# S1 E2 Colossal Misunderstanding

S1 E2 Colossal Misunderstanding 

[00:00:00] 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 gonna keep going. Um, but instead of just diving right into it like we did last time, um, we're gonna step back and tell you a little bit about who we are and why we're doing this. 

[00:00:28] Um, because I think that's only fair if you're 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 ad tech for quite some time. And, um, what we really wanna make sure is that all of the news, all the three letter acronyms, all the things that are thrown out there, um, really stick. 

[00:00:54] And the only way to do that is to kind of slow down. And really from the [00:01:00] perspective of the middlemen, 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. 

[00:01:21] 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 gonna 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 SaaS startup called Fantastic Together, um, which is focused on the Shopify ecosystem. 

[00:01:46] And so we have some experience dealing with Shopify and e-commerce. But prior to that, uh, I spent a decade building and running A DSP and which means demand side platform for those unaware of the three letter [00:02:00] acronym. And it's the software that agencies use to buy. Programmatic or real time biddable advertising. 

[00:02:07] And, uh, so that the, the benefit of that is got deep in the bowels of, of programmatic advertising. It wa we were a pioneer in the programmatic native advertising space. We helped build and define the open RTB programmatic native spec. And so I was used to love going into sales meetings for Samantha, where I'd walk into the meeting and, and ask, does anyone, does anyone in the room ever read? 

[00:02:32] 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've, you've started to, I I made, and I even asked you, you'd read it and you came from Right. A world of, you know. Oh, yeah. I, I, I built, I, you know, I created an ivy rising star with adhesion, and I was part of, you know, building out and popularizing the spec for em raid, which is sort of the vaid for mobile expandable ads. 

[00:02:57] So like, I'm no stranger to the iv. [00:03:00] 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 chatt BT 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, it's happening in a lot of times in the ad tech world is the details actually matter, the technical details, and a lot of times. 

[00:03:26] 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, uh, and they always talk about, you know, the, the VPs of marketing CMOs and how they're just befuddled. 

[00:03:50] By the, the, the realities and the technical sophistication of online advertising. And a lot of those details are over their heads. So we're hopefully here helping to explain and not just, and, and [00:04:00] to those folks, but to ad tech 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. 

[00:04:09] Yeah. And so I think that's kind of like, and you know, are we lifting up the kimono, so to speak, of the bowels, of the intersection of media and, and retail? And as that becomes tighter and tighter every day, a bigger and bigger audience is really gonna need to understand these things. Yeah. And I think, you know, and on my, my take on a lot of this is that some of the news that comes out, and I think we're probably gonna jump into that soon. 

[00:04:33] Um, there's a lot of blame immediately, um, because. People probably heard a lot about how certain types of ad tech is either shady or there's, you know, there there's fraud out there and you know, they, 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. 

[00:04:59] And I [00:05:00] 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. 

[00:05:18] So the, yeah, and, and, and what we're referencing in the news is there is a, a news around and SSP Colossus Media being accused of potentially nefarious, um, actions regarding. Uh, uh, cookie IDs and were they sharing the right, uh, information? And for those who don't understand there, there's a couple of, of, of important nuances here. 

[00:05:41] A the, the reality is no company can read anyone else's cookie. So if I am A DSP and I have a cookie on a user's machine that has my user identifier on it, the, the downstream. [00:06:00] 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? 

[00:06:19] Show the right ads to the right person at the right time. The right price and the right environment. There's lots of others that would've 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, it used to be just emails could be passed, clear text emails, right? 

[00:06:35] 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. 

[00:06:54] And then my, what I wanna do is then when I see that user again in the future, I wanna be able to target that user. [00:07:00] But then the rub is, well, 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 sink or, or Id syc. 

[00:07:15] It's not really cookie syncing. It's really ID syncing. Sure. And so I have to go through a process where I, uh, 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. 

[00:07:37] And when they re, when they send that, that request to me to launch that pixel, the partner sends me their id. So let's say my, I have a user a nine, a nine, a nine. Yeah. 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 a query string parameter. 

[00:07:57] They'll say what their ID is [00:08:00] and they'll say, oh, it's my ID is number is is Z 21, Z 21, Z 21. 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. 

[00:08:22] And so, and if there's, yeah, I'll stop you there. I mean, what's, what's funny about that is, you know, like, 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. 

[00:08:44] 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, in this case, you know, we, we met, we started this, the [00:09:00] title, this Colossus Misunderstanding. And by the way, we were very proud as dads of a great dad joke. 

[00:09:05] Um, pun intended. And. Uh, you know, just so everyone's aware, Tom and I both have kids. We're both dads. Yeah. We are officially allowed to lean into bad puns. Yeah. We lean into Tom and I lean into bad puns. I think, Tom, you, you a little bit more than me, but, uh, I think you're, you. In fact, I have to give you credit. 

[00:09:22] You're the one who came with Colossus misunderstanding as the colos. Colossal, yeah. Yeah. Colossal. Sorry, colossal misunderstanding. And I, and I just, you know, face pump because Oh my god, that's alright. Anyway, but we're running with it. 'cause, you know, in, in, in honor of, of that. But you know, from my point of view, what. 

[00:09:38] And, and if you look at, at others in the space, like, like, uh, Dr. Fu Augustine Fu, who's, uh, a, a, a researcher, antifraud 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 [00:10:00] synchronous. So what, what can happen is. 

[00:10:03] You know, A-A-D-S-P updates the user's IDENTIF identifier on the machine. And by the way, sometimes DSP have multiple identifiers. Like if you're in multiple segments, you get a multiple identifiers and then you set an ID on the user's machine, let's say, when the ad look runs. But you then have to go back through all your partners and basically the next cookie sink or ID sync, let them know what got changed and what updated. 

[00:10:28] So what you're doing then is you're, you know, okay. I, I set an id, I 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-A-S-S-S-P, and ss p could go to a proxy, like a, a bid switch, would access a one to many SSP, the DSP integration platform. 

[00:10:54] And they then send this form. Which is standardized via the [00:11:00] IEB and open RTB specifications. And in that form you put information about the ad impression so that the potential buyer through 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. 

[00:11:13] And so you're putting in buyer, buyer, buyer, UID, sorry, buyer U ID people just say buyer ID is what they, they they drop the the U in when talking about it colloquially. And there's a seller ID in that form. There's a buyer ID and there's actually another field called. At EID, which used to stand for enhanced now stands for Extended id, where you can put all sorts of other third party IDs in. 

[00:11:35] Yeah. And that's, that's, uh, what I've called myself today. I'm the EID at next Expedia. 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. 

[00:11:54] IDs and now we're migrating to, to, if someone's missing a seller ID in a machine, [00:12:00] 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 wanna target. Companies like Live Intents and 10 IQ are now working with publishers and SSPs to kind of fill the blanks so it, so Todd, if people are guessing, it sounds like a game of telephone. 

[00:12:16] It, it is. And so you have this timing problem whereby 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, a sinking issue. And again, that gets updated and fixed over time, which is why is a DS former DSP guy. 

[00:12:36] 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. 

[00:12:55] And, you know, maybe slightly higher bidding. But honestly, that's just, I, [00:13:00] 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 s SSPs are capable of, honestly. But I, I think ish industry of, of, yeah. 

[00:13:15] Probabilistic providers could be doing it, like live intent. They could be tracking, I'm not using anyone of doing anything here to be clear, but you're basically, they could, they have an incentive since they're paid on revenue, revenue shares, maybe they're the ones figuring out who are the most valuable IDs and giving those to these SSPs to fill again, when, when one's not available. 

[00:13:32] 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 by RD 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 at the end of the day, the DSPs job is to verify what you're buying. 

[00:13:52] And if you find a mismatch. Between the cookie on the, the cookie in the DSPs cookie, their [00:14:00] ID and what you were provided in the bid request. You have the right just not to pay for that impression. It's do you just consider an invalid impression and DSPs and SSPs sync all these reports up and figure out what people really owe and have been impressions invalid. 

[00:14:13] 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 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 use as a DSP? 

[00:14:37] Yeah. I eventually get frustrated and probably kick 'em out. Like, you know what, they're just not worth the trouble if the 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, I. 

[00:14:53] Is this sort of the SSP kind of being like the real estate agent, uh, trying to make the [00:15:00] 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. 

[00:15:16] 'cause we've seen this before. I mean, in the world of mobile where I was, uh, working for, um, Macriss, 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. 

[00:15:39] 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 oid 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 strange places [00:16:00] where not a lot of people would be. 

[00:16:01] 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, yeah. 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. 

[00:16:20] It's up to me. I might find in, well, I think that's where, and I'm still not sure if I understand it's completely, but, um, that's why I wanted to be really specific about the buyer, UID versus the EIDI. What I hear is a lot of, okay, you know, you're gonna do something like that. Put it in the EID instead of the buyer UID. 

[00:16:38] 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 [00:17:00] putting the ID that you were given into that field in the form, then. 

[00:17:05] W 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, you're being a little aggressive. And as a DSP, I'd get frustrated over time and again, 'cause 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. 

[00:17:24] And if they don't match, I'm just not gonna pay for those ads. So over time you're gonna like, you know what? Too many invalid impressions. You're out. The SSP has an incentive not to get kicked out, so they have an incentive to follow the rules. Right. 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. 

[00:17:41] That's okay. So, you know, to your point of like the, the GPS data, if I knew it was, call it a guesstimate or probably we use the fancy term euphemistic term. Probabilistic, yeah. It's a guess, right? Yeah. It, it, it might be a well educated guess, but it's a guess. And so I think one of the things. That, [00:18:00] and it goes back to the MFA conversation. 

[00:18:02] 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. 

[00:18:20] It's fine when it is and you think you're buying something else, well then that's, you know, iffy. That's not to me that that's aggressive business practices, maybe not the best business practice and eventually gonna lose customers and whatever. You know, I'm not gonna buy from you. If I find you doing that, misrepresenting yourself to me, the real fraud in the space as a d right? 

[00:18:39] 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 iframes. That's fraud. That is the really nasty stuff. And that's the stuff that that, you know, people like White Ops for years were going after even guys like Poo spent a lot of time focused on and you know, Dr. 

[00:18:59] Poo. [00:19:00] 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, those videos where they're just, you know, running scripted sessions? Well, I mean that again, bot spyware, that's creating invisible and you know, a impressions on a person's computer. 

[00:19:23] It shouldn't be funny, but it, it is funny for me because, you know, you, you start to work in one of these ad tech 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 gonna make sure that it works. 

[00:19:39] 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 or whatever. They're, they're black, right? They're running black ops, you know, in the alley. Yeah. You know, around the corner. Right? Yeah, no, I agree that that's a huge thing. And, and so when we think about fraud, that's the, that's fraud. 

[00:19:55] That's the stuff that worries about these cookie mismatches and whatever, like yeah, fine. It's, [00:20:00] but again, as, as a dsp, it's my job to verify and only pay for verified invalid impression. So I just look at this, it's part of the gig and it's what you're paying me for. Yeah. And you're in that job. So it seems to me that it's like it will work itself out. 

[00:20:11] 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, 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, we're we wanted to get to, which is this whole issue is I wanna show an ad to the right person and. 

[00:20:35] That's, and it turns out when you do that, it it works. You go again, the, the, the beauty and value of, of quote unquote the walled 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. 

[00:20:50] You get really amazing ROI like this whole idea of the right ad, right person, right time, and actually true. Right. It's, it just, it works. It's true. Yeah. Which is why people love to spend money with those platforms [00:21:00] and increasingly more, and, and what's interesting is the rise of like what you're seeing. 

[00:21:03] Of retail media. And what's really driving that is retailers have verified identity and we're gonna spend, you know, our, our future episodes we're really gonna go from, to me, this whole Colossus understanding is just the, you know, the, the beginning of what people really wanna do is they wanna target specific individuals and doing that in the open web with all these random, um, IDs and cookie syncing and, and. 

[00:21:26] Probabilistic IDs and S and and G-G-D-P-R and and Safari and other third party cookies getting blocked has just become harder to do that. Yeah, and what's stepping into that void are retailers, interestingly enough. Yeah, and I think, you know, that's what we want us to talk about is like the rise retail media and what's behind it. 

[00:21:44] Well, fundamentally kind of a preview is identities 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, the, that type of [00:22:00] data was shrinking. Seeing personally identifiably, uh, 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. 

[00:22:17] 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 coal. 

[00:22:35] 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, 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 three very [00:23:00] soon. 

[00:23:00] I.