, the way we see it, there are two worlds. So there's the walled garden world. Now, walled garden is a phrase that's used to describe any of those entities that you control all of your conversation, all of your data, all of your relationships sits within a walled garden. So examples of that are Facebook, Instagram, TikTok, Google to a certain degree, a large degree as well. And then there's the other part of the internet which is called the open internet. And the open internet is where we work, and The Trade Desk is, we're not a publisher, we don't own any inventory or content. What we do is we bring everyone that's outside of these walled gardens together. So that's your Spotify, your Netflix, your digital out-of-homes, your connected television partners, your Disneys, your CNNs, etc. And we enable them to sell buyers advertising. So our interest is outside of the walled garden. Now when you think about that, that is chaos. The whole world of programmatic is chaos. Digital out-of-home on Sheikh Zayed Road, how much is that? How much does it cost to buy that? What does it cost this time of day versus this time of day? What if there's no cars driving past it at this time of day? Now I want to target that, and Amal's driving past that, and I've just picked up that Amal's gone from there and now she's on her mobile device, not while driving, but she's on her mobile device, and I want to target her on her mobile device because she's looking at a news site that she's interested in or an app. And then Amal's at home and she's kicking back and relaxing watching Netflix or another provider, and then she's chilling out at the end of the evening and she's listening to a podcast about something that's really relevant to her. And Amal is a different person at each one of those days, but what's happening there is that there's millions, quite literally millions of data points every single second about you that's relevant to somebody like Hilton or Marriott or Jumeirah Group or anyone else that want to talk to you. There's no way in the world that humans on Excel spreadsheets can define how that Amal sitting in front of Netflix wants to hear about M at Jumeirah's latest offer. The only way that you can do that is through automated programmatic capabilities. And that's the full value chain from publishers that enable the digital out-of-home billboard to be automatically connected to the internet, able to play videos, all the way through to Netflix and them enabling adverts on your account, not your family's account, it's your account that's relevant to you. And all of those signals about what you're interested in can only be done...

It is scary. Look, and I love movies. I mean, by the way, I went to see Gladiator 2 last night, and I'll talk about why I think AI is so important because that piece of crap. But the real beauty of this when it comes to the scary side of it is about identity, and this is the post-cookie conversation. Because cookies were designed for something completely different, and where they are today is the scary part. But what is in the future is actually the real part where identifiers are unique, they're individualized, but they're completely anonymized and held and managed in a way which is thoroughly decrypted.

It's nice that you mentioned an example that is out of our industry, but for me, hospitality is always like late learning into going into the technology. Like airlines are way more advanced, or if we look at our friends, the OTAs, oh my God, like I just wish sometimes we could learn from them. Not we, they're our friends, we love them, we can learn from them and just try and match what they do or try and elevate our online advertising or digital delivery or journey of a customer to be a little bit close to how they do it.

Yeah, I mean, they're experts of what they do. If I was a hotel general manager and my hotel was empty in a week's time, I'd be turning to an OTA and saying, 'Fill the hotel.' But the reality is the cost of the acquisition...

Yeah, so let me take you back to what the cookie was designed for. Just by a quick show of hands, is everybody familiar with the cookie history? Okay, that's zero. So look, cookies were designed as a piece of code that whenever you logged into your bank or whenever you logged into a website, that whenever you logged into it the next time, it would remember your login details. That was the specific design for it, and that was 25 years ago that this piece of technology was designed. And it was never supposed to do anything beyond that on a web page. In fact, if you look at the history of it, the designers, the creators of the cookie, and the reason why it was called the cookie is because it's the crumb, the cookie crumb, and it remembers where to go, Hansel and Gretel story. But what it's developed to today is completely different, and it's completely ill-fit for today's mobile world first and foremost, but also beyond that, the app-based world. Because cookies will only work predominantly on websites, and now today cookies will only work on Chrome websites, which is Google's ownership, and maybe a couple of others. It doesn't work on iOS, it doesn't work on most Android devices, it doesn't work in app. So anybody that's basing their marketing performance on a 30-day post-cookie attribution model, which means whenever somebody booked that hotel room, the last click to get that hotel room as measurement of success, well, that's rubbish. Because all the effort that you put into branding, all the effort that you put into your guest experience, all the effort that you put into advertising that wasn't the last click is responsible for your brand. Even the OTA conversations, people don't book in an OTA just because of what's on the OTA. They go to your website and they'll check your website and they'll check everything else. So the cookie's defunct, and our company view on this one is that it should have been defunct years ago. And all Google is doing today is holding on to this apocalyptic world of cookies because they have no other solution. Our view on this one is that identity has to be individualized, and identity has to be individualized and managed within the frameworks of the government's perspective on this, so GDPR and Saudi version, etc. So that gets complex because every country in the world has a different, unless it's federal, has a different view on this. If you go to Saudi, they've got the GDPR Saudi. If you come to the UAE, it's a different view there, and then you've got passing of data in between. So our world in this one is about the reason why it's important, because Amal will be a different Amal at different parts of the day, and in order to speak to Amal, you have to have some information on Amal. The only way to get the information on Amal is by what we call a unique identifier, and that unique identifier will send back the information which makes advertising more relevant to you. And it comes back to the point: is advertising a good thing? A real fundamental question is, is advertising a good thing? Well, most people believe yes, because if something's relevant to me, if I receive a piece of news on North Face or Nike or Al Ain Water or whatever it might be, because I'm interested in it, I want to hear about it. And that's the core purpose. So cookies are dead. They've been dead for a long time. They will die even more horrible, slow, painful death over the next two months because Google's dragging its feet on cookie application. What it means to you as marketers is that you should be finding an identity solution. There's plenty of identity solutions out there. There's UID, there's ID5, there's LiveRamp partners as well. A lot of tech partners provide the solution, so you don't need to go out and build anything. You should never be building any of this, but to adopt it into your media. Now, this is the conversation you got to have with your media partners, your advertisers, about their use of cookies going forward.

Yeah, look, where we are today, it's probably not a good gauge of where we'll be in the future. I know we'll talk about the future in the latter part, but today AI is at its infancy. So I think back to the 1980s and the first mobile phones and the battery case, the big, big phones that were beside them. That's kind of where we are with AI today. This is really just the start of an amazing journey, and where this is going to take us from a media standpoint is all about personalization. It comes back to this point that some people might think it's quite dystopian, but the movie Minority Report, whenever the character is walking through the streets and he's able to see things that are absolutely relevant to him or her at that moment in time, that is inevitably where the personalization is going to go. Maybe not in that fearful dystopian way, but there's absolutely going to be hyper-personalization in every single part. Now, that can only be driven, like I said, by systems which can understand real-time what you want and then understand real-time who's willing to give that space for advertising and then understand real-time who's willing to buy that at what price. So again, look, we're dealing with a trillion transactions of opportunity every single day in our platform. We've got three and a half billion people that access our platform every day, and there's just no way that any human can ever in any way, shape, or form understand the potential that's in that. So that's the AI capability that sits at the back end, and we're really interested in the stuff that sits behind the scenes because a lot of companies are focusing on stuff in front of it. But for us, it's really that data-driven decision-making that comes back to that fundamental of right person, right question, right answer, right media.

Yeah, look, I mean, and most hospitality companies, organizations, whether it's small or large, will have partners in the market. So this is where the pressure needs to go onto your media partners particularly, to make sure that they're doing the heavy lift. I mean, ultimately, that's what they're paid for, doing the heavy lift to make sure that the strategy is correct and the technology they're putting in place is correct to prevent malware, spamware, just real bot, and there's a lot of it out there. And making sure that your placements are relevant and authentic, and there is technology to do that. And there's a host of providers, and we work with a marketplace of every best provider in the market to make sure that you might have heard of MFAs, made-for-advertising websites, which are just simply built for driving your content through spam websites. So it appears on a website and then the cookie reports it as being effectively delivered, so you're paying for that. To advertising appearing on, particularly on social media, and the big challenge with social media, and bear in mind I came from 10 years of working in the largest social media company, is that your brand appears on a news feed where you don't want it to be appearing, and your brand appears on a news feed where people are commenting consistently in ways that you don't want to be commenting. So there's definitely areas that need to be worked on. Protecting your brand from those, we really think that the open internet, and particularly premium open internet, is making an enormous comeback now because of technology, because of programmatic. Is that when people are kicking back and watching their favorite program on their TV, Shahid or whatever, watching the news on CNN or BBC, whatever it might be, is that they're in a different zone and your brand is protected and it's programmatic and it's measurable. And therefore you're able to do more highly qualified questioning and answering of people's needs in a really protected environment.

Oh, that's a bad one. But also when you purchase something, right? So you've done a purchase and then suddenly you're seeing it all over your social media feed or wherever. Like, what? But is that a waste of money? Completely. You know, it's like they're selling you impressions and, 'Oh, look, this is a million impressions,' and it's like, it's zero. And that shouldn't happen. And the reality is that you're completely right, that's wasted money. Black Friday sales are on this week and last week, and I bought two or three things on Black Friday sales, and then I'm getting hit with the exact same item two or three times per day for three days after that. That shouldn't happen. But that's because whoever is managing those campaigns are not throwing the message back to the advertising setup to stop spending whenever this action has been triggered, which is very possible.

Or upsell something else.

Yeah, so like, when I segue away from the last question, because the future of video is enormously bright. And again, contextually, we've gone from being in a world of short, you know, TV was a family thing. You'd sit at home and you'd all gather around on a certain show and you'd watch it as a family. And then mobile really drove home the individualized experience of short-form video particularly. So the flick, every second the flick. I actually seen recently somebody on a flight to Riyadh who had a device stuck to their finger, so they're watching the phone and they're pushing the device and the device flicks the screen for them, which I thought was scary and highly innovative at the same time. But we fully believe now that this has gone back to a moment where long-form content, lean-back content, relaxed content, hyper-relevant content is on what we call connected television, or television that's connected to the internet. So we can personalize a lot more. Almost all of us are watching connected television now. Linear television is something of the past.

Oh, really?

No. Can you, what is RB2B?

Right. I mean, I don't know the website specifically. I'd be interested you share it with me so I could see it myself. But it doesn't sound like anything other than cookies, simply because you got to collect data from somewhere. And if it's connecting it to a LinkedIn profile, I would be conscious of that.

Right. So if I was LinkedIn, I'd be looking at it a lot. Thank you.

So this again comes back to the challenge that exists today, but even bigger challenge in the future. If you don't have an individual identity solution within your company, as in working with companies like UID or ID5 or LiveRamp for example, you're going to face a real challenge. You won't be able to find people online because you don't have access to cookies anymore. So when you have an identity solution which is plugged into your CRM or data management platform, you can basically put seeds out into the marketplace, into the internet, and those seeds will then find people who look like the audience that you want. But in order to put those seeds out, you need to have a source of data, and that's email, it's phones, it's app IDs. There's a number of different identifiers which then help you find the audience online. But that's unless you have this strategy in place, in the next five years, cookies will not be here and you won't be able to find your audience on the internet without an ID solution. That's the big problem for the future.

Yes, search plays an enormous role in it. But search is, you know, that's intent. So somebody's going in with an intent to find something, whereas most advertising is trying to convince people that your brand or your product or service is relevant. But intent is generally lower down the funnel. Upper funnel is where the real challenges are.