S07, E28: Digital Advertising's M&A Resurgence (with Maor Sadra)

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Welcome to the mobile dev memo podcast. I'm your host, Eric Seufort, and I'm joined today by Mau Sadra, who is appearing for the I don't even know how many time on the podcast. Okay, so

you're saying sixth time.
Sixth time.
Yeah.
Well, you're certainly at the top of the leaderboard, but welcome back.
Thank you, Eric. Really nice to be back and thanks for reaching out. Always love chatting with you like regardless of the occasion.
Yeah. Well, likewise. And I wanted to bring you on to kind of discuss this digital advertising M&A cycle that we're in at the moment. and I I thought that you would be a very appropriate germaine guest to weigh in on that topic given that you just went through an M&A process. So, first of all, congratulations.
Second, before we dive into the conversation, maybe you could just introduce yourself to the audience for those who who didn't listen into the previous five appearances. So I'm or I still will name myself as CEO and co-founder of Incremental even though now I'm I'm getting kind of like a new role as part of the post acquisition stuff. Incremental was acquired by smartly for those who don't know. Before this, I was CEO for Appliffe, the performance network

uplift, not the ASO company, who basically took Appliff's deprecated name. And overall, I've been 25 plus years in edtech marketing doing whatever anything from like product role to customerf facing role to sales roles to whatever. But yeah, I really do like this space. I guess that's that's I'm fairly opinionated about this space, but I really do like this space. So, I'm glad to be here. I'm glad to have again met you. I think almost 15 years ago now.
Not quite. I moved to Berlin in 2014. So it would have been 2014 2015. So not quite not quite that old, but it was you at least a decade. All right. So So Smartly described the rationale for acquiring incremental as connecting real-time causal measurement directly to creative and media optimization. walk me through why Smartly was the right home for Incremental and then what's possible now as a as a sort of part of the the Smartly machinery that wasn't possible when Incremental was a standalone measurement company.
Yeah. So, we we actually were

fundraising last year, started speaking with like VCs and one of the VCs we spoke with told us, "Hey, I have this company you invested in a while ago. They got acquired, but like to introduce you and we're like fine. We're happy to like get the introduction." Yeah, that was smartly and the more we un like got them, we understood that basically this is what we're looking for. Measurement is a very easy cell when someone doesn't have measurements. Measurement is not an easy cell when you're coming and basically saying to someone, hey, I have a new ruler for you that's going to measure the truth, but it's not actually here to replace the existing ruler you might be using. Let's say attribution. Okay. The the other challenge with kind of like what incremental was selling or is selling is the fact that you know we all saw whoever scored the goal. Okay, if you've watched the last World Cup, Taurus scored the goal and attribution loves to tell you that Taurus deserves 100% credit even though we all kind of agree that that's not the case. But

basically the the ruler incremental was selling or the measurement solution incremental was selling was basically telling you that yeah that's true. I'm not coming to replace that truth. I'm just coming to give you a different truth basically to help you kind of like structure the team. Now, that was always a relatively hard sell when you don't know if someone is interested in buying that. And incentives played a very very like big part there. If a company essentially incentivizes their people based on whatever whoever is only scoring the goal, they're never going to want a solution that basically tells you differently. Smarty on the other hand has all the enterprise clients we could ever hope for. That's pretty much the best feat for us. And essentially what what this gave us was exactly what we were looking for as as founders. It gave us access to resources. It gave us access to clients and Smarty basically knows exactly which clients are interested in this because they work with close to a thousand clients who are

all enterprises. That basically for us was the clear multiplier to what we were looking for. the the fit there is very easy. It's a 1 plus 1 equals 3 and I think everyone wins from that.
Do you think that's true generally with measurement solutions?
Depending on what you're asking. So like I think hopefully we're going to get to talk about apps there. It's not always the same case. It depends on what sort of measurement are we talking about and again is this the referee or is this a measurement solution that basically gives a signal? That's a big difference there. Well, that's kind of what I was alluding to, but okay. So, there's a place for, you know, it's just standalone measurement. That's all they do. It doesn't integrate with any other functionality.
So, again, I would say that there's like two types of measurement solutions. The way I see it, there's the measurement solution that is the referee that basically connects between demand and supply and basically app says, "Hey, I'm going to tell you who scored whatever goal." And they also have the mechanism for this. And that's pretty much what

attribution does to be fair. Then there's a measurement solution that's signal that's signal that basically makes you smarter. Okay, there's like a whole intelligence suite around. I think that's the type of measurement solution incremental is or was or I guess is and that's a signal that's basically valuable. And if you are already in the marketing technology space and you're selling a SAS solution, then integrating a signal that allows your customers to be smarter, that's a that's an advantage, okay? Versus your competitors. I like in a world where you're selling the media that's a little bit harder to actually offer independent solution that enrich a signal because then you're very much biased to enrich your own signal and not anyone else's signal.
Got it. Okay. So you you've lived through you had kind of mentioned your background when you introduced yourself. You've lived through several generations of of digital advertising M&A. So earlier cycles were tended to be about companies acquiring inventory or

aggregating inventory reach. Now it seems like there has been a a dedicated cycle that is just dedicated to to data and identity and measurement and decisioning and all the stuff you just talked about. So is AI the catalyst for that change that strategic change? Is it just a maturity in the in the in the space shift away from you know the the kind of open regime to the more closed regime? What what's driving that that strategic shift into just acquiring data identity measurement versus just more and more inventory, more and more reach?
Yeah, I do think it's it is about intelligence. I think that the tools of the past simply won't survive the future unless they find how to make this shift. It's it's kind of like companies who failed at making the switch from web to mobile. If you remember that there was a lot of companies just could not make the shift and they're kind of stuck somewhere in the past. I think that most

companies will actually fail at making the switch. I I call it from legacy to AI cuz I don't even know how to call the old world. But I would think that or or at least my view of this is like an AI first company understand that they need to let go of control and put trust in the model which means that they will fail many times and debugging an AI system is a lot more hard than building a software that does what it's intended to do. That's it's actually one of the reasons why I think that AI currently is not very public market friendly because the market would penalize every time something happens. I think it's a long-term investments. It's again it's mainly reason why I think like so many AI companies are keeping themselves as private at the moment because you want to reach a point where the AI can can actually grow itself, fix itself but for that you actually need to adopt that mentality. you need to let go of control and not to try to basically develop

everything yourself because that's not necessarily the scalable solution there. And I think that's most of the acquisitions we're seeing right now. Again, they're trying to basically reinforce like a moat that is definitely an AI first. And to do that, you just need to connect a lot of pieces to buy a lot of pieces. It's an ongoing period. It's a wonderful period by the way if you look at it because for a couple of years our space was very dry when it came to M&A or going public or even when some companies went public it ended up pretty horribly right now I think we're in a again golden age again in edtech glad for all the companies who are experiencing this
yeah and we've seen a lot of movement in the in the sort of legacy space right so you had live ramp and then double verifying neielson just just this week live ramp was an interesting one I I don't know that I so it's it's difficult when you evaluate these things to kind of tease apart the degree to which they

map to a future vision of the space or the degree to which an asset that has cash flows that are probably deteriorating can still present a profitable opportunity. Right? My sense with live ramp is I that's not futurep proof approach, right? Like that that's what Live Ramp does seems like to be very much in support of an old way of doing things that's that I don't I don't believe anyone believes is has has a lot of growth potential or or is even necessarily something that will be dominant in 3 to 5 years. But yeah, there's still probably value there if it's just from financial engineering perspective. Double verify and Neielson, I can't I don't know. I mean that I kind of also get that feeling there. But maybe there's just a bigger picture that I'm in in terms of like the the market that I'm missing. What what do you how do you interpret both of those deals?
So Live Ramp so first of all, yes, it

was a PE acquisition. So it's definitely about financial engineering. On the other hand, live ramp is fueling a lot of like identif identification on the CTV space and that's definitely a growing space. In a way, I think they are the dominant player on on the CTV like identity space. We're working with pretty much everyone and assuming we both agree that CTV is going to outgrow linear TV. I think in the US it's already passed like ad spend, then I'm pretty sure they actually do have spaces to grow. They will probably also make their own acquisition probably in the measurement space. Interestingly enough, what you look at the Neielson double verified, this is definitely a measurement play and a data play because double verify had a couple of technologies that were super interesting for Neielson to get their hands on. Again, Neielson being a very old legacy player coming from again traditional MIGA and linear taking someone like the double verify under their wing. Double verify is a tech first company. It does

pre-bead, does measurement, also made a couple of positions in the past. They are well connected with pretty much all the major brands in the space. Yes, they're not like a very performance like what we know driven companies using them, but again when you're going after the Fortune 100, Fortune 200, they have all the customer base and they are almost like a like they are the de facto player you're going to use for verification, pre-be, brand assurance and all the things that like big brands do actually care about.
Got it. And and so that's is is your assessment there that that's that is a call it buoyant segment and that's not just piecing together components of an ever decreasing pie. That's probably a pie that's fairly stable and there's there's value in bringing those pieces together.
It's a pie that again to be fair it's like one pie is shrinking one pie is outgrowing it. The digital pie and the AI first pie is definitely outgrowing. What's freaking is the legacy and look

at Neielson for example, that's definitely them playing catchup. On the other hand, if you look at Walmart's acquisition of Vibe, okay, a company that I guess you probably know very well, that's incredible. Like Walmart has such a huge footprint of user level data. Now imagine that you can now expand basically that into CTV space. You're kind of building a competitor to Amazon almost overnight. basically taking all your like consumer level data and applying it as a targeting means to a channel that is definitely growing very fast which is CTV. So that acquisition I completely get like why it's very strategic why it's an amazing milestone in the industry and again I think that this is why I'm saying this is a golden age because companies understand now the strategic value they can get from marketing technology companies which again for a while was super dry like we didn't see any interesting positions or any interesting publicly list companies other than of

course upleven for for some time. Yeah, one one thing that makes me a little bit nervous about a lot of the marketing startups that, you know, are are emerging now that are, you know, kind of self-described AI companies is that they're they tend to be founded from people like totally outside of the space. And that always to me is like a worrisome sign. It it's kind of reolent of the crypto gaming era. But like when you had a bunch of people that were launching gaming companies that were kind of crypto first who had never done gaming and I I do think like the needs of of marketers are are pretty specific and require like domain knowledge that goes beyond just having been a a power user of Instagram and and so that's one thing like I haven't seen anything that I found like to my mind to be like truly innovative and I I do wonder like what the future of that this this crop of of startups is because I mean some of them have raised you know tremendous amounts

of money and and I just don't I don't see the use case I don't really see the value at now now the very first wave was just startups that would do creative production and that I saw no value in I didn't invest in a single company that was doing that just because I thought it would get absorbed into the platforms and I think it has I mean Facebook says now they've got 8 million advertisers using their JAI production tools Well, okay. So, who can compete with that? Now, now obviously there's, you know, you've got to spend ads outside of Meta's ecosystem, but but still, I mean, I don't know how you compete with that. I think every platform is going to offer that. Applements offering it. Every platform will eventually offer that. But now, I mean, you just see really a lot of like orchestration startups emerging. And again, I I just don't I don't like that that that for the most part, that's a that's been a solved problem. and you're either big enough to have done it internally or you're small enough where you're only relying on one or two channels and they handle it for you. I just don't know that there's a big space in the middle

of companies that are spending across enough channels to need it who just haven't built it themselves because it's like if you as a total outsider from marketing could build this tool then a CMO could probably organize three engineers to build it using the exact same tools that you're going to use which is cloud code or codeex and so like and know the problem space better and so my sense is like right now we are seeing a lot of like consolidation around legacy problems that is adapting to this new environment but we're not seeing a lot of solutions emerge that are AI first I guess is is my point like the the market evolution has been driven by AI and so you are seeing these strategic shifts in needs and opportunities and that's driving M&A but what you're not seeing is a lot of AI first M&A because that those those tools those solutions don't actually hue to the changes we've seen in the operating model. They're just kind of noisy. Do you agree with that or or do you think

I'm dismissing a lot of these AI first companies?
So again, when I look at generative AI right now, it's like a big question like where will this go? And I agree with you. There's a lot of slot. There's a lot of like startups that are basically kind of taking what they maybe used to use and just basically creating like an AI version for this. I do see like an like implo like a complete inflation of of apps and obviously like a lot of SAS companies and to be fair like being a founder today when you want to MVP something is much easier than it used to be. On the other hand, when I look at the scaled solutions especially when I work with enterprise clients they're not going to work with tiny startups that are simply relying on something that's like you know codeex or cloud code or something like that. when you really start scaling then you basically go back to kind of like relying on old technologies or older practices in order to do that. But again, I would say it's it's too soon to call out Genai. I think

we're just in the infancy of that and I I do think that like the level of orchestration layer is definitely a big plus but at the end maybe what we'll see is kind of like companies who built like an orchestration layer to orchestrate multiple MCPs. So essentially you can completely unload your vision to the point where the system can basically execute things for you. But again, I think that's like we're not there yet and that's not the type of acquisition we see right now. I think when it comes to like AI components we're seeing right now, it's reinforcement learning, it's intelligence, that's the level of decision we see today. And I agree with you again on like the creative generation. Yeah, it was pretty obvious that the the platforms will have their own solutions. That's that's not what's getting acquired right now.
Yeah. I I mean I just I just feel like a lot of the analytics solutions that are coming to market now that are you know supposedly

AI first it they're just recreating stuff that works well like I mean if I'm you know if I'm trying to so so you either talk about orchestration across channels which again I just feel like that was for a certain size of advertiser a solved problem and there's just not an opportunity there to serve that with a SAS tool because anyone for whom it was not a solved problem can't pay for it and then everyone for whom it was a solved problem doesn't need it and they it's a solved problem and so I but I I've also seen a lot of these tools that are like recreating player profiling or life cycle optimization or even stuff like monetization optimization you know for the end user and that could be like I've seen stuff that does on page optimization with context like there was a startup yesterday or two days ago I was reading about that did like onpage context optimization for ecom and so and I was like okay but what that exists

like that that's not a new like I I think it's it's it's someone's like hey I know how to build ML tools and you could probably imagine that ecom would like to optimize a page for a person that they don't know anything about yet and that would sound like a good idea and if you did zero research you'd probably think that's like a blue ocean opportunity But if you did 5 minutes of research, you would understand that there are a lot of tools that serve that use case. And maybe they're not built by people that came out of Deep Mind and maybe they're not even using that sophisticated of like, you know, an ML methodology, but nonetheless, they do the job. And so your goal is not inventing this category. Your goal is to demonstraably outperform those existing tools to the extent that you win all the business. And and that I just I just that's what makes me nervous. this. Okay. So then you're you're basically talking about the SAS apocalypse apparently. And to be fair, I had one client in the last 24 months who basically ahead of a renewal came to me

saying, "Hey, I'm sure you're having the same conversation with every other client. Hey, we're we're not willing to commit to a yearly contract. Hey, we're not willing to like raise the price." I was like, "Dude, a I'm not having this conversation with anyone because people who are smart enough understand that no, you cannot get this through some sloppy made tool. And if you want to try, go for it. And when we come back, we'll talk about new pricing." I literally had just one company who kind of thought that they can take advantage of this like SAS apocalypse and let us build our own sloppy tool. Most people I think see beyond that and understand that just if something looks UI based fine it doesn't mean that there's actual content behind it. I think that's a majority of people. Now on the other hand again if you are like a startup today and you're looking for tools and you have an option between a tool that cost 5K or 10K or 20K or a tool that cost you basically 20 bucks a month whatever like cloth or CHP cost

these days. Yeah, of course it's very tempting to go for this sloppy tools. I'm not that worried about that. I think most people at some point like when they start seeing some sort of scale on or when they're seeing that like they they cannot scale with these tools eventually get to like the actual good tools and again these like enterprise level build tools which have a lot of ML in them and have a lot of AI but maybe it's not generative AI and maybe wasn't created with cloud even though even like the legacy tools all of them basically today use LLM for for coding that's where you see the most to be fair, like something that was built, thought of, and tested through actual customers.
Yeah. Well, so I think I think we're agreeing with each other. What what my point is that the spate of kind of AI first startups that are being founded by people who themselves are AI

first from a from a discipline or a domain expertise standpoint are trying to replace systems that work well and and they just don't know enough about the space to know where the real opportunity is. I think that's that's my point. And so it's not that they can replicate these tools quickly and easily and steal the market. They can't. I don't think they can. And my my point is actually the market's already very competitive. They may think it's blue ocean because they just didn't do any research about the space. But like you do see these companies, it's like people will come out of Open AI or Deep Mind or wherever and they'll raise at a $und00 million post for an idea that you know as a practitioner on its face is not an unsolved problem. It's not a blue ocean opportunity. It's being serviced by multiple tools at this moment and so they're not actually adapting to the new marketing environment that has changed fundamentally as a function of AI. They're just they're entering the sort of like already solved portion of the market with a tool that is not

differentiated. And then a lot of times, you know, you look at these people's backgrounds and you question whether they have that deep domain expertise in ML in the first place. It's just that they came out of Google or they came out of OpenAI but you know they were a year out of undergrad and they studied something unrelated and you know they were doing something not that technical at the previous employer and so you just do see a lot of that and so the big point I'm making and we we'll move on is that I see the market evolving I see a lot of the M&A happening kind of doing a lot of you know consolidation and adapting to the the newest opportunities. I don't see a lot of the startups emerging to serve the new market reality. I I see it this is just like the AI of existing tools that that didn't really need to be reinvented that are working just fine.
So I hear what you're saying and there I completely agree with you and to be fair I don't think that was like what I was talking about because like a fundraising strategy is you put an AI label yourself same as a couple of years ago you put

NFT label on yourself and a couple of years earlier you put cryptocurrency and a couple of years earlier you put web 2.0. 0 or whatever. Okay. Fundraising strategies like you will have a shoe company saying that they are generative AI for whatever this I get founders want to raise money want to start their company. When I mean an AI first company, I truly mean like a company that basically adopts an AI mentality where you understand that you cannot control all the things the software will do and the software often will hallucinate and up and you're fine with it because you understand you're going for the greater good. You're going for a long-term vision. That's what I consider as AI first. Not any company that says, "Oh, we are an ad network, but we are an AI ed network." like that doesn't mean anything there. I think this maybe this is what you were kind of like meaning and there I completely agree with you. I don't understand why everything needs to be AI when it's not. AI is changing everything but it's only

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I want to talk about the Abselar investment. So this is staleish news, but I I do want to get your high level thoughts. So So what's your interpretation? Just give me the read. I know you're on the ground probably have a good sense of of how the what the consensus read on the situation or the investment was. Just just give me your kind of like high high level thoughts.
So first of all, I'm really happy for them. I know Rashef, Lisa, Laz, and a lot of people there for many years. I'm

also proud of them as an Israeli. This is a huge success and I've known Owen and since they were in Microsoft Accelerator. This is like a wild while ago. I hear that a lot of people kind of immediately were like cynical about it saying oh they're no longer independent blah blah blah. I completely think the opposite. I think that like because they are such a big player in the industry or like I don't know 60 to 80% market share and mobile attribution depending on who you're asking. like they're the referee and it makes sense for the system to sponsor like the referee because if you don't have the referee then this is complete and utter chaos. Okay, it's simply that and I think that they first of all like I completely understand why they managed to pull it off. Amazing that they did. I think all the players who participated in this investment understood that they have much more to lose if Upstar would fall. Like Upstar

ended up either in the wrong hands or literally reached the point where like they're in financial strain and had to cut more people and like and the market goes into chaos and suddenly you don't have one major third party attribution player but you have 15 third party attribution players. then you're really reaching a point where there's complete chaos where you cannot trust the referees and like again to be fair like a Google and a Meta which are the big players and this even though they're not the biggest in terms of actual money invested they would have so much to lose. So I completely get it. I also completely get why they are still independent. They're still unbiased like red to orange explanation to it. I think it was very honest and very transparent. And again, I also get the cynicism in the industry.
Yeah. Well, it's I that was my that was my argument. It was too big to let fail. Like all of those companies, those four. I mean, my next question was be was going to be why why these four? But we

just you know you you just explained why these four.
So like I don't know why others didn't join.
Yeah.
I don't know if others were offered but like you know Snap, Tik Tok, Apple Search Ads X. Again, I I think we both know like which lovely ad networks they were all like defending against, but I don't know why specifically these four and not others participated.
Well, they have the most to lose. I mean, Snap, yeah, you could I I don't I don't think they had the latitude to do that to invest in something like this right now. But, you know, it's they they benefit from the status quo. The status quo works for them, you know, and and so they want to maintain it. And it, you know, it probably works for advertisers, too. And and that the point I wrote in my piece is it was too big to let fail. And I think people interpreted my piece to mean that I thought that they were in financial distress. But I said in the piece, they're profitable. They're not in financial distress. They're very well positioned as a going concern. It's they're a healthy very healthy company. I I never implied that they were in

financial distress. The point wasn't that they might be in financial distress. The point might was at P ownership clearly wanted to get out. What happens if they say okay well let's sell to this company that you know isn't committed to independent I mean I think the fact that they took this investment from a syndicate shows that they are committed to you know neutrality cuz if they weren't they would have just sold to one party that would have owned it and controlled it and not been neutral right that would have been that would have been the direction to go in and so so my point was more about like yeah well a they're comfortable But like if the the P firm says, "Look, we want to sell. So you've got to cut expenses because we need to juice the the profitability of this." Well, then okay, are you talking about cutting people because then you're talking about service degrading potentially. So that would be a problem. Or a company buying them who was not dedicated to neutrality that would be a problem. So I think this is like kind of the best outcome for all market participants including

advertisers. And I do think yeah, that the idea that this this was so like who are they going to favor? Like it wouldn't make sense that there was some sensibility here that the people that invested got preferred treatment cuz who would they favor? I mean these are like the four biggest appetit stall outside of app loving so they would favor them like all four of them. So which one of them gets the most favorable treat? I mean it's just it doesn't make sense to interpret it in the cynical way I think.
So again I completely with you and there was a there was like the scene in Openheimer. I don't know if this like you know whether was like a potential chain reaction where like we all end up like killing ourselves everyone and the scene there in the Oppenheimer movie was like all right if that's what your math shows you share it with the enemy and hope they also don't want to kill everyone including themselves I think this was pretty much it I think like here like the the the four players that participated this in this investment understood that they have more to lose If upseller ends up in the wrong hands

and when you think about it it's like so if you if you take the this analogy of a referee which I think is a good analogy for an upser a referee can easily throw the game can easily sell the game like if a referee wanted to optimize profit there's so much evil they can do and when you think of an apps if they didn't have this investment and they really needed to optimize purely for more profit more faster growth and so on there are so much bad that they could to if they just wanted to really appreciate the the outcome here and very glad for them.
Just what's the future of that space? I mean, is this like this seems like it's I don't want to say rescue package because again, they were not in financial distress, but like this does seem like it codifies the status quo like we probably don't see any dramatic innovation now because that was the point. We the point was to keep everything the same. Is do do you agree or do you think maybe the MMP space looks radically different in 3 years time?
I think the MMP space is infrastructure.

It's always been infrastructure. It's pipes and you need pipes. I need pipes. Everyone needs pipes. Honestly, like pipes are fine as pipes have been. You you told me earlier you went to Italy to like a very old building. Hopefully, it was connected to pipes and pipes haven't changed for the last 100 plus years. You don't necessarily need to change infrastructure if it's working as is. Attribution has flaws. It works. It does what it's supposed to do. leave it. I'm really glad for the outcome here for everyone involved. I don't think necessarily that they need to change it. If I think of it and this is kind of like, you know, for me one of the reasons why I started the incremental, I allowed myself to start incremental was knowing that an attribution solution can't go and offer what incremental was offering because they cannot basically circumvent themselves and say remember all the conversions I was counting. So here's another tool that basically tells

you that they're all wrong. Yeah,
that gave opportunities for other companies like Incremental, but it did not circumvent up like no one in their right mind would say, "Oh, I don't need to use attribution anymore. Let me just use these additional or other measurement solutions that look at things from a completely different lens." No one did that. And that was never the peach,
right? And I think that's underappreciated. And and I I misread that honestly. I mean I misread that. I thought the era of MMP style attribution [clears throat] is over going into you know 2021. And that's not demonstrabably that's not what happened. What I recognize now though and what I think a lot of people underestimate is how much innovation is happening around that. So you've got core MMP attribution. You have it. you always will have it most likely, but you're building a lot of you're building a whole ecosystem of measurement around that yourself and you're layering on tools like

incremental and your own proprietary tools and you're using the you know the MMP as sort of like this this attribution signal but there's a lot of other stuff that you can build on top of that synthetic measurement call it that adjusts for it or you know just just modifies it in terms of your own like business intelligence and decision making and that that has flourished. So the underlying foundation rock solid not going anywhere. It's the Roman aqueduct to extend the Italy example not going anywhere. You're always going to have that. But you know inside your own building you might do you know calcium removal systems and a whole bunch of more sophisticated stuff to to pump the water up to the top of a a six-story building. But I yeah my sense is like the MMP space it seems though it's probably frozen in time from here on out. You've got the major players, you know, which would include branch, you know, apps flyier, obviously, adjust, and then kind of maybe some smaller solutions like Ten. And I just don't see

this. There's not going to be big evolutions here. The these these companies are they have core businesses that are very strong. There's demand that's not going away and they will exist for as long as mobile app installs exist.
I think so. Again, and they can all complement with additional services like Singular is very strong with the cost reporting side. Oava is definitely on the VIP velvet glove service to some of his customers and again I think they all can find their like edge and they all have a reason to continue existing.
Okay, let's I want to jump into Chat GBT ads. I feel like that that's a that's a space that it's funny whenever I do a post on just like here's a summary of what chat GPT just launched it does really well. I don't know why because they're really boring. It's just me summarizing like essentially a blog post of on chat GPT or on the OpenAI website, but explaining, you know, why they did this and what it means. But there's there's definitely a lot of interest in in chat GPT ads. And it's funny how polarizing chat GPT ads are because you get people that seem really dedicated

and committed for whatever reason emotionally to this idea that ChatGpt ads are going to fail. It's very odd. And not only are they committed to that idea as an outcome, but they'll argue that it's already happened. They'll argue that chatbt ads are already dead. It's a the idea didn't work. It was tried and it was a failure. And and I mean I don't know if you saw this, but like e-arketer published this estimate of the total size of chatbot ads being like 10 billion in 2030 or something and 1 billion this year. And and I I mean that was Chatt's target revenue was 1 billion this year. I think they've they're on track to beat that. So it's just very odd. There's this there's these these camps that that feel like very emotionally committed to this idea that chat chatbot ads must fail which I and I don't think any data supports that. I I called it an alternative information space because if you live in the the primary information space you see chat GPT pushes out new functionality almost monthly seems like

they're scaling really well and then the alternate information spaces people say like oh it's not working I'm hearing I'm talking to people and what people are telling me it's just like well okay can you point to any information that the primary space that supports this anyway talk to me about what are you seeing what are your clients doing with it how are they finding it? How are they finding the experience? How how are you seeing the platform evolve? Just talk to me about CHACHT ads.
Yeah. So, first of all, I think so incremental was the first company to publish actual analytics on chatbt and performance. I can understand why people think it doesn't work. It's a zero click. It's like a zero touch platform. Ads are there and but similar to social but way worse off, people are not going to be clicking out as frequent. So if you are relying on last touch top of the funnel metrics, it's going to look terrible. And you know there's there's a very meta analogy or not even like a like a meta example here. So incremental

is a is an advertiser on mobile dev memo. I think the first month we were ever live we got few leads to the point where I was thinking all right we should not continue. But then each of these leads was like super high-end sophisticated advertiser which we ended up working with for long. So it's like all right crazy high CPL incredible returns. Chat GPT ads is pretty much the same to be fair. the whole chat experience like you're not going to get a lot of top of funnel so you may not get a lot of installs and you may actually not even get a lot of purchasers but the ones you will get are going to be so qualified that the LTV will compensate. Now we are in a world today where the whole like user level tracking and measurement is quite difficult. So for you to get to the point where you're spending a,000 bucks and you know that from the thousand bucks you may only got one install but that one install actually ended up spending a lot more takes a lot of

gut/belief slash different types of measurements. So again I can see why some customers already shut it down because oh CPA looks super high, CPI looks super high. But I think that here really like a different measurement tool is needed. It doesn't replace attribution. Attribution is doing what it's supposed to do. But if you same as if I judged my quality of return from mobile dev memo advertising very meta by the way Eric this discussion if I judged my return based on leads then I would have never been on like as an advertiser for the podcast for the last I don't know two years now. Yeah. It's the same basically equivalence there.
Yeah. And it's also it's it's early days but I mean they did integrate with apps flyier and adjust on app install track. I don't know about app install ads from chat gpt. I maybe for like certain products like maybe I can see like different types of subscription products

like hey give me the best run tracker app or something. What are they and maybe that performs well. But I mean for like high volume installs I I would imagine it works similar to like kind of Reddit similar kind of like intuition about about why ecom I could see it doing pretty well and that would be clickbased right I mean you're just clicking on the thing going to wherever and the point I made when they took money from Amazon was like clearly like Amazon wants to advertise here they don't want them they don't want chatbt and other chat chatbots scanning their product catalog and you know excluding them from the process for a lot of reasons that are that are very obvious, but they do want to buy ads there. They do want to place ads there. And you're I think people have seen ads in the wild, Amazon product ads. So, I think that's that was my sense about why Amazon invested. They want that opportunity. But I can imagine ecom doing pretty well. I mean, I I you know, I'm moving back to Austin and I've been, you know, I got an office there and I'm decorating it and and I use chatbt to do research

and to coordinate stuff. uploaded pictures, said like what do you think works best here and it worked really well as that that kind of tool. I can imagine ecom being pretty performant there. Is that have you seen that?
We see ecom travel, lifestyle products, healthcare, b tools. To be fair, I think we see pretty much everything other than mobile app installs at the moment, but I think eventually they'll also go there. I think what they kind of need is they need more tools which pretty sure they're developing or working on even though they keep telling the market on the one hand no but on the other hand they're releasing everything we kind of expect them to release and I don't know if it's the advertisers who are working with them telling them hey you need to release this or if simply the teams they are hiring people from the industry like we know many other people yeah
and yeah there's like a written playbook just need to follow that Yeah, anyone who's surprised at the direction that the platform has taken just wasn't paying attention. Look at who they hire.

I mean, I I do like a catch-up call every once in a while with them with the the team and it's people that you would expect to be doing it and they it's like there's they know exactly what they're building and like I can't guess I mean like I can't I you know I can't surprise them with how I guess what's coming next because it's very obvious and linear. And so like when they when they introduced the standard events library and then they said like we're not optimizing towards that yet. It's just a measurement tool. It's like okay well then I know what's coming next. Yes, conversion optimization but we needed the events library first to have to and Cappy first in order to build up to bootstrap the data to do that. So it's pretty obvious what comes next. I mean it it's there's no guesswork involved. And I, you know, and the other thing is like people just have these like sort of like seemingly wild hypotheses about the direction that this is going to take that that's just radically different from just the the trajectory that you could just pencil out, you know, like, oh, they're going to launch an ad

network. Why would they do that? Why would they do that? We It's pretty clear what they're doing. They're building meta ads. It's very clear. like you just you could pencil out the next milestone and trace it. You know exactly where they're headed. Why would they take this radically different direction and do an ad network notework? It doesn't make any sense. And it's it's just like it's a very odd space to cover because it just does like I was said like this there's just this alternative information space that people draw from to make these presumptions that seem very distant from everything all the the data we have to support it. Talk to me about channels that you're seeing that are ascendant in the portfolio. I had the CEO of Misplay on recently. You know, the rewarded mobile app install space is like booming. What what else like what do you Reddit? Is that interesting to you? Pinterest. What what channels do you see that are that are interesting that that maybe like you wouldn't have guessed are doing well?
So again, from my perspective and looking at a lot of spend, I think we see like four to five billion dollars of that spend last 12 months. It's like we do see CTV growing in terms of share of

wallet. Meta is definitely back on where it's supposed to be. Took some share of wallet. When it comes to UA network, it fluctuates because you know it's like performance trend go up, performance trends go down, seasonality goes up, seasonality goes down. There is no single platform I'll name other than again open AAI ads or chatd ads which definitely we saw from like zero in February to a sizable number already in July and we see a lot more customers going for it. I'll be surprised and again if it doesn't end up ranking within top 20 across the board by December this year. I'll be surprised mainly because also that when they opened up the door to everyone and started offering support to third party measurement, third party tools, MMPs, which they needed to as well, that's how you grow. Again, when it comes to UA network, that's definitely a lot of gaming, but today gaming is maybe I don't know 30% of our customer base. So, I'm sure we're not necessarily seeing

the same trends as other companies would be seeing.
Yeah, Mau, it's great to have you on. always talk to us about incremental. How can people go and become customers of incremental and talk to people about Smartly? What if they're not working with Smartly? What could Smartly help them do?
Yeah, so let's start with Incremental. Incremental steals on incremental.com. Book a demo, speak with me, speak with the team. Happy to show you kind of like what we built. And we also recently added Aurora, which is an LLM part of the platform. People really like using that because you don't need to think hard anymore. You don't need to look at numbers at the dashboard. You just ask questions and get answers based on your marginal data which is what customers should be using. Smartly works with pretty large enterprises for workflow automation, campaign automation, creative optimization. There is a bridge between incremental and smarty basically where you if you wanted to include an always on incrementality signal smarty can optimize towards this on all the

platforms they're connected with which includes open AAI includes meta includes snap and they're very very strong on the social and CTB side. Yeah that's pretty much the connection there at smartly.io O, we're at incremental.com. Eventually, I think we'll do something with the brands.
M, thank you so much.
Thank you, Eric.