Cantor Fitzgerald’s Youssef Squali on Ad Technology and 2016 Trends

By Archived Rubicon Project Archives
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Jay Sears, Senior Vice President Marketplace Development of Rubicon Project discusses ad technology and 2016 trends with Cantor Fitzgerald’s Internet analyst and Managing Director Youssef Squali.

(Editor's Note: This is the second installment of a three-part series. Go here to read what BMO Capital Markets' Dan Salmon has to say about ad technology and 2016 trends.)

YOUR NAME:Youssef Squali

YOUR COMPANY: Cantor Fitzgerald

YOUR TITLE:Managing Director

SEARS: What do you read to keep up with politics, art and culture?

SQUALI: Anything that could help!

SEARS: What do you read to keep up with friends?

SQUALI: E-mail, Facebook, WhatsApp

SEARS: What do you read to keep up with the advertising technology industry?

SQUALI: Very varied. Mostly companies’ and general blogs including Google, FB, AOL, RUBI, MediaPost, Business Insider and IAB.

SEARS: With regards to advertising automation, what are the three biggest trends you expect to impact companies in 2016?

SQUALI:  

  1. Programmatic taking over premium inventory online
  2. TV ad buying going programmatic
  3. Improved measurement/greater transparency in ad effectiveness to minimize fraud/waste

SEARS: With regards to advertising automation, what are the three most overblown topics that you wish would just go away?

SQUALI:

  1. That it devalues ad inventory or applies only to remnant inventory.
  2. Shouldn’t be used for publishers’ most premium ad inventory.

SEARS: Tell us your coverage universe.

SQUALI:

 

SEARS: The majority of ad technology companies has not performed well in the public markets. Of the poor performers, what are the commonalities between them that have contributed to this weakness?

SQUALI:  

  • Disappointing quarterly performance post-IPO out of several of them, so the whole group (with a few exceptions) is in the penalty box.
  • This is a convoluted segment of the industry, which remains difficult to understand for most on Wall Street.
  • The belief that the largest online advertising providers, Google and Facebook, with extensive adtech stack will ultimately dominate.

SEARS: A smaller handful of ad technology companies has performed better than the rest. What are the commonalities between them that have contributed to this relative strength?

SQUALI:

  • They delivered what they said they were going to deliver and performed to or better than expectations since IPO.
  • Being perceived as very focused on a particular niche or functionality of this segment, and doing it well.
  • Being ultimately an acquisition target if they continue to outperform.

SEARS: Do we live in a “tale of two cities” where Google and Facebook win almost everything, advertisers are dictated to and other media companies fight for the scraps?

SQUALI: That is still generally the belief among investors and analysts. The acquisition of AOL by Verizon at 8x EBITDA speaks positively for those that are perceived to have scale and a brand like AOL within adtech. The acquisition of Millennium Media for $250M (well below its IPO valuation) speaks to the opposite.

SEARS: Please answer the following statements yes or no.

SQUALI:

 

SEARS: If you could go to the airport right now with friends or family and fly anywhere in the world for vacation, who would you take and where would you go?

SQUALI: Safari in East Africa with family.

SEARS: If you could create an endowment to fund any existing non-profit you designated, what lucky non-profit organization would that be?

SQUALI: Medecins sans Frontiere

SEARS: What is your favorite restaurant in the world?

SQUALI: La Tour d’Argent in Paris!

SEARS: Thanks, Youssef!

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