Edited transcript of Google (GOOG) at Credit Suisse Technology Conference
Google’s Neal Mohan, Vice President of Display and Video Advertising, presents at Credit Suisse Technology Conference on December 2, 2014 11:15 AM ET. Following are the webcast audio and the associated transcript of the event…
Google (GOOG) at Credit Suisse Technology Conference – Webcast Audio
Stephen Ju – Analyst, Credit Suisse
Good morning everybody. I think we’ll go ahead and get started. I am Stephen Ju from the Credit Suisse Internet Equity Research team. Joined on the stage by the team from Google I think but we before we start we’re going to have Ellen read off the Safe Harbor statements so.
Ellen West – IR
I’ll quickly cover the Safe Harbor. Some of the statements we make today may be considered forward-looking including statements regarding Google’s future investments, our long-term growth and innovation, the expected performances of our businesses and our expected level of CapEx. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date today and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results.
Stephen Ju – Analyst, Credit Suisse
I am joined on the stage by Neal Mohan who is the Vice President of Display and Video Advertising. So thanks for joining us Neal and welcome.
Neal Mohan – VP, Display and Video Advertising
Thanks for having me.
Stephen Ju – Analyst, Credit Suisse
Great. So I don’t think investors are as familiar with you. I think the industry players are familiar with you, but I don’t think they are as familiar with you. But I think of you as the guy who built the entire display stack at Google. But will you talk a little bit more about your background as well as at DoubleClick and what do you do on a day-to-day basis?
Neal Mohan: Sure. So I’ll do that fairly quickly. So my name is Neal Mohan, I am responsible for what at Google we call display and video advertising products, which are generally speaking those products out of our core search ads set of products, so outside of the ads that we run on google.com. And so my portfolio includes advertising on YouTube across the Google display network, our AdSense sites and of course our DoubleClick platform, our programmatic solutions both for the sell side, the publishing side as well as for the buy side, the advertiser and agency side.
I came to Google when we sold DoubleClick to Google about nearly coming up on seven years ago now, with really as Stephen said the purpose of building out a display and video advertising business and capability for the company which is what I have been responsible for and leading over the course of the last several years.
Stephen Ju: Got you, so seven years on now, it’s a lot of water under the bridge now. But what do you think were the most crucial sort of product developments for Google in that meantime? And where do you think you still have a lot of work to do?
Neal Mohan: Yes I mean I think that when I started — when we at Google really started sort of growing the display and video business, it was nascent – AdSense which is kind of the kernel of our display business was around. We were working with publisher websites but putting together I think sort of the deep relationships and customer expertise that we had on the DoubleClick side of the business with sort of Google technology and the scale as represented by AdSense and AdWords into kind of a unified offering that works for 2 million plus Web publishers, app developers from the smallest sort of blogs and app developers to multi-media sort of publishing conglomerates on one end and then having a solution that caters to the smallest mom and pop advertisers via our AdWords on display offering to the largest agency holding companies via our DoubleClick suite on the high-end.
Having that sort of comprehensive complete solution, I think has been our largest accomplishment and throughout that process we’ve remained very focused on one thing, which is what do our customers need, both on the buy side and the sell side, how can we deliver to them a comprehensive solution across display, video, mobile, search et cetera. And that’s what we’ve been focused on. And so that’s been I think sort of the kernel or sort of the key ingredients of our success over the course of the last seven years.
In terms of kind of new opportunities, I think one of the areas that I am particularly interested in and that we’re very focused on is really cracking the brand advertising nut for digital. And so if you think about sort of the overall sort of display or overall advertising pie globally there’s estimates between $600 billion to $800 billion, digital predominantly has addressed about one-half of that which is the direct response portion of the pie. And so the opportunity before all of us is that other half of the pie which is brand advertising, predominantly spends on television today, but that represents a huge opportunity not just for Google but for all of our publisher and advertiser and agency partners, and so that remains something that I am extremely excited about. We’re obviously very focused on that with properties like YouTube, our programmatic buying solutions et cetera. And I think that’s where you’ll see a lot of product innovation in the years ahead.
Stephen Ju: Got you, when you bring up YouTube and brand advertising, I think we asked Nikesh this on an earnings conference call several quarters ago. And especially as it pertains to YouTube and brand advertising, safety as well as context, are two hugely important factors for brand advertisers. So it seems like given that given Google’s core technology competencies and I think of Google as those were the king of contextual advertising, I mean there remains a large opportunity to do the same for YouTube as well. And so you can signal to your advertisers, and say hey this is a safe place for you to be placing your ad dollars. So where are you on that sort of product initiative right now? How are you signaling to advertisers, yes you can spend your money here?
Neal Mohan: Yes, so the first thing that I will say is that, when we think about things like making sure that digital is a safe and kind of productive place for brand advertisers to spend money. We don’t think about it just in terms of how do we solve that problem for YouTube, we want to solve that problem for the entire ecosystem. Like I said we work with 2 million plus publishers who also are great places for brand advertising in addition to YouTube. And so we approach it as an industry-wide system-wide sort of problem and it’s an area in that we’ve investing in very heavily. Obviously, Google has a deep heritage here, given our early days in terms of sort of weeding out fraud on the AdWords side, click fraud et cetera, we want to extend those capabilities to things like impression and view fraud, which is a challenge in the display and video space. comScore had a recent study I think that said that about half the ads on the Internet are never actually seen by human being. With stuff like that nothing else matters. And so it’s been an area of aggressive investment for us to solve that problem not just for Google but for the entire working with partners across the entire industry.
And so couple of things there. We acquired a company called Spider.io a few months ago that has deep expertise in impression and view spam. We’re building those capabilities into our entire stack. And the idea there is ensuring that all of our inventory, YouTube the inventory available on our Ad Exchange et cetera, is as clean and as fraud free as possible, but just as importantly giving tools to our buyers to make sure that that’s the case not just for our inventory but for all the inventory that they’re buying across the Internet and the app ecosystem. So that’s what I would say kind of on the sort of safety and fraud side of things.
And in terms of viewability, we’ve been again investing very heavily there working with industry bodies like the IAV to come up with viewability standards for display and video. We have a technology called Active View, which allows brands to be assured that a human being actually is capable of seeing the advertiser that they’re running. It sounds kind of crazy, but that is the fundamental problem that still needs to be solved in digital and we have a technological capability that allows us to do that. In fact, we’ve rolled that out across all of our media buying networks where we will only charge advertisers when the ads are actually seen by a human being and we encourage the entire industry to move to that type of a standard, we think it’s good for the overall ecosystem for publishers, advertisers and agencies. And so, that’s how we’re looking to address the problem systematically not just on our own properties like YouTube.
Stephen Ju: Got it, now that brings up an interesting question attracting sort of the TV ad budgets to come online. So that’s been an exciting theme that everybody is chasing after and you’re seeing Yahoo! recently as well as AOL positioning themselves to capture additional share of those dollars. But this is an industry that’s been doing things the way they’ve been doing it for close to 50 years now. Right so what can Google do to accelerate sort of I guess the share gain for online and make it easier for advertisers to start?
Neal Mohan: Yes, I mean I think that to answer that question, you really have to again think back to sort of what the true sort of first principles and if you think about it brand advertisers really only care about three things. They care about, whether they’re actually reaching the right audience in the right context et cetera and so they are everything that I talked about fighting ad fraud, ensuring that ads are actually viewable by human beings on desktop, mobile, all kinds of devices. That’s table stakes and we need to deliver that as an industry, obviously Google’s taking a leadership position and making that happen across YouTube and other properties. That’s kind of the first step.
But then, once the brand advertisers are assured that they can reach the audience that they’re looking to reach, we need to give them the tools to actually engaging that audience. And so one of the great things about digital of course is that, we have a slew of capabilities there that you may or may not have in sort of linear television. In terms of making the creative really something that works for an audience and so an example of that is our TrueView format, which for those of you that aren’t familiar is the skippable video format that you see on advertising that runs on YouTube. And the idea there is, can we align advertiser and agency goals with consumer goals which is users if they’re not interested in the ad can skip them, they don’t have to watch them. And advertisers don’t have to pay, if users actually skip those ads. And so it creates sort of this kind of sort of positive feedback cycle where advertisers are very investing in building sort of beautiful creative, engaging creative, and that actually works for the consumers. And so a lot of the sort of great sort of viral video campaigns that you’ve seen have been campaigns that have been built around this orientation of user skip the ad it doesn’t matter, so let’s create something that’s truly engaging, funny, makes an emotional connection with users et cetera.
And so we’re investing very heavily there in terms of building out those capabilities for creative agencies, media agencies. We have YouTube Brand Labs where we literally will bring in creative agencies to help them with concepts of how do you actually get consumers hooked during the first five seconds of an ad so that they don’t actually skip when they can and those types of concepts. We are also investing in terms of making it very easy for them to deploy those creatives by making it very easy to buy allowing them to buy that inventory problematically which I think many of you know is the means by which many large advertisers and agencies would like to deploy all of their digital media going forward.
And then the final thing that brands care about is not only did I reach actual, the right audience was I looking for, did I engage that audience but how do I actually truly measure the efficacy of these campaigns? And if I were to articulate in a nutshell, the biggest problem that needs to get solved in digital in terms of attracting brand dollars it’s this third one, which is around measurement. And the analogy that I like to use is that digital works for direct response advertisers because they can measure it, impressions, clicks, conversions it’s all right there, they can make the math work seamlessly and that’s the reason why it’s such a powerful medium for direct response advertising. But what if we could actually invent or deliver sort of that click if you will for brand advertising, giving brand advertisers that clear sort of real-time signal into the fact that their brand campaigns are actually working the same way that DR campaigns do for performance advertisers.