# S3 E4 T59 Luma - Conor McKenna

S3 E4 T59 Luma - Conor McKenna 

[00:00:00]  

[00:00:00] ​  

[00:00:01]  

[00:00:06] Tom: All right. Welcome to the Middlemen podcast. We're talking today with Conor McKenna from Luma Partners. If you don't know Luma, they are the Lumascape Company, so they're an M&A shop that. Really is the leader in the ad tech world. They have a commerce media landscape and then they just put out their 2025 full year market report. 

[00:00:26] Tom: I got the email yesterday, so hot off the presses and we'll put that in the show notes. But Conor is your friend. Tell us, uh, what, what Conor does. 

[00:00:34] Scott: Sure. So Conor's an investment banker. He is a partner at Luma Partners, right? The Terry Kawaja firm of, of infamous fame in in ad tech. No, great transaction happens without them. And he has a really interesting perspective on all of ad tech in general and sort of this niche focus of commerce media. 

[00:00:54] Scott: Particularly like what are the trends and cycles that he is seeing because it helps him prepare for [00:01:00] transactions, give good advice, and then be ready for these companies. Um, one of the really interesting things that we get into is how retail media is experiencing some things that are very similar to early programmatic and digital media web publishers between cookies and auctions, and certain ways that, 

[00:01:18] Scott: commerce media may not be scaled yet for optimization. Really. They're just sort of running the playbook right now. And Conor's perspective is really unique and interesting, and it was great to have him on the show. So I hope everyone enjoys what he has to say and think about why a banker has a good opinion, because, uh, your shares aren't worth much until you have a liquidity event. 

[00:01:42] Scott: See what he's got in store for the future. 

[00:01:45] Tom: Welcome to the Middlemen podcast. We are here with Conor McKenna, and Conor has been, uh, a partner at Luma Partners for 12 years. Is that right? 

[00:01:55] Conor: Yeah, just about coming on it. Thanks guys for having me here. Excited to, uh, dig in. 

[00:01:59] Tom: [00:02:00] So most of our audience, I'd say maybe like half of our audience probably knows what Luma is. Uh, the Lumascape, obviously in the ad tech world is super famous. It has covered many of the different areas and I think now even has an AI Lumascape. In my background as a, a guy in the mobile space, we looked very closely at, you know, where we were positioned and what box we were in. 

[00:02:20] Tom: But you guys are, are basically the defacto M&A company for all ad tech, is that right? 

[00:02:27] Conor: Yeah, exactly. I mean, Lumascapes is a, is a big part of the, the top of our funnel. It's part of our, you know, marketing and, really our goal is to provide value to this ecosystem, but the way we actually derive a business is, is through, uh, advisory on, on M&A and, and capital raises in the space and. 

[00:02:43] Conor: Um, our view is, you know, if you take the digital marketing more broadly, it's a trillion dollar TAM and growing 20% a year for 20 years, like almost no other industry has ever had that, um, which has led to thousands of thousands of companies. So mass fragmentation, and as anyone who's been in this [00:03:00] space long enough knows, you know, if you don't like something in ad tech and MarTech just wait six months and it'll change. 

[00:03:04] Conor: So it's highly dynamic, which means, um. It's a very tough market to do M&A in because you know, you can buy companies that are very interesting at one moment and, and that can completely shift. Uh, which is why we sort of come to this with a very niche focus, right? You'll see a lot of the transactions we ever do sort of line up to what we're talking about. Um. And, you know, over the last 15 years as a, as a company, we've been, you know, right more often than we've been wrong, um, you know, called balls and strikes on where we think things are not interesting in ad tech and MarTech. 

[00:03:37] Conor: Um, and so, you know, that really drives a lot of our, our business. 

[00:03:40] Scott: It is so cool to see how the bankers show up in this process oftentimes you need an exit or liquidity event, and that's obviously facilitated by bankers. And I'm sure like no transaction is a bad transaction for you. 

[00:03:54] Scott: But you definitely have an opinion on what are good transactions and who should [00:04:00] be transacting, and that's why you need that sort of specialized lens on the the, the industry. So where does commerce media and retail media show up across the ad tech landscape? 

[00:04:13] Conor: Yeah, absolutely. So, um, look, commerce media something, you know, we, we did the hook logic deal almost a decade ago now. So, um, we've been thinking about this space for a long time. 

[00:04:23] Conor: I mean, just broadly speaking, where are we gonna allocate our time? Where do we see a big market with a lot of opportunity for technology, um, that we think will continue to grow and then therefore be M&A coming from that. And Commerce media is, is 100%. Um, one of those, I take a pretty broad view of what, you know, the term commerce media. 

[00:04:41] Conor: You'll hear me say that, not retail media, because I, I think of retail media and I, coined this concept a couple years ago about this notion of a, a channel and a layer. So retail media to me, is a new channel. It's a new surface area for advertising, commerce media is the layer it sits across. 

[00:04:56] Conor: Um, and we've only ever seen this, one other time in digital, and that was [00:05:00] mobile, right? When mobile came out, there were five years of, this is the year of mobile and this is the, the year of mobile. 

[00:05:05] Conor: I swear next. This is the year of mobile. Um, and the challenge was, was because, um, mobile was a much broader thing, right? It wasn't just a channel, it was a layer across. You don't manage mobile search versus desktop search. You manage search, right? Same thing is happening with commerce, right? You don't manage. 

[00:05:22] Conor: Uh, commerce driven, social or not, you're, you're driven like outcomes across the entire ecosystem. Um, ultimately, you know, what is, what are outcomes or commerce, right? It's, it's advertising perfected. And so we see that as a, an increasing layer across the whole space. Um, I will say with this whole, there's a whole huge notion around the outcome era and people pushing this direction. 

[00:05:44] Conor: And usually, you know, for at least a decade, we'd break it down. Oh, these are the CTV trends, these are the programmatic trends. This is the, you know. Mobile app or commerce media trends in the last year, what we came to realize is there's really three overarching trends, um, that are impacting [00:06:00] everything in advertising, AI being the most obvious, and that's the most pervasive across this space. 

[00:06:05] Conor: The other is, is outcomes. Um, and, and again, that all ties back to Commerce media and the goal of people lever. To, uh, more ai, more capabilities to drive more predictability of, if I spend X I'm gonna get y in return. And again, that's only possible with bringing commerce into the equation. Uh, the third thing is, is more on, you know, sort of media consumption and where consumers are. 

[00:06:26] Conor: But those, you know, impact, uh, uh, really at a broader lens. Um, and so I think commerce and commerce media is absolutely, you know, it's a critical piece of that, that puzzle. You couldn't do it without, without that. 

[00:06:38] Scott: So it's a, it's a critical piece of the puzzle. And by the way, I really love like the channel and layers, uh, metaphor. When that came out a while ago, that was really clarifying for us. Um, so it's a piece of the puzzle, but like. What's the state of this puzzle piece and like, is it healthy, is it not healthy? 

[00:06:56] Scott: Like, where are we in terms of like a timeline and [00:07:00] longevity? Like where, what inning are we in of this? 

[00:07:05] Conor: I'm just gonna aggressively avoid your inning question, um, and, and, and not try to put us in a specific inning, but I, uh, needless to say, it's, it's early, right? We're in a weird space in, in commerce media and retail media, right? In some ways it's as hot as ever with this, you know, the focus on outcomes and everyone in ad tech talking about that. 

[00:07:23] Conor: I would say the retail media space feels more to me like it's in that trough of disillusionment, right? We had a massive hype for a couple years. Uh, everyone and their and their brother got into retail media. Um, you know, ultimately, I think this is more, there's been a broader permission structure change as to who can monetize their consumer data and consumer time spent, um, with advertising. 

[00:07:46] Conor: The challenge is that a lot of companies got started, especially in retail thinking, oh, we can, we can do what Amazon did. We can bring this massive high margin revenue, uh, to our business, transform our platform. And the challenges for, for the vast majority, [00:08:00] they're not nearly large enough to do that. 

[00:08:02] Conor: They're not nearly, um, to really capture that full value. It is still good incremental value, but that's kind of what they're going through right now. It's incremental profits. The problem was most of them. Built teams thinking this was completely transformational and built huge ad sales. They thought they were, you know, uh, everything they should do is unique to them, which is a massive challenge for marketers. 

[00:08:24] Conor: And we're, we're kind of in that swing back to, okay, this is a challenge. And so to me this is, is no different than what we saw in, in programmatic, right? It's, it's ad sales on publishers in the mid aughts that, you know, uh, we've got different measurement, different formats, all these, you know, shiny new objects. 

[00:08:41] Conor: Uh, the challenge is to really scale this as a, as an over wide industry. We need to have more standardization, uh, more aggregation and, and we're sort of pushing back in that direction. And I think for the retailers themselves, they need to find more profits from this. Not, um, just increased revenue. 

[00:08:58] Conor: Ultimately. The goal of this is [00:09:00] we're very low margin businesses. Here's an opportunity to capture very high margin revenue, um, that can flow to our bottom line. And, and I think we're, we're in the starts to those shifts. 

[00:09:10] Tom: What you talked about, made me think about, I don't know, maybe like five years ago it was like, nobody's gonna invest in the DSP. That's what that's done. Um, and then now you're talking about how the retailers have sort of built out these expectations, maybe even built out sales teams. 

[00:09:24] Tom: That sounds like a time when there might be real reason for new startup investment. Um, because they need to fix problems to, related to profitability, related to making sure that they're more aggregated, uh, so that they're in, in the discussions rather than trying to pitch from the outside. So is, is that an area where you're seeing a lot of interesting new activity? 

[00:09:48] Tom: Or do you think it's more. Standards and things need to happen first before we can fix these problems. 

[00:09:55] Conor: Yeah, a little bit of both. I don't think anyone wants to redo the. [00:10:00] Sins of programmatic, right? Where you, you jump into standards and, uh, in, in ways that allows for Tom foolery, uh, for lack of a better word, and, and all the rest that's gone on that space. Uh, and so, um, I we're also like, there's more control here than there is in that space. 

[00:10:19] Conor: Um, and there's more control of the data. The data's more sensitive than, you know, cookies and, and what that ecosystem. Transacted on. Um, so I don't think we're seeing that yet. I think we kind of need to get past some of this before we see it. A huge upswing. I think the other challenge is there were, there've been a lot of companies claiming how big this opportunity was that are still in that maturing to their, their growth stage. 

[00:10:42] Conor: So it's not as if VCs pumped a bunch of money in, there were tons of exits, uh, thus far. I mean, there were a couple early ones in, in, you know, 2019 and 2020. Uh, but since then there haven't been a, a huge number of exits, uh, in this space that it still needs to mature a little bit before we, we may get to [00:11:00] that, that area. 

[00:11:01] Conor: Maybe that's like in the real retail media side as you flip to like commerce media and you think about companies trying to sell on outcomes or leveraging. 

[00:11:09] Conor: AI to drive better results. I mean, there's a, a just alone on meta, I'm seeing new companies popping up that are finding ways to make money by helping, uh, drive either, you know, better results on meta or better results. You know, post the click on meta that you just haven't seen in a long time for a while that was sort of, you know, stay away from an ad tech 'cause all the margin went to, uh, to those. 

[00:11:32] Conor: You know, to the platform itself. Um, so, you know, in, if you take the broader lens of commerce media, there's absolutely that. I think in retail specifically, people are trying to figure out, you know, where they, where they fit and where they can start to, uh, drive that. I think there's a huge need for aggregation. 

[00:11:46] Conor: I, I haven't, it's not there in, in enough meaningful ways yet. Um, and so, you know, really unlocking that is, is the next big step. 

[00:11:54] Scott: It is coming outta this like trough of disillusionment and. maybe there's like a small [00:12:00] reckoning coming for the 300 plus retail media networks are out there. What do you see, like is it consolidation that's coming and like, what's the shift that happens as this starts playing out? 

[00:12:13] Conor: Yeah, I think it, it depends on what you mean by consolidation. Um, and even the reckoning. I, I actually think it's like rationalization, uh, for those players. I mean, there, the problem is if you thought your core business was shifting to advertising and, and you weren't big enough to do that in a major way. 

[00:12:32] Conor: I mean, there are a few, take Amazon and, and even what Walmart has said publicly, like. They want to make more margin from selling technology and services than they do from selling goods in their stores. That is a like two feet down. We're, we're, you know, advertising and other things are our core business. 

[00:12:48] Conor: Um, if you are, you know, even Target, like their core business is curating great products and, and having incredible shopper experience, and that's the majority of where their revenue is gonna come from. And advertising would be [00:13:00] an add-on. I don't think that changes. Um, and if you get to the broader lens. I, I don't think a, regional grocery store needs to go and consolidate with a bunch of other regional grocery stores to, to make advertising technology work for them. 

[00:13:16] Conor: Obviously more scale is better, but they're gonna have other, they have other defensibility. The fact that 85% of shopping still happens in store, it means their core business. There's a lot more infrastructure to go and take down a regional grocer than it is to. You know, uh, take share from a, a digital publisher, right? 

[00:13:33] Conor: If, if, if you take that analogy towards programmatic, um, I think in the, in the technology tools, there's a lot of opportunity for consolidation. You've had a lot of companies pop up. They're on their own, you know, subscale in many cases. Um, and getting more scale and breadth there allows them to compete in many other ways better. 

[00:13:54] Conor: And, and particular if there are certain platforms that can actually. Bring the [00:14:00] capabilities to the, the retailers to say, Hey, if you let us work across in a much more efficient way, we're gonna bring a ton of efficiency to your platform, um, and allow you to scale in a better way. And what's critical here is their data is still unique. 

[00:14:15] Conor: The, the challenge with digital and programmatic, which is why if you're a retailer, you wanna be careful is it wasn't great for publishers. Um, you know, the publishers that were really strong in the mid aughts are not the companies we talk about in the same way today. But part of that challenge was there that, uh, that whole world shifted towards a focus on cookies. 

[00:14:36] Conor: And cookies were not distinguishable between CNN versus, you know, uh, MFA site, you know, 1, 2, 3. And so there was this race to the bottom of buying inventory based on audience. Well, you can't. And, and frankly there's bots and all the rest, but bots don't buy goods. And if you have strong, intense signal on your consumers and that intense signal drives value elsewhere, uh, or on your own [00:15:00] site, there is, there is still inherent value in that. 

[00:15:02] Conor: And so you've got kind of a baseline level of capabilities would, but to capture that from, from a profit standpoint, you need to make sure your tech stack and your ad operations are highly efficient to make sure that is most optimized. Versus, you know, how do we go, uh, bring a new format, a new measurement stake, even though we're a, you know, regional grocer, uh, to the, to the market. 

[00:15:24] Conor: 'cause that is a much more challenging thing for marketers, uh, especially large, you know, CPGs and the biggest players to, to, um, take advantage of. 

[00:15:32] Scott: So, so if I could run that back, like being fundamentally sound in your business and operation in the way that you're either running media on your own site or running off network. Has to able to be efficient and be a good use of the advertiser's money. Otherwise, you really don't have a a right to that budget at all. 

[00:15:55] Scott: Um, 

[00:15:56] Conor: Yeah, for sure. And also 

[00:15:58] Scott: need [00:16:00] better at doing what they're doing. 

[00:16:02] Conor: Well, and, and it's hard. Ad tech moves fast. Uh, the number of companies, the, the only companies we've really seen who have bought technology for O&O ad technology for O&O that have done very well with it are, you know, uh, meta Google, Amazon, Walmart a little bit, but they bought sort of, you know, smaller assets and rebuilt them internally. 

[00:16:25] Conor: Um, it ad tech moves very fast. It's. Constantly changing. If you are, if it's not a core part of your business, which it's obviously core to meta, it's obviously core to Google, it's increasingly core to Amazon and Walmart. Um, the, the technology investment to keep up with the shifts, it shouldn't be your problem. 

[00:16:45] Conor: You should be leveraging or renting technology to make it work. And, and increasingly in this type of tech, it toward tends to scale towards. Larger platforms that can do that investment and win over time. It's why you've seen programmatic shift towards, you know, a handful of larger [00:17:00] players. There's still smaller players who will do unique things here or there, that that will always be the case. 

[00:17:04] Conor: Uh, in media budgets are just too fungible, um, and easily to, to capture. But, um, you know, increasingly you see scale is a big part of that. And so if there's platforms, that's why I think on the platform side, there's big opportunity for consolidation. Um, more than there is, you know, do the retailers need to, that's a different conversation. 

[00:17:23] Conor: I mean, there's certainly retail bankers who will have reasons as to why or why not certain retailers should consider combining. Uh, but that is, it should be a consideration on their core business, not around ad tech. 

[00:17:35] Tom: Well, I think you, you always have a situation where no matter how small retailers, if it, if it has a good business model, those purchases are gonna happen there. And so the need to sort of, uh, consolidate them, it seems like that's a tech challenge that. May or may not exist in two or three years. To your point, it it, you know, like if te if technology gets better and better to sort of manage working across all of these [00:18:00] retailers, if those purchases are still happening there, there's value. 

[00:18:04] Tom: Um, and so I'm actually interested in sort of, um, on the platform side, what you see, where are the areas where there's opportunity? Is it like. We saw Amazon look to be more, uh, active in finding anonymous users outside of, uh, their own, you know, file, even though they're huge. Um, we've also seen, like you mentioned, companies like Walmart go and buy, uh, assets like Vizio and, and others. 

[00:18:30] Tom: Um, but we've also, you know, we've heard from a lot of people that unless you are Amazon or Walmart, you can't handle that type of inventory because you don't have the ad tech for it. So. Let's stay on the platform side, but where do you see the most exciting parts? Is it, is it in like abandoned carts and anonymized data and all that? 

[00:18:50] Tom: Is it more about helping people deal with CTV inventory if you're a retailer? Like where, where are the cool parts of, of, of the, the ecosystem today? 

[00:18:59] Conor: [00:19:00] Yeah, I think there's, there's a lot of experimentation going on in, in those areas. Um. I think it's, it's probably too early to say like, what's the most interesting, I mean, uh, ultimately to me the question is, um, is being able to try to test and iterate, does, does this data add value to ultimately driving outcomes? 

[00:19:20] Conor: Right. And I think we're, there's one aspect there of like, we are just, there's a broader ad tech shift towards this because just having the commerce signal, you have a question of are you trying to deterministically. Determined that an outcome was completed after they saw this purchase? Or are you moving towards probabilistic methodologies? 

[00:19:39] Conor: If you look at Amazon going outside of their own, uh, you know, not just their own, O&O inventory, but also, you know, starting to leverage some of these tools. If you look at meta, a lot of what they increasingly do is probabilistically driven. I like companies like AppLovin. There's a ton of probabilistic signal, uh, being leveraged in there. 

[00:19:56] Conor: They're using ai. AI is sort of like [00:20:00] meeting cookies, which are deterministic or going away. Towards first party data that is a lot scarcer and, and, and more protected. So like we, we lost a lot of that deterministic data. AI is a meeting that perfectly, I'd say like AI kind of creates a probabilistic renaissance that makes the ties or the predictive commerce much stronger now. 

[00:20:19] Conor: It needs seeds to make it work and that's where the commerce signal comes in. I think what we, for retailers right now, especially if you're, you know, a smaller retailer. People need access to those seeds. And if they determine those seeds are, are useful to their modeling, then there's value in that. Is that value the same as you going and building a custom audience and selling it? 

[00:20:42] Conor: Probably not if you have enough scale to do that. But that's a, you know, it's kind of like the, the DMPs in the programmatic space, right? Those were companies that, that took all these cookies and then built custom audiences that they believed, you know, performed better or targeted better. Um. You know, I, I, James Burrow, [00:21:00] who's now at at Universal Ads, uh, for Comcast has said this notion of transactions are the new cookie. 

[00:21:05] Conor: Which I think that's really like at the heart of this, right? How do you, so I think we we're early in that determination of how do you figure out the value prop to a retailer of getting access to their data that you're gonna protect, but you're gonna model on top of to then go build predictive, um, you know, targeting to go find the right consumers and measure it back to outcome. 

[00:21:27] Conor: It's, it is, that is a, that is a challenging thing. I don't think we anyone has really solved that yet. Right now it's more piecemeal of, you know, companies that have enough data trying to do that on their own. They're trying to build audiences and segments. Um, but to me that if someone can figure that out, that's a huge opportunity. 

[00:21:45] Speaker 6: Yeah, I mean, just to close it out, I know Scott's probably has tons more questions, but just to like for the. Audience. If you watch the Bobby Watts episode from Ahold Delhaize, I was kind of shocked that they were leaning into predictive audiences. Make sense? Because people, the [00:22:00] trends on TikTok and other places, or because of GLP ones are changing faster than you can have custom audiences for. 

[00:22:07] Speaker 6: However, if you're a retailer, your value proposition was those transactions, those very, you know, scarce cookies, uh, or you know, the, the new cookies that, you know, there's not, uh, an infinite amount of. How, you know, how do you make that transition to, to have, you know, the ability to do predictive audiences as well and sell both and not dilute the value. 

[00:22:28] Speaker 6: That was always what was scary and interesting to me. Um, and I, I haven't seen a ton of platforms that do it. I think we had Moloco on, which Terry was a big fan of. Um, and you know, they talked about it where just taking the deterministic data and the behavioral signals on top of it. On site could potentially map out consumer journeys in a more predictive way. 

[00:22:49] Speaker 6: That's interesting. But it isn't getting to like doing that with offsite or doing that within store, 

[00:22:55] Conor: No, but we're, I, I think that's part of the, goes back to, I didn't, I didn't answer Scott's, uh, [00:23:00] inning question, but like, you know, a lot of retail media has been ad sales for a search driven. Business, like most of the listings are gonna be search or display on the side of searches. That's how people leverage those sites. 

[00:23:16] Conor: Um, you know, Google search is not an ad sales job, right? It's a, it's very, it's maybe the most self-service, um, tool out there where they've gotten millions and millions of customers logging in and sort of buying into the efficient frontier. Um, it shouldn't be that, oh, someone searched for. You know, X, Y, Z on this site. 

[00:23:35] Conor: And, uh, it turns out the sales guy hasn't reached out to 'em yet. So that's, or or we don't have an active campaign for 'em, so we're not showing a sponsored listing. Like that's not how Amazon works either right now. Right. They have like a constant flow that is measuring and deciding what to show based on predictive, uh, visibility to what's gonna perform the best. 

[00:23:54] Conor: Increasingly, you know, Facebook is that too. Facebook tells marketers give us 50 creatives. Tell us what [00:24:00] you wanna do, we're gonna go figure it out and show you which creative's actually working right. Um, we're so far from that right now in retail media. So to the Moloco point, like I, I agree. I've talked to those guys a ton. 

[00:24:10] Conor: Uh, I talked to a number of others, like, I think there is that need as well. And again, you're not gonna build that in-house unless you are massively scaled enough to, to, uh, to do that cost. And even then, it's very hard. So some of those tools are, are gonna come in, uh, and, and start to solve that problem. I, that's like step one. 

[00:24:30] Conor: And then yeah, the next layer is, is even more complex and you need to be able to then be very good at finding those signals offsite. It, it'll be a big question as to where this, this, that industry goes, right? If you go to outcomes era, the, there's just more focus on, well, this is the value of that data because I have to be able to predict this outcome. 

[00:24:48] Conor: And you can start to figure out that value prop versus the way programmatic has worked thus far has been very workflow. Here's a workflow to go determine what audiences and targeting you want to go. Here's a [00:25:00] marketplace to go buy them. And in that, it's just, that becomes a tough sales motion. But I think over time where commerce, media, retail media really differentiates is having enough data that can be predictive. 

[00:25:11] Conor: Right? And that's a sort of a different game.  

[00:25:14] Scott: So is it is it moves more into this data model, right? What's the, what's the outlook on the DSP market? Right. Thinking both from like an onsite perspective and then an offsite perspective, because they're not really in onsite at the moment. And they're getting used for audience extension for offsite. 

[00:25:32] Scott: So what's like, what's the DSP view at at retail media and what are they excited about and afraid of? 

[00:25:41] Conor: Yeah. Um, I think in like they've all started with this, let's be the offsite. That's what we know. It's actually a more complex environment. I mean, even if, uh, there's 300 retail, you know, media or, or you know, call it new surface areas in retail commerce, media. Um, you know, the vast majority gets spent [00:26:00] on, on two to three of 'em, and, and, you know, those are more walled gardens in their, you know, purview. 

[00:26:05] Conor: Um, I, I personally believe a lot of those DSPs need to get rid of the walled garden, uh, mentality and just think about where's their fragmented consumers that they can go buy on. A lot of 'em have been more of a dashboard for agencies. There's a tension going forward around agencies versus DSP about who's deciding, you know, where and how do you spend your next dollar? 

[00:26:28] Conor: Like, is, is your value prop being the workflow or is your value prop saying this is the best data to go, um, actually achieve what you're looking for and you see steps in this direction. Um, you know, trade Desk has announced that, uh, what is it? Audience's, unlimited product that's all about like, we'll help you decide instead of you going and just choosing. 

[00:26:48] Conor: that, you know, and then agencies also have always played that role. So I think there's, um, ultimately, like I, I see this all as inventory. How are you managing and driving that across all the [00:27:00] inventory? Uh, and the, you already trade desk has made announcements. I think Yahoo has made announcements about buying some more onsite inventory from some of these parties. 

[00:27:10] Conor: I think of it as just new surface area. Like, why are you not? Um, so I, I do think those could come together over time. Right now there's been more, you know, uh, retail media centric call it DSPs, like, uh, you know, PAC View or Skai or businesses like that. You know, Criteo's got aspects of this. Um, a lot of the players you can buy across their eco, their platforms or other supplies. 

[00:27:32] Conor: So, um, you know, I, I wouldn't shocked 

[00:27:35] Scott: how hard is it then for like the DSPs to enter the, the onsite market? how big of a hur, how big of a hurdle is it? Maybe we can answer that for you or like, how big of an opportunity is it from a revenue perspective if they can hop into the onsite transaction world? 

[00:27:52] Conor: Yeah. Um, I, I don't know if I can answer technically how hard it is. Um, I, I think there's, you know, business [00:28:00] inertia alone is a challenge and, and, you know, sort of moving that over. I, you know. The, the buying itself is certainly complex, but it's, you know, achievable over time. Um, you know, shocker, it'll be shocking to hear a banker say this, but I think they'd be better suited to buy their way in. 

[00:28:15] Conor: Um, it, it would just accelerate things you capture scale quickly, um, especially tied with other scale. That's a very unique angle. Um, and, and I don't think they should be scared of, you know, these other quote unquote walled gardens, right. It's just, it's inventory that they should be purchasing and helping. 

[00:28:31] Conor: Um, deliver for their marketers, right? If they, they need to capture all of that to, to 

[00:28:35] Scott: Yeah, and and should Commerce media networks be hesitant about allowing DSPs to transact on their inventory and like sliding into the open auction conundrum that digital web publishers find themselves in now? High liquidity, but low volume and you know, losing control of your sales process. 

[00:28:58] Conor: Yeah. Um. [00:29:00] Yes and no. I mean, I, I'd be curious why, like, to me, there needs to be more demand in there, there needs to be better tools. I I it particularly for the display stuff, um, you know, if you want to maximize your results, that, that would be, that's really the focus. But I, there's always challenges with, I think it's less about the, the media side of things and, and the gives and takes there and more challenges with. 

[00:29:27] Conor: The merchandising and JBP side of their ecosystem. Um, that's a tough thing to sort of manage throughout, but I think you need more demand, you know, uh, coming into this space to really start to drive things. And again, you focus on ad operations. To me, ad operations is managing all those conflicts, taking all the demand, seeing who's working, who's not pushing them out if they're not useful. 

[00:29:52] Conor: I mean, there's a lot of techniques and tools that can be done. Um. A lot of value shifted to the demand side [00:30:00] in, uh, in the open web because of cookies, because there was, you know, each, um, cookie was again, less tied to an individual. And then you had, you know, all these companies start renting cookies, right? 

[00:30:13] Conor: When, I mean, renting cookies or renting users was running search arbitrage and, and you know, uh, Facebook arbitrage when you used to be able to do that, uh, to sites. So they were not, didn't own the consumers again. People don't buy stuff at a, like, that's much harder to do in a commerce and retail centric, um, side of things. 

[00:30:33] Conor: And, um, you know, if they can bring more demand and, and capture incremental value, that's the, they should absolutely be testing with it. 

[00:30:43] Tom: Where is , the future that you're trying to figure out now? Is it, you know, how does AI fit into, uh, a company's, you know, plans to, to buy platforms? Is it more like. Are you moving into in-store technology because there's [00:31:00] some potential for M&A to happen there. 

[00:31:03] Tom: Like what, where, where, what's the, the vector that you're most interested in, in, in say 26, 27? 

[00:31:09] Conor: Yeah, I'd say it's two core vectors. Um, and the first is anything around data. So like, how do you unlock the value of this data? Um, there's. You know, a ton of data at retailers, um, that is just not being unlocked and not leveraged and not being sort of integrated into space in a, in a big way. So there's some companies doing interesting things around. 

[00:31:32] Conor: How do you actually allow these enterprises to control that data and what gets put out and what, what can be, you know, work on? Um, I think there's, for me, in store, the biggest opportunity is the data from in store. Um, that has been, you know, again, 85% of purchases happen there, especially for retailers. You know, no one's going to walgreens.com very often, but they get a hundred million signed in, uh, you know, you [00:32:00] Americans a week or something along those lines. 

[00:32:01] Conor: So, um, huge amount of value there if you can start to unlock that, the question that you then have to figure out how to, you know, make that work, uh, for your business. So I think that's step one. Is just unlocking that data. And step two that goes very hand in hand with it is how do you then optimize that data? 

[00:32:18] Conor: So you see a lot of businesses, there's custom algo businesses and things along those lines. What custom algo means is not building a unique algorithm, it's, it's all the unique seeds, right? So, um, how can we start to take that and optimize in different channels, whether that is, you know, CTV, the open web, mobile app, or wall gardens. 

[00:32:40] Conor: And, and I actually think. Uh, what's sort of fascinating about commerce is it is like, it's actually a great unifier of these things because ultimately the goal of all advertising is to drive commerce. Um, everyone is sort of geared towards that same goal. It's the reason you see, like [00:33:00] Amazon and Meta have made more partnerships over the last three or five years, uh, even as they compete more and more around ad dollars. 

[00:33:07] Conor: Because of that, that critical sort of commerce signal that Amazon brings to the table. Um, as you look at what's happening with, you know, uh, ai, especially the consumer side of things with, you know, chatGPT and Claude and perplexity, more and more than, where's the biggest focus interactions into commerce with the Shopifys and Walmarts of the world. 

[00:33:27] Conor: That's gonna change how people think about intent and signal and journey flows to, to buying. Um, and so. The, you know, platforms that are able to, again, with the data, either help drive modeling into those channels or, or manage, you know, media spend across those channels for demand with an eye towards commerce. 

[00:33:45] Conor: I think that that's where there's, you know, massive amount of opportunity. 

[00:33:48] Tom: Well. wanna thank you for, for joining the Middlemen. Um, we don't usually get this type of perspective at this high level to understand sort of where the market is moving, so thank you. 

[00:33:59] Conor: [00:34:00] Yeah. Thanks so much for having me. This was fun. 

[00:34:02] Scott: Conor, thanks for being here. We really appreciate it. 

[00:34:05] ​