00:00:00
Lou pascalis is the chief strategy
00:00:02
officer for ad Fon uh media he knows ex
00:00:06
CEO Linda rakino quite well in a recent
00:00:08
weeks was one of the number of AD
00:00:10
Executives encouraging to resign
00:00:11
advising her to do so uh before her
00:00:13
reputation is damaged he said he also
00:00:15
wrote a really interesting piece about
00:00:17
it uh I've known him for a long time
00:00:19
he's been a big mover and Shaker in the
00:00:20
ad industry uh We've recently talked
00:00:23
quite a lot about how advertisers are
00:00:25
not buying into news which I want to get
00:00:27
to at the end but first welcome Lou
00:00:30
thank you car it's a thrill to be here
00:00:31
with you and Scott bucketless event for
00:00:33
me so nice you're you're a nice fan um
00:00:37
you've always been really nice about
00:00:38
pivot um so let's talk first about Linda
00:00:41
you've known her for a long time you
00:00:43
were close to her you even were very at
00:00:45
the time she went to Twitter when I said
00:00:47
oh no no this isn't going to end well
00:00:48
you said oh come on Cara I'll give her a
00:00:50
chance she'll do a good job um uh when
00:00:53
you texted her about resigning that was
00:00:55
before elon's dealbook interview uh H
00:00:59
have you been in touch since and
00:01:00
obviously you wrote that piece um what
00:01:04
what's the state of play right now she's
00:01:06
sort of Allin it seems she is all in and
00:01:09
uh I've texted her a number of times
00:01:11
without reply which is you know
00:01:13
unfortunate because normally we you know
00:01:15
had a great you know exchange very
00:01:17
quickly but I think she's bunkered in I
00:01:20
think she's really focused on staying on
00:01:23
the mechanical bull as long as possible
00:01:25
um and uh you know I I I think that this
00:01:30
is very consistent with her DNA where
00:01:33
quitting equals failing and
00:01:36
unfortunately that's a sort of
00:01:38
short-term outcome in this context
00:01:41
whereas the long-term outcome is she
00:01:43
probably has or maybe had the best
00:01:47
reputation of any sside senior executive
00:01:50
in the advertising industry it was built
00:01:52
over a quarter Century always doing the
00:01:55
right thing high integrity you could
00:01:57
rely on her you know her word was her
00:01:59
bond and I think she's now cashing those
00:02:01
chips in for Elon in a way that I don't
00:02:05
think he's capable of
00:02:06
reciprocating yeah so after the
00:02:08
interview she as you said she sent a
00:02:10
memo to ex employees saying mus quote
00:02:12
shared an unmatched and completely
00:02:13
unvarnished perspective and vision for
00:02:15
the future this is after he cursed out
00:02:17
advertisers uh she also which was
00:02:19
shocking to me she also said in the post
00:02:21
about X standing at the unique and
00:02:23
amazing intersection of free speech and
00:02:25
Main Street which was possibly one of
00:02:26
the worst metaphors I've ever heard do
00:02:28
you actually think she believes this
00:02:30
stuff or is she just determined what is
00:02:32
causing this I think she believes it now
00:02:34
I think she actually believes it I maybe
00:02:37
not I I I don't find her to be a
00:02:39
particularly cynical person over the
00:02:40
time I knew her I think she wants to
00:02:44
believe it and I think she's searching
00:02:47
for arguments to make it believable and
00:02:50
I think it's resonating with a certain
00:02:52
audience on
00:02:54
X uh that you know has really consumed
00:02:57
the Kool-Aid you know every time I I get
00:02:59
interviewed dude I get hared by these
00:03:02
people who are you know accusing me of
00:03:03
hating Free Speech which I I find
00:03:06
laughable given you know uh my side
00:03:08
hustle to save news so I think she's
00:03:11
slowly building what um um Walter
00:03:14
isacson would have described as a
00:03:16
reality Distortion field when you know
00:03:18
in the book jobs uh
00:03:20
and I think she probably sees the
00:03:23
counterargument but she's making the
00:03:24
case as best she can because she's
00:03:26
tenacious as hell and she's going to
00:03:27
make her argument okay last question
00:03:30
Scott have a question when I predicted
00:03:32
when I wrote that Linda was going to be
00:03:33
the CEO um you responded to me on
00:03:36
Twitter saying she would be my first
00:03:37
choice and my only choice to save the
00:03:39
platform from the hands of its owner you
00:03:40
also noted I still cannot understand why
00:03:42
she'd subject herself to Elon Musk
00:03:44
however
00:03:47
um you did think it could work correct
00:03:50
correct at the beginning I did because I
00:03:52
thought it was rather self facing of
00:03:54
Elon to recognize that he was never
00:03:56
going to be able to change his behavior
00:03:59
in such a way way as to appeal to
00:04:00
advertisers and there were all these
00:04:02
incidents that happened before the last
00:04:04
influence Council which was a legacy of
00:04:07
Twitter which was a shocking meeting
00:04:09
where he basically said advertisers were
00:04:11
going to have to create a distance
00:04:13
between how he himself acted and buying
00:04:16
the
00:04:16
platform uh which is not a possibility
00:04:19
when you work in Corporate America how
00:04:21
the CEO speaks is you know is
00:04:22
representative of the platform's values
00:04:25
but I thought she could influence him I
00:04:27
thought it was a moment where Elon said
00:04:30
okay for me to be successful I'm going
00:04:32
to have to learn from others and I'm
00:04:34
going to go and buy the best person I
00:04:36
can but he didn't Empower her it was
00:04:39
very evident when the name change was
00:04:42
affected that she was not part of the
00:04:44
comm's plan which I found shocking
00:04:46
having grown up in Corporate America she
00:04:48
was basically behind a parade uh
00:04:50
cleaning up the elephant poop and saying
00:04:52
rahah this is great but it didn't feel
00:04:55
like she had a meaningful role in it and
00:04:57
it it it seems like she's not being
00:05:01
allowed to exert the kind of influence
00:05:03
that he paid to get and that would have
00:05:05
helped him and and now that's affecting
00:05:08
her ability to help him even if he were
00:05:10
to change his behavior Scott good to see
00:05:13
you Lou um likewise Scott
00:05:16
so it it's not that they've registered a
00:05:19
50 or 60% decline in advertising Revenue
00:05:21
that's surprising it's that they still
00:05:23
have 40 or 50%
00:05:25
so make the bull case for advertising on
00:05:29
Twitter what do you think her pitch is
00:05:31
you're you're in this business give us
00:05:33
the pitch your NBC NBC Universal or NBC
00:05:38
UI whatever it's called her old employer
00:05:40
that's actually stopped advertising
00:05:42
what's the pitch to come back on the
00:05:43
platform right
00:05:45
now Scott I really struggle with that
00:05:48
because you know I think as you know in
00:05:49
it's Heyday I was an enormous supporter
00:05:52
of Twitter and I was a huge Advertiser
00:05:54
on Twitter news broke on Twitter culture
00:05:57
broke on Twitter Sports is better with
00:05:59
Twitter
00:06:00
the only use case I personally have
00:06:02
anymore is during Formula 1 races which
00:06:04
is a very International Community and
00:06:06
I'm a huge Formula 1 fan is I connect
00:06:08
with the people that I'll never meet all
00:06:10
over the world and we watch in real time
00:06:13
and we snark in real time I think it's
00:06:16
different if you're activating in sports
00:06:19
if you've got a league sponsorship there
00:06:21
are immediate plays to extend that you
00:06:24
know keep your eye on the NFL deal will
00:06:26
the NFL continue to endure being
00:06:29
associated with Twitter in in coming
00:06:31
years um I think that's one um they
00:06:35
don't have a good uh performance product
00:06:38
they never did it's always been their
00:06:40
weakness to Achilles heel so that limits
00:06:42
their ability to appeal to DTC and you
00:06:45
know they're pivoting now to small and
00:06:47
mediumsized businesses you're going to
00:06:49
need an awful lot of those to make up
00:06:51
for the companies that walked away and
00:06:54
so as she walks into Corporate
00:06:57
America I I don't really know what
00:06:59
argument that she has other than to say
00:07:01
activate Your sponsorship and I just
00:07:03
read an article this morning that uh you
00:07:05
know people are moving their Super Bowl
00:07:07
sponsorships was which was always the
00:07:09
biggest week on Twitter from a revenue
00:07:11
standpoint and they're moving them to
00:07:13
Tik Tok they're moving them elsewhere
00:07:14
where it's much harder to activate but
00:07:17
they just don't want to take that risk
00:07:19
and that's where the margins are it's
00:07:20
those big Brandy plays not those you
00:07:22
know directed consumer small uh direct
00:07:25
response plays I I wouldn't know how to
00:07:29
begin to sell that platform to any
00:07:31
well-governed company wow not anything
00:07:33
you're an ad guy are you been and you've
00:07:35
been you've heard every ad guy trying to
00:07:37
get you to spend money yeah and and and
00:07:40
woman person absolutely and you know
00:07:44
it's it's really hard for me to say this
00:07:46
I loved the platform before Elon bought
00:07:48
it I'm a huge fan of Lindy acarino I
00:07:51
don't see a path forward with
00:07:53
advertisers and I think that's why Elon
00:07:55
made the statement he did at dealbook I
00:07:58
think he went there wanting to deliver a
00:07:59
message like he did I think he knew that
00:08:02
after his you know post October 7th
00:08:05
unfortunate retweet that the path
00:08:07
forward with advertising was dead to him
00:08:10
because you know anti-Semitism is the
00:08:12
third rail and I don't think there was
00:08:15
recovery and so I think his approach was
00:08:17
very much like Cortez when he landed in
00:08:19
the New World in 1519 the first thing he
00:08:21
did was burn the boats so nobody was
00:08:23
going back I think he burned the boats
00:08:25
to advertising Lind is going to keep
00:08:28
trying but he's moved on to another
00:08:30
Revenue model that he has in his head
00:08:32
that I am not smart enough to understand
00:08:34
but the man's a genius and you know
00:08:37
we'll wait and see if he's got something
00:08:38
up his sleeve that the rest of us aren't
00:08:40
seeing but just to just to follow up on
00:08:42
that if you think he's moving to a
00:08:44
non-advertising based Revenue model what
00:08:45
does she bring does she survive as CEO
00:08:48
she doesn't have any background in AI
00:08:49
doesn't have any background in payments
00:08:50
she's an ad
00:08:52
salesperson I think it's a fair question
00:08:54
I think that you know maybe what he's
00:08:56
learning although I would say in a in a
00:09:00
in a not so you know preductive way is
00:09:02
that before you jump to the new thing
00:09:04
you need to still continue to nurture
00:09:07
the old thing right uh he doesn't have a
00:09:09
good track record of doing that um I you
00:09:12
know I what I do know is that you know
00:09:14
there there's few people that are better
00:09:16
than Linda at figuring it out at being
00:09:19
able to to Pivot to adapt whatever and
00:09:22
you know she does have relationships
00:09:25
above the CMO level where some of these
00:09:28
new Revenue model that he's thinking
00:09:29
about some of these new businesses
00:09:31
bolting on content deals yeah content
00:09:33
deals you know she's kind of hinting at
00:09:36
sponsorship uh which you know again it's
00:09:38
got the same set of issues I think uh
00:09:42
but you know I I I think she'll be
00:09:44
around for a while I think in the
00:09:45
relative scheme of things she's not that
00:09:47
expensive considering what he's trying
00:09:49
to do and she can still knock on doors
00:09:51
and get in rooms even if she's not
00:09:52
getting add money as a result um what do
00:09:55
what so when the advertising Community
00:09:57
are they going to come back is there it
00:10:00
never worked before I it never worked
00:10:01
for us it never you know why would they
00:10:05
are they going to come back or is this
00:10:06
just a is it a pause or it's like that's
00:10:08
enough of this because better to put
00:10:11
their money correct I this one is really
00:10:13
clear to me and you know I put myself in
00:10:15
the context of having run ad buying
00:10:17
operations for major brands for three
00:10:19
and a half decades there is no scenario
00:10:22
that's going to cause me to go to the
00:10:23
management team and say you know what
00:10:26
we've looked at what x has to offer from
00:10:28
an advertising perspective and we're
00:10:30
going to go back up on the platform and
00:10:32
you're just going to have to ignore the
00:10:34
risks of Elon Musk his current and
00:10:36
future
00:10:37
Antics I don't know if the management
00:10:41
team would laugh me out of the room or
00:10:44
have me escorted out of the room but I
00:10:46
know I'd be out of a job in 24 hours
00:10:48
because part of the job is risk
00:10:49
mitigation a big part of the job when
00:10:51
you're a Fortune 500 company is saying
00:10:53
do the risks offset the rewards and the
00:10:55
risks are usually well we reach the
00:10:57
Right audience does the platform have
00:10:59
enough scale does our creative resonate
00:11:01
against this audience this is will our
00:11:03
customers boycott us if we go up on uh
00:11:06
on Twitter will the board call the CEO's
00:11:09
judgment into question could I get my
00:11:10
CEO fired these are risks that have no
00:11:14
offset whatsoever from an advertising
00:11:16
value and so I would never make that
00:11:19
recommendation I can't imagine people
00:11:22
wanting to come back from that and my
00:11:24
bigger concern isn't the gfy comment
00:11:27
that he said to
00:11:29
um Andrew r i don't want listen I leave
00:11:33
that to you guys I leave that to you
00:11:35
guys it was [ __ ] yourself okay when he
00:11:38
said when he said go [ __ ] yourself twice
00:11:39
to advertisers there you got me to do it
00:11:42
um I'm actually less concerned about
00:11:44
that than what he did immediately
00:11:45
afterward hi Bob this is what corporate
00:11:49
communication functions fear most of all
00:11:52
and I have to tell you guys and it's a
00:11:53
topic for another day marketing has been
00:11:56
suborned in most major companies to
00:11:58
corporate community Communications these
00:11:59
are risk averse people who are really
00:12:02
there to promote the CEO and his talk
00:12:05
track right and the minute that he
00:12:08
singled out Bob Iger every one of them
00:12:10
said that's it I'm not going near that
00:12:12
because God forbid we go on the platform
00:12:14
and then choose to come off again at a
00:12:15
later date we might get singled out and
00:12:18
I'm not getting my CEO singled out and
00:12:20
neither is the media guy so I think he
00:12:23
slammed the watertight door he's dogged
00:12:25
it down and he has moved on and
00:12:27
advertisers on the air side of it are
00:12:29
not pushing on that door at all I I
00:12:30
think it's a parting of the ways and I
00:12:33
really doubt you're going to see major
00:12:34
well-governed companies come back wow
00:12:36
well there it is let me ask you um I
00:12:38
want to ask you one more questions about
00:12:39
this so and you think she's staying no
00:12:41
matter what she doesn't she's staying no
00:12:43
matter what where could she is she
00:12:45
ruined her career or can she recover if
00:12:47
no you know I still look at this as the
00:12:50
biggest virtual intervention in history
00:12:52
the entire ad Community people who do
00:12:55
what I
00:12:56
do uh all of whom you know we know each
00:12:59
other it's a yenta Fest we all yeah we
00:13:01
go to the same events we have the same
00:13:03
conversations for we're trying to run an
00:13:05
intervention for her to get her out
00:13:07
there's a million things she could go do
00:13:09
she could run Amazon's ad platform she
00:13:11
could you know she can recover from this
00:13:15
the only thing that you know you have to
00:13:17
give her a mulligan on is the Vox
00:13:18
interview which was a whole another
00:13:20
thing that you guys have talked about
00:13:21
before which was just on her best day
00:13:24
but she's so well respected in the
00:13:26
industry everybody would like well she
00:13:28
tried
00:13:29
we kind of thought it wasn't going to
00:13:30
work because of him it didn't it's not
00:13:33
her fault and now she's going to end up
00:13:35
somewhere else so I think she's got run
00:13:37
yeah but she's I know dou she's doubled
00:13:41
down but she's doubled down against
00:13:43
climbing Mount Everest where a lot of
00:13:45
people fail and you know I said on an
00:13:47
interview last week you know that Hill
00:13:49
went from steep to Vertical now because
00:13:51
of his behavior but she's she's not
00:13:53
going to let go of it but the the
00:13:55
advertising Community will give her a
00:13:56
break the question is you know will
00:13:59
people who don't know her but who seem
00:14:00
to have formed opinions of her in the
00:14:02
last couple months also give her that
00:14:04
break and that is you know unknown all
00:14:06
right Scott last question then I have
00:14:07
just one more about a different topic so
00:14:09
Lou you sit at sort of the Helm of the
00:14:11
Bob slud looking at flows of advertising
00:14:13
Revenue just more broadly
00:14:15
speaking um and by the way just a quick
00:14:18
comment as someone who didn't know or
00:14:20
anything about Linda before I think this
00:14:23
has been a total disaster for her to me
00:14:27
she just looks not not knowing how
00:14:29
impressive a person she is and I trust
00:14:31
your judgment and and Caris has said
00:14:33
very complimentary things of her coming
00:14:35
into this with a clean slate she strikes
00:14:38
me as the worst CEO of the Year hands
00:14:40
down if time had said worst CEO of the
00:14:42
year it would have been this individual
00:14:45
is just being mocked and made a fool of
00:14:47
and every day just looks worse and worse
00:14:49
but anyway um the you sit at the you get
00:14:54
you have a bird's eye view into capital
00:14:56
and advertising flows across the major
00:14:57
platforms and major mediums I just love
00:15:00
your sort of Cliff Notes on which
00:15:03
platforms are doing better than people
00:15:04
think not as well as people think like
00:15:06
what are you seeing out there in the
00:15:09
ecosystem you know I think there's
00:15:11
really a search for Quality engagement
00:15:13
and the places that you get the kind of
00:15:15
quality engagement have bifurcated based
00:15:18
on the audience that you're going after
00:15:21
uh you're seeing certainly um one social
00:15:24
platform emerge as the you know the sort
00:15:27
of killer app and that's Tik Tok
00:15:29
marketers have to work really hard to
00:15:31
get quality engagement there but when
00:15:33
they get it right they really get it
00:15:34
right so there's a lot more effort being
00:15:37
put in there there is this symbiotic
00:15:40
ecosystem between what are called retail
00:15:42
media networks these are the Walmart the
00:15:44
Walgreens the
00:15:46
Albertson uh the Kroger of the world
00:15:49
that are now in the ad business who have
00:15:51
great first-party data Scot but they
00:15:53
don't have the kind of scale that they
00:15:55
really need and so they're forging
00:15:57
alliances with c TV CTV is also login
00:16:01
that's the Netflix of the world the ad
00:16:03
supported sides of Hulu etc etc um and
00:16:07
they're trying to build an ecosystem
00:16:09
where there's Rich first-party data
00:16:11
there's quality engagement there's up
00:16:13
and down funnel uh and I do think in a
00:16:16
broader context uh we're seeing some
00:16:19
really interesting green shoots we just
00:16:21
did some research at adones media with
00:16:23
Civic science which showed that young
00:16:24
people are now turning back to Quality
00:16:27
news platforms
00:16:29
um for their news and away from social
00:16:31
media because they feel like they were
00:16:32
duped in 2020 so jenz yeah JZ and
00:16:37
Millennials they're now saying we're not
00:16:39
going to get duped and I mean it's a
00:16:42
sign of hopefulness it's a sign that
00:16:43
people are kind of taking the rein back
00:16:46
in so I think accountability
00:16:48
transparency and Trust are kind of
00:16:50
coming back in and that quality
00:16:51
publishing and general will do well but
00:16:54
you know there are not it's not without
00:16:56
headwinds as you know a more pointed
00:16:58
question what's the easiest platform to
00:17:00
sell for you right now to an
00:17:03
Advertiser look if I'm if if I'm an
00:17:06
Advertiser where I'm going to start
00:17:08
where I get the best targetability the
00:17:11
best addressability the best scale of
00:17:13
addressability and that is pretty much
00:17:15
any AD supported CTV platform and then I
00:17:18
would augment it with linear and then I
00:17:20
would go into addressable digital um so
00:17:23
what's old is new again uh there's so
00:17:25
much headwind Scott on programmatic
00:17:27
right way right now that Ana just
00:17:29
dropped their full study the other day
00:17:32
uh which full disclosure I worked on
00:17:34
which just said that one in five one in
00:17:37
every five dollar that's being spent in
00:17:39
the 88 billion doll programmatic
00:17:41
industry
00:17:42
globally uh is going to Bad actors
00:17:45
either made for advertising sites that
00:17:46
deliver a terrible experience or these
00:17:49
uh really lowquality Publishers that say
00:17:51
you know if you have these three
00:17:53
symptoms you might be dying a fungus
00:17:55
which have no basis in reality and so I
00:17:57
think we're seeing a flight to Quality a
00:18:00
lot of that quality is from established
00:18:02
companies I think you're going to
00:18:04
actually see a little bit of a bump uh
00:18:07
in really old school stuff like I'm not
00:18:10
kidding terrestrial radio linear TV
00:18:13
things that have measurability to them
00:18:16
that give you scale and then addressable
00:18:19
that's accountable and I think that's
00:18:21
what you're going to see and I think
00:18:21
there's going to be a whole lot of
00:18:23
skepticism about programmatic moving
00:18:25
forward which is a huge part of the
00:18:26
digital ecosystem now
00:18:29
um I have oh sorry I have a oh sorry I
00:18:31
have a last question Lou um you have
00:18:34
been pushing for this for for people to
00:18:36
buy into news advertisers which they
00:18:39
don't want to do even though they
00:18:40
willingly go into more controversial
00:18:42
platforms like ex um can you very
00:18:46
briefly because we only have a little
00:18:47
bit of time why is this important you
00:18:50
and I had a great talk about this at uh
00:18:52
in in France at con lion so we're living
00:18:55
through an era where there's a war on
00:18:57
truth and I mentioned this to you when
00:18:59
we talked you know I it was eight years
00:19:00
ago when kellyan Conway was standing on
00:19:02
the lawn of the White House and
00:19:04
answering a reporter's question by
00:19:05
saying that the reporter that the
00:19:07
president was using alternative facts
00:19:09
and I naively googled that I thought
00:19:11
that was a thing well now it is a thing
00:19:13
and the only people who are defending
00:19:15
the truth and the war on truth are
00:19:17
journalists it's allowing for all sorts
00:19:19
of zoning and Schoolboard issues that
00:19:22
lead to the burning of books which you
00:19:24
know sounds like Germany in the mid
00:19:26
1930s to me uh because you don't have
00:19:29
local reporters there calling it out and
00:19:31
marketers are uniquely called out in the
00:19:34
uh uh first um Amendment of the Bill of
00:19:37
Rights um in their their role to support
00:19:39
journalism to keep politicians on track
00:19:42
and we've got to do more there and and
00:19:44
Cara it's not just an eat your
00:19:45
vegetables message about it's your civic
00:19:48
responsibility to support journalism it
00:19:51
delivers enormous return on Advertising
00:19:53
spend it delivers enormous unduplicated
00:19:56
reach these are the things that advertis
00:19:58
ERS crave and they're ignoring that
00:20:00
because of unfounded fears about getting
00:20:03
caught up in the cultural Wars which
00:20:05
again are being driven by corporate
00:20:06
Communications and have no basis in
00:20:09
fact yep so people should advertise with
00:20:12
news news it's so much more dangerous
00:20:14
elsewhere it's so funny that they just
00:20:16
they probably want to keep up with the
00:20:17
young people in any case go ahead sorry
00:20:20
I was say I know we're at time but what
00:20:22
they're doing is ironically they're
00:20:23
moving their money unbeknownst into mfas
00:20:26
these bad M made for advertising sites
00:20:28
which are engineered to appeal to that
00:20:30
money and appear to be brand safe when
00:20:33
in fact they're not and they're actually
00:20:35
taking the money away from journalism
00:20:37
and that 10 billion dollar slice of pie
00:20:40
that's going to mfas if that went back
00:20:42
into journalism in the United States you
00:20:44
would see robust newsrooms and robust
00:20:46
local reporting we're the real deal Lou
00:20:49
that's right so are you I really
00:20:51
appreciate it thank you so much so
00:20:52
insightful um and fair I have to say I
00:20:55
know you like Linda and I know you were
00:20:57
very close to her and this
00:20:58
I I hope she listens to you because
00:21:00
you're thank you guys you're a better
00:21:02
friend than she realizes I think I
00:21:04
appreciate you saying that it's an honor
00:21:05
to be on with both of you thanks
00:21:11
Lou
