67. Ramsey McGrory – DoubleClick to Mediaocean via Right Media

Paleo Ad Tech

Ramsey McGrory started his career in the U.S. Army and later found himself at the mighty DoubleClick in 1999 at the peak of the dot-com boom as an ad sales exec “banging the phones” selling direct-response ads to finance and insurance companies. He joined the seminal Right Media in 2004 as VP of platform and ad sales, staying on after Yahoo acquired the company in 2007.

Later, Ramsey was CEO at AddThis, acquired by Oracle, and president at Scout Media before joining his old friend and former PaleoAdTech guest Bill Wise at Mediaocean, where he is CDO.

As Ramsey tells Marty in this fascinating episode, he fell into advertising by accident in the 1990s after starting his career in New York at Citibank, working on then-trendy derivatives; a hiring manager moved over to a little-known startup called DoubleClick and suggested he join up. Ten interviews later (none with founder Kevin O’Connor), he was hired as a display ads sales rep, a career change for this former Army logistics specialist.

He thrived on the chaos and excitement of the boom. “It was a very diverse community,” he recalls. “You’d get the super-engineering quant types, you’d get the creative types and everything in between.”

In the process, Ramsey learned a lot about how to make advertising work on the internet as part of a direct-response group (distinct from the more premium DoubleClick brand-sales group) led by Bill Wise and Mike Walrath. The process was manual: he got a daily spreadsheet describing publishers, impressions, cost, conversions; and he would make tweaks to targeting and frequency capping.

Daily frustration led to innovation, years later: “The concept of Right Media came out of DoubleClick’s unwillingness to invest in an ad server and a media business that was focused on meeting direct-response goals,” Ramsey says.

DoubleClick went through 7-8 rounds of layoffs after the dot-com crash as the brand-ad market cratered and colleague after colleague was called into the HR office on the 13th floor of the luxe “Click City” on 38th and 10th. Ramsey’s niche in direct-response stayed relatively steady: “How many times have these direct response advertisers said, if you’re meeting my goals, I’ve got unlimited budget?”

Ramsey followed ex-DoubleClicker Mike Walrath to Right Media, which Walrath founded in 2003 in the offices of Joe Zawadzki’s Poindexter (later called [x+1]). Of course, Right Media gained an inestimable asset when the technically-brilliant Brian O’Kelley joined and a series of fundamental ad-serving and network innovations unrolled, setting up the era of RTB.

Ramsey describes a market with rampant impressions on sites like MySpace, requiring scale (O’Kelley’s specialty as an engineer and the topic of his Princeton thesis paper) but also inspiring new ideas. Optimization was primarily by “suppression.”

Meaning: the advertiser picked a price point (e.g., $2.50 CPM) and inventory would be optimized by changing geos, websites, frequency — optimization happening by removing placements, which lowered scale and decreased spend. The team experimented, creating campaign segments at different price points in the ad server.

This tactic raised the frequency cap for ads: “You’re bombing the same ad unit and the ad unit is effectively sort of competing with itself,” Ramsey explains.

At this point, O’Kelley had one of his insights: “Brian looked at it and said, ‘We just built this wrong.'” Meaning: the ad server (called Manage) optimized inventory against a set price. But what if that model could be changed — what if campaigns could flip the model from optimizing inventory against price to optimizing price against inventory? Thus: dynamic pricing.

It was a fundamental conceptual and technical change. Now theoretically every advertiser could look at every impression, which improves yields for publishers. Advertisers were told that the eCPM (average CPM over the campaign) could be lower overall than the previously-set price but the scale would go up 5X (say) because more inventory is available.

This technology, rebuilt by O’Kelley, became Yield Manager, and it was licensed to a number of ad networks including Right Media’s own. At this point the 3-4 networks in the group noticed they had all trafficked demand and supply tags into one another. This observation in turn led the ad server to morph into the first “exchange,” where users (at first, ad networks) would have a “seat” and connect to other seat-holders without having to use a lot of cross-tagging.

This was the pioneering Right Media Exchange (RMX) of song and legend. The only tags used were the creative tags on the page. There was an auction for each impression. However, a limitation was that all the intelligence required had to be synched into the exchange. (This data-sharing requirement made some large buyers like P&G uncomfortable.) The next evolution was the emergence of DSPs and SSPs which pulled decision intelligence from the exchange itself into buy- and sell-side platforms.

How did buyers and sellers react to the idea of an ad exchange? At first, Ramsey says, it was not difficult to describe an auction — after all, everyone knew how the stock market and paid search ads worked, — but “dynamic pricing” made buyers uneasy.

The Right Media sales team came up with the idea of “PANT People,” styrofoam figures brought into meetings to demonstrate for visual-tactile learners how the platform worked. PANT stood for the parties in the exchange: Publisher-Advertiser-Network-Technology.

The challenge with dynamic pricing was that it made ad serving fees (then materially higher than today, say, $0.05-0.07) difficult to forecast. Objections were met by focusing the market on eCPM and setting a maximum bid that was higher the eCPM so more inventory could be accessed.

After Yahoo’s acquisition of Right Media, Ramsey stayed at Yahoo for four years, which he says he enjoyed.

He started at Mediaocean eight years ago as CRO, building a sales function beyond the original holding-company core and now shepherds mergers and acquisitions, of which Mediaocean made 10-12 in recent years. The largest of these was Flashtalking, run by PaleoAdTech guest John Nardone, which powers the fast-growing digital component of Mediaocean’s business.