Russ Glass, VP of products at LinkedIn Marketing Solutions, leads the LinkedIn team that builds ad products to help advertisers engage the right audiences.
Prior to his role at LinkedIn, Glass was founder and CEO of Bizo, a B2B audience marketing and data platform that he sold to LinkedIn in 2014.
Curious about his point of view about market consolidation—and his plans now that LinkedIn has a new corporate parent, Microsoft—Real-Time Daily took the opportunity to have a year-end chat with Glass.
Real-Time Daily: You’ve said that you think consolidation in the ad-tech and martech arenas will accelerate next year. What do you mean by that?
Russ Glass: We’ve seen the buyer’s journey completely change. Buyers—consumers or B2B buyers—are doing their own research and are in control of how they find information. It’s created a diffuse dynamic. Marketers have to offer all the right information at all points in the ‘purchase’ funnel. The web has become far more personalized.
The expectation that we all have now is that with a single click, we get exactly what we’re looking for. Google uses predictive technology and previous purchase history. All of this has conditioned us to expect smart responses to our needs. Marketers are under a lot of pressure to deliver decent and relevant experiences.
While the martech sphere has focused on smaller scale, more highly personalized applications like email and predictive analytics platforms, existing prospects and customers, ad tech has focused mostly on large-scale, anonymous users. Martech platforms have a lot of intelligence for personalization, while ad tech, because of the commoditization of display advertising, has pushed prices down and squeezed margins. I believe ad tech has to get more like martech, but that’s hard to do. And that’s driving consolidation.
RTD: Why does martech have an edge over ad tech?
RG: It has a business model edge because martech companies are generally more profitable than ad-tech companies. The gross margins are higher than in ad tech, because martech products and services aren’t commoditized. The gross margins for martech are as high as 80%, while in ad tech, they’re between 10% to 20%. Criteo might have margins in the 40% to 50% range.
RTBlog: So ad tech wants to behave more like martech?
RG: Well, software as service businesses (SaaS) generally have better margins. Yes, ad tech is trying to become more like martech. You see certain ad-tech companies trying to move more into providing platform and services that marketers can use inside their own platforms. Ad-tech companies, overall, don’t have much differentiation left. Facebook is integrating everything into its platform.
RTBlog: So what’s going to happen to ad-tech companies? It seems likely that they’re going to be acquired or die.
RG: Ad-tech companies will either be bolted onto larger martech businesses—merged to add scale and intelligence—or they’ll go out of business. While ad-tech companies have great engineering talent, and those people will be poached, they don’t have sustainable business models. The martech sector is in better shape because it’s created more differentiated value.
RTBlog: What are you focusing on now that you have Microsoft resources at your disposal?
RG: Our core focus is on reaching professionals, and to get messages in front of marketers in a more personalized way. We need to focus on revenue and lifetime value—we want to use those standards to help marketers make good predictive decisions about who their next best customers will be. To do that, we need to target more effectively.
Microsoft has incredible assets—CRM, predictive analytics, artificial intelligence, bots, and machine learning capabilities—but we don’t have to use any of their tools. I can use what I want from the Microsoft tool chest, or I can build capabilities in-house, or acquire capabilities.
Microsoft has MSN and Outlook, among other properties. We want to make sure that LinkedIn marketers can reach their audiences in a highly targeted way. We need to create a way for our audiences to get value out of the existing Microsoft tools and platforms.
There are a lot of interesting technologies that Microsoft brings. We have to be smart about all of them and see how they fit into our strategy. We’ll bring them in if they’re right for us.
What I will say is, there’s an interesting data play here—both LinkedIn and Microsoft have good data about their audiences, but it’s different data. The question is, how do we secure data in a privacy-sensitive way to make marketers more effective? That’s our focus going forward.