Connected TV and Data Regulation Ft. Brian Jones

Brian Jones:

Imagine if a subway was infinitely customizable because it was built with software instead of dug out over the period of years underground with big drills. Think how complicated the subway in New York City would be if it had all these little modules that anyone could build a mini subway that ran around New York City. That’s kind of what at tech is and broadly what big tech companies are. You can say ad tech, and what I mean is every big software company that a consumer is interacting with is essentially ad tech, and its pipes of information moving around. And some of that is ads, and some of that is… You can call it tracking and stuff, but it’s mostly people moving media around that they want to see, pictures of themselves, of others, movies, videos, YouTube, TikTok. It’s communication.

Adam Kerpelman:

Hey. This is The Data-Driven Marketer. I’m Adam.

Brian Jones:

I’m Brian.

Adam Kerpelman:

Welcome back for another hang in the data basement. You’ll notice the composition of those voices, different than it’s been in a little while. So, here’s the thing, Brian. We have a statistically significant number of plays now. The episodes where you and I just talk about a topic are far and away the most successful.

Brian Jones:

That’s right.

Adam Kerpelman:

That sounds like I’m bragging, but sorry, that’s what’s in the numbers.

Brian Jones:

That matches my mental model.

Adam Kerpelman:

JJ, our producer, came to me and said, “Look, it’s in the numbers and it’s also in my gut. Figure out how to do episodes with just Brian.” So, we’re juggling up the format here a bit. Sometimes, it’ll just be me and Brian, sometimes Brian and a guest. And then you’ll also still be seeing Mark. But that’s going to be a slightly different format where we’re going to do interviews and stuff. So this one’s just the two of us.

Brian Jones:

Wonderful. Thanks for having me back again.

Adam Kerpelman:

So, here’s the thing I want to do here, and we could maybe start by talking about this premise. You and I have had a number of conversations that have ended with, “Every meeting should just be a podcast.” As a coherent internal communications strategy, I’m not sure everyone can pull that off, but you and I can. So, our meeting just now started, I don’t know, three minutes ago, and we’re recording.

Brian Jones:

I think if we could edit meetings, that’d be a wonderful way to capture the notes. We’re headed that way. We’ll have an AI doing that soon, editing and then probably even capturing what people said and summarizing it, and then resaying it in their voice. That’s not that far off anymore.

Adam Kerpelman:

Yeah. Most teams I talk to are using some version of something that’s just a little bot lurking on your conference call. So, the first thing I wanted to throw you is a hot take. Pulled it out of Slack this morning. The headlines continue to heat up around Disney’s advertising-powered offering of their content.

Brian Jones:

Oh. Disney Plus or whatever Disney’s streaming channel is?

Adam Kerpelman:

Yeah. And Netflix and a bunch of other people, like Netflix partnered with Microsoft for something to do ads.

Brian Jones:

Of course, they’re all going back to that.

Adam Kerpelman:

So, we’ve been talking about this for a while, the notion of CTV. We could do a whole episode right now on just what is CTV.

Brian Jones:

Or we could summarize it in a few minutes, probably.

Adam Kerpelman:

Let’s do that one instead so we can talk about the topic you’re going to talk about today. Of course, this is happening. It’s just a shift away from the linear model. Cable is just a pipe that gets data to you. And you plug a box in and then you have channels. But it’s all software and electrons.

Brian Jones:

Cable TV and internet TV, it’s all the same thing. It functions differently, sort of. Probably not anymore, actually.

Adam Kerpelman:

This is a paradigm shift that favors a version of vertical integration that is not a new thing if you understand the old studio system for movies and stuff. That makes sense. And there’s going to be an advertising layer. That’s CTV. Every time you see one of those headlines, it’s like you can go target me since Disney knows who I am because I pay them with a credit card for this service and I have a login, and then you can target me with stuff. Well, Paramount would be a better example since you and I always talk about the next generation. You can target me with relevant ads for me, not relevant ads for your best guess based on the next generation.

Brian Jones:

I would imagine current cable boxes have the same… The current cable boxes-

Adam Kerpelman:

Yeah. Something like it. It’s-

Brian Jones:

… probably included in CTV these days. I would think they’ve upgraded they’re software.

Adam Kerpelman:

Yeah. I assume they’re working on it from all angles, the user resolution problem that we have on the web every day.

Brian Jones:

But the important business aspect of this too to talk about is the branded media companies, the companies producing content are with traditional connected TV, digital TV over the internet. They’re cutting out the middleman in a way. They’re cutting out the ISP in the sense that the ISP was servicing and controlling the content. You’re still using the ISP. It’s still in their delivering your internet in most cases. But they’re direct-to-the consumer now. So, when you go to Disney Plus or Paramount Plus, they’re all plus, right, Netflix Plus, you log in with your email.

Brian Jones:

And they even ask, you think it’s nice that they provide customization like, “Remember the show you were watching.” But that’s targeting also for them. So when you log in as you versus your kids or your wife, they know it’s you. And like you said now, power of digital advertising, the ability to show me the pair of shoes I was just looking at on Amazon is coming for streaming TV. It doesn’t quite work that easily because it’s a different medium that is more difficult and expensive to produce content for. But I suspect we’re going to see things that are like your 30-second shopping opportunities as soon as AR and takes off a little heavier and stuff. Whole different concepts for ads will start to emerge.

Adam Kerpelman:

Yeah. I mean-

Brian Jones:

I pulled myself back there for a second. Had to stop.

Adam Kerpelman:

Yeah. No it’s fair because the comment that I want to make is immediately about how the metaverse and everything’s a video game, but that’s not what we’re here talking about today. Anyway, the quick primer, CTV, for anybody who’s like, “People keep talking about it. What do they mean?” It’s just better TVs and the targeting will look way more like websites than it will like TVs, which tends to hit the headlines in existing giant companies moving power around an attention economy, essentially.

Brian Jones:

And you’ll get to do more interesting things for your TV commercials. You still don’t see this because the scale’s not there. You don’t have the power of YouTube creators making ads.

Adam Kerpelman:

You kind of do because you have brand deals. The best way to make money as YouTuber is to do direct deals with brands. Oh. I just make stuff the style of you.

Brian Jones:

On CTV, you’re still seeing commercials that were professionally produced by big brands. So, you’re still seeing auto commercials because everyone’s still in the mindset of, “I’m making this for TV. It’s got to be a big, robust commercial.” But, what I need is I need the really explicit, weird thing that I was just shopping for on the internet shown as an ad made by a YouTube creator so they can scale their media because video is just so much harder to make. So you’ll see that soon. How silly is it to be watching something on Netflix where they know it’s me and to see an ad for some drug for somebody who’s 70 years old with some eye vision drug? It’s crazy.

Adam Kerpelman:

[inaudible 00:07:06] years. A year. I don’t know. It’s hard to guess here because it’s like this stuff accelerates exponentially and so it always feels like it’s shorter than you think in the short-term, but then longer than you think in the long-term. But it sure seems to be happening. I mean, the streaming wars is them figuring out where all this attention lands. What part of it is like, “Hey, I can’t pay 15 bucks a month for that anymore.”

Brian Jones:

Well, I don’t think it-

Adam Kerpelman:

But they don’t want to lose your attention. If they’re still making dope content, I’ll go watch it and just watch ads.

Brian Jones:

Well, it’s not just that people aren’t willing to pay, and I don’t think that’s necessarily the problem either. People are still willing to pay for that content. It’s a great deal. It’s so much cheaper than cable. I have a ton of streaming services, and it’s still boatloads cheaper than paying for cable. The issue, and we come up with this all the time when we talk about marketing, and I have particular views on marketing depending on the context of the community I’m talking to, but marketing will always find its way back in because it’s that extra little way to squeeze some extra cash out. So, it’s crazy that Netflix doesn’t have a marketing-powered version. They’ve been running with you have to pay because they were the leader. So, they said, “You want this cool service that no one else does.

Brian Jones:

They probably generate a lot of money because a lot of those customers wouldn’t have paid if there was an ad-free version. But now you’ve got competition and it drives everything to the bottom again. So now everyone’s going to say, “Well I might as well also have ads. Why not?” And then in a couple of years you’ll see, “Wait, why does my paying service have a few ads again now?” because it always comes back in. That’s how it works. The same as buying candy at the checkout at the grocery store. We might as well have some junk food here because we can get a couple of extra bucks from every customer. That stuff always comes back.

Adam Kerpelman:

To Netflix’s credit, I think it’s smart to not start from being a marketing-driven model even though in the world, you can look at a marketing-driven model. They managed to get out ahead in terms of content creation and international content creation. Now they have an inbuilt fan base based on people who will show up for the movies and the shows and the stuff that they like what Netflix makes that is produced 100% vertically integrated by Netflix. That’s a really hard part of this to bootstrap just off of ad dollars.

Brian Jones:

Oh. Absolutely.

Adam Kerpelman:

That’s why YouTubers are so weird and quirky because they’re all ad dollars at first till they’re big enough to level up.

Brian Jones:

Yeah. It’s not only expensive. It also makes your business way more complicated. Generating revenue from advertising is a very convoluted business model for a lot of reasons that we’ve talked about many times before.

Adam Kerpelman:

So that’s actually probably the right pivot to the conversation that I wanted to push forward today, which was more in the space of like, “Okay. You got all your streaming headlines and stuff. What’s happening in the media landscape?” At the same time, all the other headlines, at least in my field, are about antitrust actions and privacy regulations and concerns about this or that or how we should break up big tech if we should break up big tech, however you define big tech, blah, blah, blah. We’ve talked about that a ton. Seems to be a conversation worth following through with, honestly, because no one has brought up the points that have come up in our brainstorms about what’s happened in here. I feel like for you and me, the platform to develop this on is this medium, like what-

Brian Jones:

[inaudible 00:10:38] how we should break up big tech?

Adam Kerpelman:

Yeah. I mean, that’s a very blunt way to say it. That’s probably inappropriate for our corporate context at this point.

Brian Jones:

Well, it’s super relevant.

Adam Kerpelman:

We are deep in the data, which is the part that’s important at this that I still don’t see regulators understanding. So, at some point, we should have an opinion on how this should play out, right?

Brian Jones:

It’s very hard to have an opinion on the data layer of technology without also having an understanding and opinion of the technology layer, and then the business model layer. And they’re very complicated, and they’re very distinct. And one of the things that’s challenging with technology as it becomes the core part of every business is that it’s so customizable that the businesses become that customizable. So that’s especially relevant in our space, advertising technology. Every business is completely different when you dig in a little bit in how they operate and what they’ve built. Everyone’s seen that MarTech 5,000 thing that’s got all the company logos that are companies in our space, and it’s got 10,000, and there are probably another 10,000 that aren’t on that list that are all attempting to move data around and help target advertising and help people sell things and meet each other and talk to each other and network. And they all work differently. It’s all different ways of leveraging the ad tech underlying architecture.

Brian Jones:

Imagine if a subway was infinitely customizable because it was built with software instead of dug out over the period of years underground with big drills. Think how complicated the subway in New York City would be if it had all these little modules that anyone could build a mini-subway that ran around New York City. That’s what ad tech is and broadly what big tech companies are. You can say ad tech and what I mean is every big software company that a consumer is interacting with is essentially ad tech, and it’s pipes of information moving around. And some of that is ads, and some of that is, you can call it tracking and stuff, but it’s mostly people moving media around that they want to see, pictures of themselves, of others, movies, videos, YouTube, TikTok. It’s communication, and it’s a giant mess.

Brian Jones:

And rolled up in there is our personal identity and our made-up personal identities, our identity on Reddit and our identity as a professional and our identity as a content creator, our identity as a hobbyist or a member of a club. We’ve got a lot of identities, and all these businesses are jockeying to capture information, not maliciously, generally, just functionally to operate their businesses and make media more interesting.

Brian Jones:

And the great opportunity we have now is we’ve built all these big platforms and systems and subways for our information and we’re at a precipice now where you’ve got enough public perception of what’s going on. You’ve got enough regulatory perception and pressure, real change coming, and the tech companies now… And as a big tech company, as Dun & Bradstreet, we can start to look at how do we build the next real, serious iteration of this, the next generational shift in how we manage and create and distribute all this information.

Brian Jones:

And I think the cultural shift is one of shared, distributed global cooperation. Our generation has that more in mind, it seems, than a lot of some previous generations, partly because of the technology. And so we want to unify and clean up and opensource and share what allows this stuff to happen. And we’ll have something completely new bloom. I’ll spare my opinion now, but that was my long-winded description of what’s going on.

Adam Kerpelman:

No. But I mean, that’s perfect because it gets the thing that gets to what does it look like to deal with the existing tech, we’ve built that has powerful inertia against changing certain aspects of it. That’s why government must step in. The SEC didn’t used to exist. Then a bunch of bad stuff happened. So, we invented the SEC as a way to regulate people hurting one another by selling snake oil, which was the thing that happened before we stopped it. So, when I say regulation, I don’t even mean it in the necessarily bummer sense of the counterculture cipher punks or whatever. We need government. It’s important for how all this stuff works. Government is public.

Adam Kerpelman:

So as soon as government gets involved, opensource starts being the answer for a lot of things because the regulatory side of trying to keep it private gets too inconvenient. And this is the definition of regulatory capture. That leaves some players that can pull it off and a bunch of other people in the open ecosystem that’s 80% of the rest of the talent in the world to work where you’re talking about, which is like, yeah, but also we could build an open standard that someone doesn’t try to monopolize and then we can do all things that we want to do here, just with free innovation.

Brian Jones:

I haven’t thought about that before, how regulatory pressure can push for openness. Kind a new opportunity for things to go that direction because it’s so natural for software and information to be made free now that we have global networks and the internet. It was not free to get my message out to the whole world previously. I needed a printing press and a delivery mechanism, and I needed to get everyone’s addresses and have ships and boats and planes and trucks delivering stuff.

Brian Jones:

[inaudible 00:16:18] just go on Twitter and if I’d stay and do something compelling enough… you can take compelling however you want there… the whole world will see it, inarguably. It’s very, very hard to get to that point. It’s very rare that any one individual produces something like that on their own, impossibly rare, lottery-level rare. But it really works that way, sort of. So that means that in a way, distribution is kind of free there or at least the cost is something different now. It’s not money cost, exactly.

Adam Kerpelman:

It is to you. The cost is absorbed by Twitter and they sell advertising against it.

Brian Jones:

Exactly. It’s corporate-

Adam Kerpelman:

Not very good advertising, and that’s problem with Twitter. But to be fair, they’re working on it. It’s getting better.

Brian Jones:

What are the ads on Twitter? I don’t really use Twitter.

Adam Kerpelman:

Promoted posts and stuff.

Brian Jones:

[inaudible 00:17:06].

Adam Kerpelman:

They get me occasionally. Fair enough. Historically [inaudible 00:17:08]-

Brian Jones:

It’s an unfair word.

Brian Jones:

Promoted tweets?

Adam Kerpelman:

Yeah. But this gets us to the thing of like, okay, if there’s going to be a regulatory answer, one of the answers is what do you nationalize would be the term for it. What do you say like, this is an important enough… It’s like the airlines or something like that. There are industries that the function of which are important enough to the fabric of society that they’re not a great place to go make a lot of money anymore. Airlines, for example, because of the government’s involvement in the whole. It doesn’t necessarily have to be that. But the thing that you and I end up talking about is what… And this gets to the whole data thing. This is the relevant part of the expertise from which we’re speaking about this at this point in our professional lives of working at a data company.

Adam Kerpelman:

The split is between what we should consider to be Facebook and the data. And if you don’t handle that split the right way, every regulatory action that they talk about, yeah, some will be great for competition. But if we’re gunning for fixing these social ills that Facebook may have wrought, then you’re just going to breed 1,000 Facebooks.

Brian Jones:

Yeah. I mean-

Adam Kerpelman:

They’re going to take their data with it. They’re literally going to fork the data set and go run the same algorithm to make money until they can get to their promise of it being something different. But how much more destruction are you going to do in the meantime?

Brian Jones:

An interesting way to draw a parallel with our space, with the ad tech space, is that there are industry groups that are not owned by anyone business that work on standards for how information flows. And that, in a way, that’s partly been due to regulatory pressure, partly due to companies just coming together. I don’t really know how they all formulated. I wasn’t around when that was happening. But that in a way is setting standards. It’s opensource standards, essentially. Not exactly, but kind of the same thing.

Brian Jones:

And I hesitate to want to nationalize things. That’s a strong term to use, especially in the US. But what I would do, since you asked, is I would, as the government, put $1 billion dollars out there for groups to fund opensource creation of shared data platforms that start to capture our identity and our personal data, our pictures, our messages, create an ecosystem that funds non-profit software groups to build that layer for the next generation of the internet. I don’t know if that actual mechanism is the right way to roll that out, but something along those lines where you’re financially incentivizing the next layer that captures that away from those companies.

Brian Jones:

Facebook, and this is what we talk about all the time, Facebook as a platform, as a web app that you go to or an application on your phone, can and should be completely separate from my pictures. My pictures should be able to go wherever I want, which is kind of how it works. But ultimately, at the end of the day, Facebook has a version of my pictures. Instagram has a version of my pictures. TikTok has a version of my videos. And the platforms are intimately connected too because they help you create them. The function of the software drives where the creativity comes from on these platforms too.

Brian Jones:

But they should sit over a layer where the data really is in a place that’s owned by humanity. It’s our life. It’s our reality that we’re putting into these platforms. And what I think we see is if we separate those layers, the level of innovation that will come on top of that all of a sudden, if that was all open in a way that was purpose-built to enable new versions of Facebook and new versions of TikTok and new creativity on top of this, we’ll see an unbelievable explosion and shift in how the internet works and systems we have available. I think that would be one of the best investments we could possibly make for all of humanity right now, other than climate change investments. But it’ll help with that too.

Adam Kerpelman:

Hopefully better market economics will correct for the fact that we should care more about climate change than we seem to. Yeah. I promise the goal of every conversation I have is not to lead people to Web 3. The promise of the next thing is enough people from the early advent of the internet have aged up into positions of power, whether politics or within companies to understand that there’s a different way to think about doing that than nationalization, or on the other side, free market economics. Opensource software works. SSL works for banks because a nonprofit organization made up of 10 people and $900,000 a year keeps that encryption from breaking. They should get paid way more for that. But it could also still be public. And now that the tech starts to exist for that, the time for the conversation about what does it look like to have public data infrastructure, anybody can build an app, and you store it here because people can just use their universal login, and then they’re in.

Brian Jones:

And since you took it to Web 3, we can talk about it. Web 3 in the sense of blockchain technology and cryptocurrencies and wallets and all of that, it enables a whole new revolution in how business models are built, how money is exchanged, how stores of value, to use the trendy academic term, how you exchange that stuff. There is no mechanism right now for the group that maintains SSL to make money every time it’s used. It doesn’t work. That doesn’t exist. They didn’t build it. It wasn’t put in place. It’s really hard to do that kind of stuff. No one’s going to paid for it anyway. [inaudible 00:23:05].

Adam Kerpelman:

They tried. The 402 error, payment source not found. Andreessen has a whole story he tells about a meeting with Visa after which they scrapped the idea that that would ever be a part of the initial web languages.

Brian Jones:

I’m sure there was all kinds of innovation around how to do this stuff.

Adam Kerpelman:

It was like they were still working on terminals connected to a mainframe and we decided this isn’t going to happen. Yeah. Well, so the middle ground that I’ve missed there is self-regulation. It’s the thing that cable has pretty effectively pulled off after watching broadcast television get regulated, which is like you were talking about, standards bodies, nevermind all the stuff to do with the MPAA and all that kind of stuff. But on the other side, standards bodies are why USB works. That’s also a thing that we have had to really refine as a way to solve a problem of communication between pieces of hardware. It’s also software. It’s HTML 5 or whatever. It’s like you’re saying, “Okay. We’ve upgraded to this stack of how we decided to trade all this information,” blah, blah, blah.

Adam Kerpelman:

But these are all new cool things. We can do a whole different… I know you said you’re not in the weeds. I am. I can talk about weird standard bodies stories of how stupid plugs got shaped the way they are over time because I think it’s fascinating.

Brian Jones:

Standards body evolutionary pressure for technology.

Adam Kerpelman:

Otherwise, hopefully this was a fun jam for anyone who’s listening if we made it through the edit process and didn’t decide it stinks. Thanks for hanging around another Data-Driven Marketer. I’m Adam.

Brian Jones:

I’m Brian. Take it easy, everybody.

Speaker 3:

Thanks for listening to the Data Driven Marketer. Our show is produced by Jessica Jacobson and Dan Celsius. This episode was edited by Steve Kosh. The Data-Driven Marketer is sponsored by NetWise, a Dun & Bradstreet company. Any views or opinions expressed in this episode do not represent the views or opinions of NetWise or Dun & Brad Street.