Episode 162: Eric Picard on The Future of Local, Social and Mobile Commerce

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Eric Picard is one of the industry's brainiacs - especially when considering the near future of online advertising.

He has participated in numerous acquisition and partnership efforts, including several successful acquisitions of companies such as Massive, Screen Tonic, AdECN, aQuantive and the recent Yahoo Search & Advertising agreement.

Listen as we talk on location at ad:tech SF as part of DishyMix's "Muckety Muck Insights" series.


Susan Bratton: Welcome to DishyMix. I’m your host, Susan Bratton. I’m here onsite at AdTech San Francisco and you’re listening to part of my Muckity Muck Insight Series. I have just captured another fantastic Muckity Muck for you, someone that I respect greatly in the industry. One of probably the smartest people who thinks about the uber machinations of the advertising landscape. So I’m really excited to have Eric Picard here. Eric is a director at Microsoft. He’s had many different roles at the organization. And as you know Microsoft has acquired a lot of super solid companies and Eric’s been on the frontlines of the acquisitions and the integration, and he has a new role that he’s going to tell us about. So lets get him on the show. Welcome Eric.

Eric Picard: Hi Susan. How are you? 

Susan Bratton: I’m fantastic. And hey, you’re speaking here at AdTech, right?

Eric Picard: Yes I am.

Susan Bratton: What’s your talk about? 

Eric Picard: I’m on a panel tomorrow with Dave Smith. It’s about next generation metrics for advertising. And I’ll be speaking a little bit about social graph and how you can use analytics to understand what’s happening in the social graph, particularly around when people are sharing content. So somebody copies a link or a piece of content from a website and then puts it on their blog or puts it in multiple locations, and then trying to understand based on that what happens next.

Susan Bratton: Oh that’s very interesting. So essentially the paying it forward, the retweeting, what kind of content gets promulgated and the value of that forward pay, is that right?

Eric Picard: Yeah, exactly. You know, people are using lots of different terms to describe this. You know, they’re saying, they’re going back to the old term of earned media, but it’s also being used, people are saying, you know, that it’s viral or that it’s word of mouth. All of those things have sort of different flavors and different dimensions on the same thing. So a lot of companies now in that space, exploring what, how to understand the value, so there’s a lot of really cool stuff going on.

Susan Bratton: Well it’s interesting too because Tim and I were just talking about it, my husband Tim. We were talking about the new Twitter ads. And he was saying “Huh, I wonder what kind of ads would work best there”, and my guess was that any ads that allow you to promote something that raises your social capital in the Twitter sphere, something that’s valuable enough that you can forward on. So if a brand was creating content that an end user consumer would want to put out into the world and forward or retweet or blog about or what have you, would be the kind of advertising that would potentially work very well. Also philanthropic oriented advertising would work well. News related, you know – so temporal content could work really well. So I’ve been thinking along those same lines about what kind of content. The Jaiku guy – I forget his name, I think he has a Danish name or something – he had a concept for it and he called these pieces of content that a consumer could forward ‘pearls’. He thought about them as being pearls that you would give this pearl and someone would want that because it became a piece of valuable information that you would then want to share forward. And I had always remembered that, whenever I’m Twittering or posting things, how can I create something that’s an easy retweet or an easy forward or an easy post, and I always keep that in mind.

Eric Picard: That’s great. I’m going to plagiarize you viciously because I…

Susan Bratton:  Do it man.

Eric Picard: I’m speaking at Web 2.0 in a few weeks…

Susan Bratton: Oh great.

Eric Picard: in San Francisco…

Susan Bratton: Awesome.

Eric Picard: on this topic specifically.

Susan Bratton: Perfect.

Eric Picard: So I’ll be chatting about advertising in the real time stream.

Susan Bratton: Exactly.

Eric Picard: Yeah.

Susan Bratton: And Dan Zurella with all his retweet statistics, that’s very interesting as well, and I’ve been watching the kinds of things that get picked up on Facebook, you know – what is it that people like and comment on. It’s all very fascinating to me. 

Eric Picard: Yeah, I agree.

Susan Bratton: I like the zone you’re in man. Super cool.

Eric Picard: Yeah.

Susan Bratton: So what is the most interesting initiative that you’re working on right now? Is it this social tracking thing or is that just what you’re here talking about at AdTech? Tell me a little bit about what’s happening behind the scenes at Microsoft.

Eric Picard: Sure. So the, it’s interesting, the social tracking thing will tie into what I’m doing right now, but, you know, David asked me to come in and talk because I’m kind of the metrics guy from way back. But…

Susan Bratton: I’ve always liked that about you.

Eric Picard: But, you know, I’m working on a new initiative around mobile content and mobile, local and mobile hasn’t been announced yet so I can’t go into too much detail, but it’ll be related to the local sort of – you can tell that I haven’t spoken much about this ‘cause I don’t have anything to spit out here.

Susan Bratton: That’s great. We appreciate the authenticity.

Eric Picard: Yeah, it’ll be essentially tied to location and using the mobile device has a way to connect you as a user to your surroundings. So we’ll see how that goes and maybe in a few months I’ll be ready to talk about it.

Susan Bratton: Location aware, you know, presence or whatever you want to call it is a very interesting category right now. 

Eric Picard: Yeah.

Susan Bratton: It seems like Yelp, of all of the location or, you know, kind of mobile local social intersection companies has done the best so far. Are there others that you would call leaders? I know FourSquare is coming to the fore, Bright Kite is coming to the fore. I’m playing with both of those on my phone. What other kinds of things are you tracking or where do you see some good opportunity for us as marketers to put our attention and interest? 

Eric Picard: You know, that’s interesting. I’m pretty new to thinking about this space. I only started this role about three weeks ago.

Susan Bratton: Okay.

Eric Picard: So I’ve been digging in. You know, I’m a big believer in ecosystems of companies and leveraging the ecosystem, as opposed to trying to do everything ourselves, especially at a big company like Microsoft. It’s one of the things that I didn’t understand when I came to Microsoft. I always, as an entrepreneur and a technologist…

Susan Bratton: You came from a little tiny company, Blue Streak in Rhode Island…

Eric Picard: Yeah, exactly.

Susan Bratton: and moved to Seattle to the Megaluf.

Eric Picard: Yeah, exactly. So, you know, as an entrepreneur who started technology companies I’d always had this vision that, you know, when you go to a, you don’t want to do anything to sort of get the wrong attention from a big company like Microsoft or Google or any of these other companies because they’ll kind of roll over and squash you without even thinking about it. And what I’ve found is that it’s actually not true at all, that large engineering groups, you know, with thousands of people in them have to work on very large problems. They don’t have the ability to really focus in on some of these very vertical or very focused areas of development. So, you know, a company like Microsoft, you know, we’re very focused on the ecosystem and building the ecosystem of partners that we work with and facilitating those companies to be successful because we’re just not going to invest in a lot of those areas ourselves and we want to be able to make sure that we work well with all of these different companies. It’s been one of the most surprising and fun things about my job at Microsoft over the last five years.

Susan Bratton: One of the things I wonder about is that I’ve heard Microsoft is a fairly combative environment and a very competitive environment, and you strike me as a very kind easygoing gracious not an aggressive person. You use your mind power, not your – you use your brains not your brawn to navigate the universe it seems to me. How are you holding up within the cultural morays of the Microsoft ecosystem or ego system? 

Eric Picard: Well you know I’ve had an amazing time at Microsoft. I’ve really, I do long sometimes for the sort of very gritty granular start up world, but every time I feel like I’m about to, you know, start thinking about starting another company I end up getting engaged in a real deep intellectual opportunity and then get excited about what I’m working on. The culture’s a little bit competitive, but you know, it’s competitive more in the way that when you get a bunch of very, very smart people in the room together, I wouldn’t so much say that it’s ego driven but it’s more, people don’t take things for granted. So one of the interesting surprises I had when I first started the company, you know, I’d been hired because I was an expert in this field and I was going into meetings and, you know, there’d be a young 25 year old guy that is sitting in the room with me and he’d say, “Well this is what we’re thinking about doing” and ask me for advice in a very not-asking kind of way. And then, you know, I’d say “Well I think actually we should do it this way instead, and this is sort of why”, and the amount of challenge that you would get from somebody in that situation who doesn’t know anything about our industry but is very smart and just wants to really understand and really dig into all the details, that can be actually very challenging. But, you know, for me I had always hired people like that at my companies, so it really wasn’t that big of a change but I was surprised at the scale, you know, that you go into these meetings in a young just out of college developer or program manager be able to sort of really just sort of ask repeatedly “Why? Why? Why?” You know sometimes it would feel like you’re dealing with a two year old, you know…

Susan Bratton: Yeah, I can imagine.

Eric Picard: But it’s fun ultimately. It’s just sometimes you got to jump over those hurdles. That’s the big difference.

Susan Bratton: Well luckily they’re asking why instead of just doing some boneheaded thing, which is good…

Eric Picard: Yeah.

Susan Bratton: in the grand scheme of things.

Eric Picard: Yeah, absolutely.

Susan Bratton: It’s exhausting, but the right thing to do, right?

Eric Picard: Yeah, you know, one of my favorite stories about Microsoft and the moment that I kind of realized I’d make an okay decision by going there was a few weeks after I had joined the company I was at an internal conference and there was a guy in the room that kept standing up and asking really great questions. And people would make comments up on the stage and he’d stand back up and say “Well, you know…”, essentially the much more mature and seasoned version of why. And, you know, he asked such sort of penetrating questions and the way that he was digging in on things got me really interested in meeting him, so after he was done I kind of walked up to him and started, you know, introduced myself, said “Hey, I’m new to the company, but you asked a lot of really good questions.” And he introduced himself and asked what he did and he said he was a developer and I said “Oh great.” And he asked me what I’d noticed was so different about coming to Microsoft, what was the difference between this big company and a startup, and I said, “Well the only thing that I’ve noticed so far is that it seems to take a lot longer to do things here.” And he said, “Explain that”, and I said, “Well you know, we are” – at the time we were delivering new versions of MSN as an example once a year, which we’re doing better than that now but that was five years ago. And he kind of bristled a little bit, and I was like, “Oh, you know, who is this guy” and then I started to get a little nervous, you know, ‘cause the way he bristled was interesting. And then he said, “No, no, you know, look, I would love to hear more about this. I’d love to hear about your experiences sort of delivering software on a more quicker cycle and not going through these long development cycles.” And I said, “Oh, okay great. I’ll definitely send you an email then.” And my friend came up to me after he left and he said, “He’s a big VP, you know, a bigwig in the company”, and I said, “Oh, okay.” Well I kind of took him at his word and I sent him some thoughts and he wrote back and said “Wow, I didn’t know any of that.” And it was, you know, late at night and we were emailing each other for about an hour. By the time we were done it was about 2 in the morning and, you know, one of the things we were talking about was, you know, different development methodologies, how to build software faster…

Susan Bratton: Sure, agile development…

Eric Picard: Like agile…

Susan Bratton: and all the new trends.

Eric Picard: Yeah, extreme programming and agile methodologies. And about a month later – or maybe it was two months later – every developer in the whole division got a scrum programming book, an agile programming book on their desk, which was, you know, the ability to sort of have these conversations at any level, you know, so that the inverse was also true, you know, that despite that you had these junior guys that could question you and kind of put you on the spot and kind of, you know, make you really explain stuff that you feel like you shouldn’t have to explain, flipped all the way around, all the way up to the top, you know, and even people like Steve Balmer, they’re very accessible. You can send email to Steve and he’ll answer you and there’s no, and that’s not considered a bad thing to do. So it is an interesting environment from that perspective.

Susan Bratton: So there’s an open permeability for having conversations at any level, which is awesome.

Eric Picard: Yeah.

Susan Bratton: I like that. Good card trick.

Eric Picard: So that’s one of the reasons I’ve ended up really having a great time while I’ve been there.

Susan Bratton: Nice. So you’re getting into the local mobile intersection. You’re studying social graphs, you’re studying the ability to put a metric to the value of forwarded retweeted virally regenerated content. These are some of the things that are happening in your mind, in your world. Are any of those the most exciting area of internet marketing to you or is there even something else that might not be your job today but that you’re really keeping an eye on in our world?

Eric Picard: Yeah, I think there is. You know, I’ve been, I moved into this new role about a month ago and for the last few years I’ve been really digging deeply into the future of display advertising and, you know, I’m really, the way that I sort of think of myself is as a catalyst for change. So I, whether that means starting a new company or starting a new team or incubating a project or working with developers to get them to understand why the change over on the right is affecting something over on the left. And as I started looking at what was happening over the last year, you know, a few years ago with my sort of Ford hat on, you know, looking five, ten years out I had made some predictions about real time bidding in the display advertising space and how those things would change with things like exchanges and…

Susan Bratton: Does Microsoft, did they buy Ad ECN?

Eric Picard: Yeah, we bought Ad ECN a few years ago.

Susan Bratton: Okay, yup.

Eric Picard: So I started thinking about this and, you know, at the time one of my jobs was to do long term platform planning for the ad platform and that involved actually getting into a lot of the acquisitions that happened in the ad technology space on our side.

Susan Bratton: Would you list some of those to keep everyone up to date?

Eric Picard: Sure. Ad ECN was one we just were talking about, was an ad exchange. We also bought Screen Tonic, which was a mobile advertising technology company. We also bought Massive, which was in the end game advertising space and still one of the big leaders there. And then the aQuantive acquisition, when we acquired aQuantive I was very involved in all those. So, you know, when I started looking at what I thought was going to happen in display ads I started thinking a lot about this idea of real time bidding and being able to value and impression in real time and look at all the perimeters attached to it and understand not only, you know, what type of person was behind that impression, but to look at it on multiple dimensions and not…

Susan Bratton: Yeah, what kind of perimeters could you set values for…

Eric Picard: Exactly.

Susan Bratton: so that you could qualify a particular impression and…

Eric Picard: Exactly.

Susan Bratton: know what you want to bid for. 

Eric Picard: Right. So I started thinking about a lot and, you know, and certainly I wasn’t the only one – there were a bunch of us sort of collaborating on this and we kind of laid out this future that we thought was going to happen. And then we, one of the things we did as result of that was looked at companies to go acquire in the space and Ad ECN was he one we ended up with. But it was interesting to watch what happened in the market because it took right media quite a bit longer to get the real time bidding components out, the Google Exchange or the Double Click/ Google Exchange, really only entered into real time bidding in their recent version. It took us longer to get Ad ECN out the door than we expected when we acquired the company. So as a result this whole ecosystem of companies that were playing aggregator roles and, you know, companies like Rubicon and Ad Meld and Pubmatic, they all started exposing real time bidding interfaces directly. So as they did that and as on the flip side, on the byside of the market you had Media Maths and all of the DSP’s like Invite Media and Media Math, all these guys…

Susan Bratton: What’s a DSP? 

Eric Picard: Demand Side Platform. So if you think about it – I’ll use Media Math and Pubmatic as examples. Pubmatic’s really an aggregator of, on behalf of a publisher they’re aggregating multiple different sources of demand. A demand side platform is sort of playing the agency or advertiser facing role and built out platforms to manage that. So you’ve got the publisher size sort of optimizing yield for the publisher, and you’ve got the demand side platforms optimizing ROI for the advertiser and working, not against each other, but with each other, to sort of find the right impressions and value them appropriately. And that whole space, as a result essentially they have us big guys not getting quite as quickly to market with real time bidding, that whole space took off in the last year in a way that was very unexpected. You know, I would’ve guessed a few years ago that it would’ve been Microsoft and Google and Yahoo sort of duking it out over this real time bidding thing, and that may still happen, but to see that there’s now probably 20 companies that are very deeply involved in this and going back and forth is very exciting. So I think the implications of that are pretty broad and a lot of people haven’t wrapped their heads around how big those implications are. There’s going to be pretty significant changes in this industry because of it. 

Susan Bratton: Can you describe some of those implications?

Eric Picard: Sure.

Susan Bratton: This is very interesting.

Eric Picard: Thanks. You know, the thing that I find really fascinating is when you look at the way media when it’s hand bought and sold, it’s handled, just because of the friction involved and the lack of efficiency in that transaction, you end up with maybe a handful of perimeters applied to the body – so you might have the publisher, a couple of definitions of where on the publisher you’re going to buy, maybe if you’re a little more advanced to start putting in some extra filtration in there. So you’d say “I want women in a certain age group” or you might say “I want a certain geography only” or you might put in some psychographic information or some behavioral perimeters. But you probably don’t end up with more than four or five and you don’t really have any way to radically impact the way that those impressions are going to get handle. Those are sort of bulk buys when they take place and the inefficiency of all the different systems having to work together in ways that are extremely manual. There’s a lot of telephone and email and in some cases even fax still involved in that process. So it’s quite a change when you look at what will happen in this new space where the buyers will put down their business rules – “These are our goals. This is what we want to achieve. We want to reach these audiences with these 30 perimeters, these 40 or 50 perimeters. Oh and if there are existing customers we want to do something different. If we happen to have a product that fits that audience perfectly we’re willing to pay a lot and on top of that if we have an ad creative that fits that scenario and that audience really well then we’re willing to pay an extremely high amount.” And that change, once you’ve defined your goals and let the system start to go out automatically and look at inventory across multiple publishers is really significant. It’s going to change the way that budgets are allocated, it’ll change the way that people approach the space, and more importantly than anything because all of this is done in real time and everything is web service based over API’s, it’s going to allow new companies to enter the space that aren’t doing the whole thing, but that are adding values in unique ways. So whether that’s, you know, some startup that actually happens to have a very specific piece of expertise in optimizers, you know, some algarythm – you know, you can imagine a world in a few years where a couple guys or people who graduate from computer science school or a math program write this algarythm that’s going to just make things ten percent better. In the old world, to do a startup where you have to build every piece – the ad delivery systems and the BI systems that do reporting and billing and all of that stuff, it’s quite complicated. In this new world it’s going to be a lot easier. You’ll be able to offer that up, and a lot of these platforms have sort of host, algarythm hosting capabilities as an example, so you can have lots of different companies sort of drop their code in and let it run and see if it works better, and if it doesn’t then you just stop using it. And I think we’ll see lots of other value ads. I mean that was just one example, but we’ll see people doing creative customization and all sorts of analytics and reporting that gets plugged into these systems that I think the big innovation there is that you won’t have to build the whole thing. That’s been the real difficult thing. I started three ad technology companies before I went to Microsoft and, you know, to try to get those things off the ground in a way that would scale, there’s a huge amount of just sort of iron that you have to pour, you know. It’s very difficult and I think we’ll see that change now. 

Susan Bratton: So if I had to net it out in a simplified way, what you just told me – it’s not that you made it complex, you didn’t Eric, but I just want to make sure that I get it – what I think you said was that there is this, it started out with the ad exchanges where publishers were able to offer up their inventory for anyone to come into their platform and bid on it. Right Media was Yahoo, you at Microsoft had Ad ECN and there was a Google double click kind of a… So we’re three camps working on this. But each one of those camps took a while to do the integration and other companies sprouted up like Pubmatic and these other ones that you mentioned, they sprouted up to provide that level of capability for other publishers as well. So that added to the mess. And the ultimate goal here is to be able to take things like dynamic creative ad serving and behavioral and contextual targeting and whatever other perimeters that you want to set for your campaign and essentially have it automate so that you can say “I want to buy this kind of inventory, I’m willing to set this price for it, and if you find those occurrences then launch my campaign with, you know, with these perimeters.” So that’s where it’s all going, right?

Eric Picard: Yeah, absolutely.

Susan Bratton: Was that a good recap?

Eric Picard: That was a great recap.

Susan Bratton: Need to tweak it out anywhere or…?

Eric Picard: No, you know, I think you really nailed it. I think the big, this whole space is going to evolve much more quickly now because if you think about it the first wave of technology in any industry is always around automating paper process, right?

Susan Bratton: Yeah.

Eric Picard: You take stuff that was done on paper and you build workflows. And that’s kind of what we had in the early days, 15 years ago in the online ad space, you know, the early ad systems that were delivered weren’t really platforms, they were really very locked down, they were very limited in many ways. And all of the tools that were developed were really developed off of the way that things are done in the traditional media world. 

Susan Bratton: Yeah. But now we can have cloud based open API…

Eric Picard: Absolutely…

Susan Bratton: big databases with ad exchanges and all that stuff, uh huh.

Eric Picard: Yeah, absolutely. Yeah, and, you know, so this next generation is just going to make things evolve much more quickly. I think we’ll see more change in the next 5 years than we’ll see in the next 15.

Susan Bratton: And what we’re really doing is we’re optimizing media planning and buying and placement as well as ad serving. Those pieces are coming together with the latest and greatest in localization, behavioral targeting and all those pieces as well…

Eric Picard: Absolutely.

Susan Bratton: That’s the perfect storm that we’re focused on.

Eric Picard: Yeah, I think so. And, you know, some of those things like local have been really difficult to crack, partially because the systems were so closed…

Susan Bratton: Yeah, not scalable.

Eric Picard: you know, and I think now we’ll see, you know, this whole scale display space take off, not only at the high levels but really at a very granular level down to even local businesses, and that’s, you know, if you think about how interesting – another big change I think that’s happened in the last year is how Facebook is really, really taking off with your advertising business and I’ve seen who they’re recruiting, they’re getting really great people in, it’s going to be very interesting. You know, the rumor on the street is that they’re going to do a billion dollars in ads this year and a lot of that is local, you know, because it’s one of the few places when you buy ads that you can actually specify down to very granular levels – I don’t know if you’ve ever played with a Facebook ad platform, but it’s very fascinating. You know, the idea that you could pick your market and drill in and say “I want to reach Microsoft employees in Redmond Washington of this, you know, age and gender and it’ll show you exactly how many people that fit those criteria are available or potential. It doesn’t do prediction, doesn’t say that you will get these things, but it give you a sense of the size of the audience, that’s pretty compelling, you know, the idea that you can… I can tell you as a Microsoft employee that I have not infrequently have I seen ads that are “Hey I want a job at Microsoft. My name’s Bill and, you know, here’s my resume. Click here”, you know. Very, very targeted, you know, obviously…

Susan Bratton: It’s like micro targeting at scale because Facebook’s so big…

Eric Picard: Exactly.

Susan Bratton: And it’s a self serve platform, so its got three really good things going for it. Actually here at AdTech Nielson is unveiling with Facebook some new research and I can’t spill the beans because I’ve seen you early, but essentially what they’re doing is showing the most optimized way that you can leverage the different kinds of advertising and the news feeds and, you know, the social proof of Facebook into the ad model. Should be pretty good, so keep your eye out for that.

Eric Picard: I will.

Susan Bratton: Yeah, by the time this is out it’s available, so anybody can just go Google that and find it, I’m sure. 

Eric Picard: Fantastic.

Susan Bratton: Awesome. Well Eric, thank you so much. I’ve really enjoyed the conversation. It’s always a lofty perspective that you bring that I so, so adore about the way your mind is. And do you have any way that people can follow your thinking?

Eric Picard: Oh absolutely. You know, I’ve been writing a monthly column since 1999, for a while I was on ClickZ and I’ve been on iMedia Connection now for the last year or so. So you can follow me there or I also, I usually when I write a new article I’ll tweet it, so I’m ericpicard, all one word, no spaces…

Susan Bratton: And that’s p-i-c-r-d.

Eric Picard: p-i-c…

Susan Bratton: e-r-i-c-p-i-c-a-r-d…

Eric Picard: Yes.

Susan Bratton: Yeah. Anything else?

Eric Picard: No, that sounds great.

Susan Bratton: That’s enough, that’s enough. Follow you on Twitter, read your iMedia column and perfect. You got to know Eric Picard. He’s the director at Microsoft and obviously someone you’re going to want to follow. I’m your host, Susan Bratton. We’re live here at AdTech San Francisco and this is part of the Muckity Muck Insights. I hope you got some from our favorite Muckity Muck Eric. All right, be back soon. Thanks.