Month: July 2021

“We wanted to put accountability to the business outcomes at the center of our model,” said Koenigsberg, who is the son of Horizon Media president, CEO and founder Bill Koenigsberg. “We feel rooting our compensation in business outcomes crucial to our clients’ success is less about gimmicks and more about shared culture and identifying the capabilities and incentives we can draw upon to create those outcomes.”

John Koenigsberg said the models for each of Big’s clients varies. In this case, the deal involved setting multiple KPIs around agreed-upon sales objectives and creating a sliding scale of comp for the agency. At 80 percent of the KPI reached, the agency’s fee kicks in, but is capped at 120 percent. “It gives us the opportunity to overdeliver,” said Koenigsberg, who did not provide exact figures as examples. “In the spirit of reciprocity, Windmill wants us to make money too.”

“It’s going really well at this point,” said Mike Mayer, co-founder of New York-based Windmill. Though he declined to share actual sales numbers or the details of the financial arrangement with Big and Blue Hour, he did say “we are selling fast and beating our expectations.”

Using Horizon Media’s buying clout, Big sought out effective but cost-efficient media (including unusual out-of-home media placements in New York City laundromats and bus wraps on the Hampton Jitney, as well as paid and organic social, digital video and email) while Blue Hour conceived of all the creative work. Some digital elements launched in May but the OOH only kicked in after the July 4th weekend. The campaign’s overall media spend was about $1 million, said a Horizon representative.

Mayer added that with Big and Blue Hour handling all marketing elements of the startup, he was able to focus on the customer side of launching the business. “That’s really rare for a founder to be able to do — I felt like we’ve been in good hands since inception,” he said.

“It’s not just the better performance, it’s always moving on a better path than your competitors,” said Adam Heimlich, CEO of Chalice, a one-year-old firm that recently received an undisclosed amount in funding through a new venture capital unit of indie programmatic ad giant The Trade Desk. Rather than relying on generic algorithmic models designed to satisfy broad advertiser goals — or to favor firms that created them such as Google and Facebook — he said advertisers are asking for systems that give programmatic platforms bidding “instructions that are unique.” For instance, he said, a retailer with data that helps predict the lifetime value of a customer might want to distinguish between those sorts of buyers and a one-time purchaser to target ad creative and place bids accordingly.

Sophistication and growth

In the earlier days of custom algorithms just a few years ago, the products developed were “relatively crude and hard to use” compared to tech created today, said Heimlich. Exponentially faster and cheaper data ingestion, storage and processing power enabled through cloud computing is helping produce more sophisticated tools that can take advantage of data in new ways, he said. 

Companies like Paris-based Scibids and WPP-owned Xaxis also compete in the evolving arena of custom advertising algorithm suppliers. Xaxis in 2018 began shifting its proprietary artificial intelligence platform Copilot to enable more customized tech refined to meet specific advertiser goals, said Jacob Grabczewski, head of product for Copilot at Xaxis.

Grabczewski said custom algorithms have accounted for 20% of digital ad activity optimized by the Copilot system thus far in 2021, compared to 15% last year. The company has built programmatic ad models such as one for a furniture retailer optimized to reach people predicted to make high-value purchases, and another for an online bank that wanted to reach people who were likely to make high-value initial deposits. 

“The adoption of customized algorithms is typically a process,” said Grabczewski. “We see marketers test the waters with a new data integration to inform optimization, such as in-store visit, or add a level of complexity to a more standard goal, like calculating the return on ad spend.”

Concluded Heimlich, “Our take is there are many different ways to build ad algorithms, and advertisers should think of the landscape as a set of tools for different jobs.”