Marketecture: Get Smart. Fast.
00:08:39 · Ari Paparo, Eric Franchi, Tim Rowe
[00:08:39] S1: Yeah. I kinda think that a DSP, like, a a Trade Desk or MediaMath type DSP can buy from Vistar, but probably... You know, this has always been a very small amount of volume. [00:08:49] S2: Yeah. Yeah. I mean, they... All of the DSPs at this point have, like, the omnichannel capabilities. And then to your point, I think it's, you know, very de minimis part of this. [00:08:58] S1: Okay. Cool. I'm really interested in the unit economics. I mentioned this earlier. Because if you think about an individual screen, we're not talking about Times Square here. We're talking about a Wawa that has an individual screen above the cash register. Right? The return on investment of that screen is largely a function of the cost of the screen, physical... How much does it cost to buy the screen, the installation cost because someone has to go in there, turn it on, screw it in, the bandwidth to receive the content and the ads, the mixture of fixed and variable costs. Right? [00:09:33] S3: And all [00:09:33] S1: those... And the maintenance, it breaks. It goes down. Someone has to come out and check it out. And all of those things, although they're kinda boring, they're outside of, like, us fancy programmatic speed of light people. Right? Those are things that a telecom can do. They have people in vans who go to places. Right? They go and buy, you know, acres of digital screens, not a couple screens. So how much do we think that was a big factor here?
00:09:33 · Ari Paparo, Tim Rowe
[00:09:33] S1: those... And the maintenance, it breaks. It goes down. Someone has to come out and check it out. And all of those things, although they're kinda boring, they're outside of, like, us fancy programmatic speed of light people. Right? Those are things that a telecom can do. They have people in vans who go to places. Right? They go and buy, you know, acres of digital screens, not a couple screens. So how much do we think that was a big factor here? [00:10:00] S3: It seems like... And I don't know necessarily on the hardware side, but I think that I think that that's maybe what's most interesting about the deal, at least from my perspective, is how can T Mobile unlock synergies between the things that they were already doing and what Vistar does? Right? They were going out and having to source their own hardware, build an ad sales team, build this technology. Now they own it, and it's the biggest piece of the pie. So I think that it it creates that moat for them, but then also obviously they can unlock the the unit economics that you just described. [00:10:31] S1: They also have team... 5,000 or so T Mobile stores. They can promote their products. They're one of the largest advertisers in The US. Yeah.
00:10:31 · Ari Paparo, Eric Franchi
[00:10:31] S1: They also have team... 5,000 or so T Mobile stores. They can promote their products. They're one of the largest advertisers in The US. Yeah. [00:10:40] S2: North of 1,000,000,000 in ad spend. They own T Mobile Arena. So there's a lot of interesting assets here. Just to come back around to this unit economics thing, that was part of the thesis behind acquiring Octopus, which is, you know, Octopus had to buy these screens. Though when we were contemplating the investment at Aperium, it was the first time for us, like looking at something where we had to like actually factor in hardware costs, shipping, all that stuff. That was a gating factor for them growing. T Mobile, to your point, like oodles of screens. So I have no idea about this particular transaction with Vistar, but it makes a lot of sense. Because if they've got the unit economics down on the screens, and all of a sudden they've got most of the market demand for ads, you got yourself a nice biz in a box right there. [00:11:26] S1: Eric, can you give us any color on this? I don't wanna give away any confidential information. But, like, size of a breadbox, how much does it cost to get a screen in an Uber or to get a screen in a store? Or maybe, Tim, you have the numbers here. Like, what... What's the hardware cost? Is it a $100 or $250? Or or what what would... How fast would that pay back?
00:11:26 · Ari Paparo, Eric Franchi
[00:11:26] S1: Eric, can you give us any color on this? I don't wanna give away any confidential information. But, like, size of a breadbox, how much does it cost to get a screen in an Uber or to get a screen in a store? Or maybe, Tim, you have the numbers here. Like, what... What's the hardware cost? Is it a $100 or $250? Or or what what would... How fast would that pay back? [00:11:46] S2: No. The screens... Let me go first on the back of the Uber Okay. Sure. Because I I don't have less knowledge on on the in store stuff. At least previously and likely to date, these are very cheap tablets. Right. So they're not buying like They're Androids, generic Androids. Exactly, exactly. So I would say it's certainly double digits in terms of the cost. And then there's no installation cost. You basically send it to the driver who's at $10.99. You say, hey, strap this to the back of the headrests and you'll start making money. [00:12:18] S1: So let's say including including shipping, you know, call it $75 to enable an Uber? [00:12:24] S2: Even that feels high. Yeah. [00:12:26] S1: Really? Okay. [00:12:26] S2: Yeah. I just think these are these are very low cost devices to him as an expert.
00:12:26 · Eric Franchi, Ari Paparo, Tim Rowe
[00:12:26] S2: Yeah. I just think these are these are very low cost devices to him as an expert. [00:12:30] S1: And then you've got... You have to pay for bandwidth. Right? So per it's not a lot, and it's only data, you do a bulk deal. But still, it's gotta be, like, $10.20 dollars a month or something like that. So you need to generate enough revenue to, after the revenue split, make money on that whole thing. So that... That's a that's a decent burden in terms of payback. Tim, those numbers sound right to you, or or how does it differ in, like, a checkout aisle? [00:12:54] S3: Yeah. I I think that that sounds in line for for a tablet in the back of a rideshare. And then when you think about a screen, right, maybe close to checkout or in a bar or restaurant or something like that, it's gonna be closer to that thousand dollar range. Really depends on the operator, say 5 to $700 to get a screen hung with hardware online plugged in ready to, ready to receive advertising. And then it's based on a rev share with whoever's property it's on. And that payback period can be a lot longer especially if the publisher doesn't have a sales strategy to support it. So I think there's a lot of inventory out there that's not getting filled. So it could be interesting to see how maybe we, we purge some of that out. [00:13:35] S1: So we've talked a lot about the unit economics. Let's talk about the upside. How can T Mobile make this business bigger and better using their ad sales and their data? And this is where everyone on Twitter seems to have an opinion. Anyone wanna wanna tackle it?
00:13:35 · Ari Paparo, Tim Rowe
[00:13:35] S1: So we've talked a lot about the unit economics. Let's talk about the upside. How can T Mobile make this business bigger and better using their ad sales and their data? And this is where everyone on Twitter seems to have an opinion. Anyone wanna wanna tackle it? [00:13:51] S3: It looks like they're gonna lean in on the ability to measure app engagement. That's where it looks like it could be really interesting from a bottom funnel outcome standpoint is app engagement. Mobile delivery could be interesting, I think. Where I think T Mobile wins the most is by really putting their name on digital out of home. It was some of the feedback that we talked about in that session last year, which was... I don't wanna speak for T Mobile here, but do we wanna disassociate from digital out of home as a category? How do we create ownership of this idea? T Mobile is so much bigger than whatever digital out of home might mean. So I think that this play kinda solidifies what is digital out of home. I don't know, but call T Mobile. [00:14:32] S1: So I'm sorry. But what do you mean by app engagement? [00:14:35] S3: So it... And I'm sorry. Here, I didn't do enough prep on this. You wanna cut me out on it. You you could totally cut me out. [00:14:41] S1: No. We're leaving it. [00:14:42] S3: No. We're leaving it. So I was looking at the T Mobile website earlier in in leading up to this, and that seems to be on the ad sales page. I can pull it up. But the