# A Colossal Misunderstanding?

## Transcript

hello welcome to the second episode of the middlemen we had a lot of fun um we posted this out a few days ago our first episode on MFA and people listened people reached out said they like they liked it so we're going to keep going um but instead of just diving right into it like we did last time um we're gonna step back tell you a little bit about who we are and why we're doing this um because I think that's only fair if spending your time listening to this um our whole point

is that Todd and I have been working in uh retail media in e-commerce in adtech for quite some time and um what we really want to make sure is that all of the news all the three-letter acronyms all the things that are thrown out there um really stick and the only way to do that is kind of slow down and really from the perspective of the middleman somebody who's really in the middle of it and we've been in the middle of it for a long time give you an understanding of why these

things are happening what are the incentives peeling back the onion and really you know getting people to sort of train up muscles on how to understand what's going on um in the news that they read and and and listen to on podcasts like these so um with that I think one of the ways of of you know making a better understanding of who we are and what the show is about I'm going to ask you Todd to give us a little bit about your background so and it just coincides you and I came

from we spent a year and a half working at a e-commerce SAS startup called fantastic together um which is focused on the Shopify ecosystem and so we have some experience dealing with Shopify and e-commerce but prior to that I spent a decade building and running a DSP and which means demand side platform for those unaware of the three-letter acronym and it's the software that agencies use to buy programmatic or realtime biddable advertising and uh so that the benefit of that has

got deep in the bowels of of programmatic advertising it what we were Pioneer in the programmatic native advertising space we helped build and Define the openrtb programmatic native spec and so I always used to love going into sales meetings for zamantha where I'd walk into the meeting and and ask does anyone does any in the room ever read the programmatic native or open rtb specifications and I'd raise my hand and of course no one else would raise their hands and so yeah you

you've started to made I even asked you if you'd read it and you came from right a world of you know oh yeah I I I buil I you know I created an IB rising star with adhesion and I was part of you know building out and popularizing the spec for emid which is sort of the vpid for mobile expandable ads so like I'm no stranger to the IV but I I think that the rtb spec is at another level and you know I actually got about two-thirds of the way reading it before this podcast um if I

had done that without chat TBT as a sort of interlocutor I don't think I'd make it through it's very Arcane and I think you know our point in in you know what's happening in a lot of times in the adtech world is the details actually matter the technical details and a lot of times people's lack of understanding of the details allows them to jump to conclusions and I think that might be with a recent um news piece what what might be going on and as a result I think what we're trying

to do is help because I know when I talk to friends in the brand advertising space and they always talk about you know the the VPS of marketing CMOS and how they're just befuddled by the the the realities and the technical sophistication of online advertising and a lot of those details are over their head so we're hopefully here helping to explain and not just and to those folks but to adtech folks who don't dive into the specifics and so a broad audience here of helping people

understand why these Details Matter and what they mean and so I think that's kind of like you know are lifting up the kimono so to speak of the bowels of the intersection of media and Retail and as that becomes Tighter and Tighter every day a bigger and bigger audience is really going to need to understand these things yeah and I think you know on my my take on a lot of this this is that some of the news that comes out and I think we're probably going to jump into that soon um

there's a lot of blame immediately um because people probably heard a lot about how certain types of adte is either Shady or there's you know there's fraud out there and you know that they always sort of as a consumer you sort of bring your experience back to what you know and most people know Facebook better than they do sort of how regular websites work and I think you know from the discussions that we've had is that the inner workings of all this the rtb spec it it makes for

a very fragile uh very collaborative but very fragile system that breaks all the time and I think that's something that you know we can talk about in terms of the news that we're seeing so the yeah and and what we're referencing in the news is there is a a news around in SSP Colossus media being accused of potentially nefarious um actions regarding uh cookie IDs and were they sharing the right information and for those who don't understand there's a couple of of of important

nuances here a the reality is no company can read anyone else's cookie so if I'm a DSP and I have a cookie on a user's machine that has my user identifier on it the the downstream Publishers ssps can't read what's in my cookie can't read my identifier now the reality is that my clients want to Target specific users if I'm a DSP and the whole point of online advertising is to try to Target individual users as much as possible Right show the right ad to the right person at the

right time the right price in the right environment there's lots of others that not have been added over time but you're trying to Target an individual as as much as possible which means there needs to be an identifier back in the day as you and I talked used to be just emails could be passed clear text emails but obviously with the rise of Regulation and privacy concerns and whatever that's been replaced with uh pseudo Anonymous identifiers right random strings of letters and

numbers and and so forth and so if I have I'm a DSP and I cookie that user when when an when I deliver an ad to that user um that gets placed in the machine and then my what I want to do is then when I see the user again in the future I want to be able to Target that user but then the rub isw if the SSP can't Target or can't read my cookie then how do they share that information with me well the the backdrop is that um I have to as the DSP then I have to sync cookie sync or or

ID it's not really cookie syncing it's really ID syncing and so I have to go through a process where I where the the SSP or its intermediaries and proxies basically send me a request a pixel request and the pixel launches my domain which means I'm allowed to read my cookie and then um I can read my cookie and when they when they send that that request to me to launch that pixel the partner sends me their ID so let's say I have a user A9 A9 A9 and what happens is the the downstream

partner the SSP sends me a pixel request and they pass in as part of the question mark it's called query string parameter they'll say what their ID is and they'll say oh it's my ID number is is z21 z21 z21 and then what I do is I create basically a big fat spreadsheet a table that says my ID equals this partner's ID and then I'd let them know after the fact and say oh yeah by the way here's here's the match of our IDs and so I'll stop you there I mean what's what's funny about

that is you know I think a lot of us have have heard that explanation in the past I think one of the best ways of explaining how much how often that's happening Jeff Green from the trade desk uh in one of their Edge training materials talks about how when you look at the bottom and left uh of any website you see all those things happening there's just tons of cookie sinks that are happening at every you know it just shows you how much wasted effort our machines are making on

behalf of trying to figure out who you are right and so in this case you know we we we started this the title this Colossus misunderstanding and by the way we were very proud as dads of a great dad joke um pun intended and uh you know just so everyone's where Tom and I both have kids we're both dads yeah we off allow yeah we lean into Tom and I lean into bad puns I think Tom you you a little bit more than me but I think you're you in fact I have to give credit you're the one

who came with the Colossus misunderstanding as the yeah yeah colossal sorry colossal misunderstanding and and I just you know face pal because oh my God that's anyway but we're running with it because you know in in in honor of of that but you know from my point of view what and if you look at at others in the space like like uh Dr Fu Augustine Fu who uh a a researcher an fraud researcher um in the space he you know points to this as like hey this is really just a a factor of

the reality of the fact that this ID sharing is not not synchronous so what can happen is you know a a DSP updates the user's ident identifier on the machine and by the way sometimes DSP have multiple identifiers like you're in multiple segments you get have multiple identifiers and then you set an ID on the user's machine let's say when the ADL runs but you then have to go back through all your partners and basically the next cookie sync or ID sync let them know what got changed

and what updated so what you're doing then is you're you know okay I I set an ID and then queue up to tell all my partners and then over time that gets propagated back and so what happens in in the way the the the programmatic advertising works is a seller publisher goes to a s SSP and SSP could go to a proxy like a bid switch would ACC as a one to many SSP to DSP integration platform and they then send this form which is standardized via the I and op rtb specifications and in

that form you put information about the ad impression so that the potential buyer the DSP platform knows what they're knows what they're buying and one of the fields is buyer ID which is the DSP ID and so you're putting in buyer U ID sorry buyer U ID people just say buyer ID is what they they they drop the the U and when talking about it Cally and there's a seller ID in that form there's a buyer ID and there's actually another field called Eid which used to stand for enhanced

now stands for extended ID where you can put all sorts of other third party IDs in yeah and that's that's uh what I've called myself today I'm the Eid at next to pedia so there you go and you can put in all additional identifiers which come from third parties and and you know this gets to a whole you know this idea of enhanced um bidding information there's a whole cottage industry of of providers who now provide IDs and now are migrating to to if someone's missing a seller ID

in a machine sort of guessing as to what they think the seller ID is because that's more valuable from because again it's the user I want to Target companies like live and tens and 10 IQ are now working with Publishers and ssps to kind of fill the blanks so so if people are guessing it sounds like a game of telephone it it is and so you have this timing problem where if I change an ID and let's say the the the SSP has the old id from 15 minutes ago or yesterday they could be

putting in yesterday's ID and it's not nefarious it's just a syncing issue and again that gets updated and fixed over time which is why as a DS former DSP guy I looked at this scenario what was happening I said this doesn't scream fraud this just screams normal Pub Ops SSP Ops bidding Ops like normal ad Ops type of stuff like it now it could be like someone could be figuring out my IDs as a DSP and figuring out the the hundred most popular IDs that I always want to Target and

show ads to and you know maybe slightly higher bidding but honestly that's just I I've never met an SSP who I really felt could pull that off um it really requires a lot of real time really fast sort of tracking and and it just really is beyond my experience most what ssps are capable of honestly but cotage industry of of probabilistic providers could be doing it like live intent they could be tracking I'm not accusing anyone of doing anything here to be clear you're basically

they could they have an incentive since they're paid on revenue revenue shares maybe they're the ones figuring out the most valuable IDs and giving those to these ssps to fill again when when one's not available filling in the blanks is what they're supposed to do if it's if it's already there and they already have it they're supposed to give back that the bud that was given to them and so that's maybe what you know that and so that's a scenario that could be happening but the

end of the day the dsp's job is to verify what you're buying and if you find a mismatch between the cookie on the the cookie in the dsp's cookie their ID and what you were provided in the bid request you have the right just not to pay for that impression it's you just consider an invalid impression and dsps and ssps sync all these reports up and figure out what people really owe and if an impression is invalid you just don't pay for it so the the that's a job of the DSP is to

verify what gets bought you can't TR you trust but verify is very much a part of this industry and so I think we have to look at it yeah and so you're if an SSP is is doing a poor job at their ad Ops or their bidding Ops whatever term you want to use as a DSP yeah eventually get frustrated and probably kick him out you know what they're just not worth the trouble too many impressions are not verified or not you know billable or invalid like it's just not worth my time well and

I think I think you know a way to understand that relationship if you haven't really been in the in the weeds there is is this sort of the SSP kind of being like the real estate agent uh trying to make the house seem better than it is or pump up the value out of it you know like what how do we sort of look at this you know you mentioned incentives the SSP wants to be able to put the highest value customer in front of the DSP if they can because we've seen this before I mean in

the world of mobile where I was uh working for um M Chris but then and then quotient um we saw this all the time where back then especially when the beginning of of GPS data being really valuable when you know if location targeting was going on if you had GPS that was really valuable if you didn't have GPS and you had a zip code you're like well what if I made it look like it was GPS and I put it to a really specific location but that specific location is what we call the centroid

or just the middle of the zip code and you know that you know that that could be in the water or you know Cape Canaveral or what you know it could be in range places where not a lot of people would be um but it looked valuable for a little while until people figured out that that was fraud and so you know well I don't know if it's fraud right it's it's sort of is it misrepresentation can be right is it fraud or not now as a buyer I'd say as long as you're representing that it

was a probabilistic like a guess of an actual location it's up to me I might buy well I think that's where and I'm still not sure if I understand this completely but um that's why I wanted to be really specific about the buyer uid versus is the Eid what I hear is a lot of okay you know you're going to do something like that put it in the Eid instead of the buyer U ID correct so the buyer ID is supposed to be the ID that the DSP gave to its Partners okay so it's meant to be what

you believe their actual ideas what they told you and you're you're you're not supposed to put in a different ID than what you believe than what you were given and so if you are not putting the ID that you were given into that field in the form then that could be considered you know is it is it fraud I don't know if it's fraud um is it nefarious yeah you're probably you're being a little aggressive and as a DSP I'd get frustrated over time and again because I I would I after

the ad shows I I send a win notice which is just a pixel which allows me to see my cookie and if they don't match I'm just not going to pay for those ads so over time you're going like you know what too many invalid Impressions you're out so the SSP has an incentive not to get kicked out so they have incentive to follow the rules so the idea here is that they're only supposed to maybe fill in an ID if it's blank but only if the DSP says that that's okay so you know to your point

of like the the GPS data if I knew it was call it a guesstimate a probab we use the fancy term euphemistic term probabilistic yeah it's a guess right it might be a well educated guess but it's a guess and so I think one of the things that and it goes back to the MFA conversation if the buyer's aware of what they're buying I don't have a problem with any of this you just it's up to the buyer it's capitalism just buyers and sellers can transact however they they please within the

law and now if it's being misrepresented and that's kind of the MFA conversation when it's not misrepresented it's fine when it is and you think you're buying something else well then that's you know the ify that's not to me that that's aggressive business practice maybe not the best business practices and eventually going to lose customers and whatever you know I'm not going to buy from you if I find you doing that misrepresenting yourself to me the real fraud in the space as

a d right as as a guy who ran a DSP the real nasty fraud are are Bots and non-human traffic where or you're running impressions in invisible eye frames that's fraud that is the really nasty stuff and that's the stuff that that you know people like wops for years were going after even guys like f spend a lot of time focused on and you know Dr Fu and so that to me is as a DSP that's the stuff that kept me up at night fraudulent Impressions truly fraudulent right where either a

machine's creating them via script you've seen those walls of iPhones you know videos where they're just you know running scripted sessions well I mean again bot spyware that's creating invisible you know ad Impressions on a person's computer that's it shouldn't be funny but it is funny for me because you know you start to work in one of these itch companies and you're like oh we use this company that has a wall of phones for QA and you're like isn't that great oh we we make

sure that you know before people really see this thing we're GNA make sure that it works and you know and then you find out that they have a side gig where they're you know making money as a Content farmer whatever they're black right they're running Black Ops you know in the alley yeah you know around the corner right no I agree that that's a huge thing and so when we think about fraud that's the that's fraud that's the stuff that worries about these cookie mismatches and whatever

like yeah fine it's but again as as a DSP is my job to verify and only pay for verified in valid Impressions so I just look at as it's part of the gig and it's what you're paying me for yeah you're in that job me it's like it will work itself out but the question for me is does this work itself out in just stopping people from investing in open web because you know cookies are taking too long to go away or whatever well and I think that that so the the reason cookies or user

identification matters and I think that's really what we're where we wanted to get to which is this whole issue is I want to show an ad to the right person and that's and it turns out when you do that it works you go again the the the beauty and value of of quote unquote the wall Gardens of Facebook and the really just walled identity Gardens Facebook Google Google is Gmail Facebook has your Facebook profile is when you can Target an individual it works you get really amazing

Roi like this whole idea of the right ad right person right time it actually true it just it works it's true which is why people love to spend money with those platforms and increasingly more and and what's interesting is the rise of like what you're seeing a retail media and what's really driving that is retailers have verified identity and we're going to spend you know our future episodes we're really going to go from to me this whole colossal misunderstanding is just you know

the the beginning of what people really want to do is they want to Target specific individuals and doing that in the open web with all these random um IDs and cookie syncing and and probabilistic IDs and and and G gdpr and Safari and other third party cookies getting blocked is just become harder to do that yeah and what's stepping into that void are retailers interestingly enough and I think you know that's what we want to talk about is like the rise of retail media and what's

behind it well fundamentally kind of a preview is identity is behind it yeah and I I I look forward to talking at length on that because that that was kind of the Nirvana of moving away from you know as as location targeting was dying and you know that that type of data was shrinking seeing personally identifiable information be safeguarded in ways you know through identity partners that could allow a retailer to run a business and sort of not not have to worry too much about

how uh the Privacy effects would be because they had they had the rights to the data and even with gdpr and CCPA and and future regulations that there were ways for them to still win in that environment whereas the the traditional news Publishers and others in the open web are still sort of out in the cold um and so yeah I think it'll be a good part of our of our story um and I look forward to that that next episode the future of the open web is is in large part e-commerce based

and retail-based well we'll get there too all right thank you again for listening and we're excited to bring you episode