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Joe Zawadzki Talks About the Birth of his Career and Foray into Programmatic

April 7, 2017 — by Lauren Fritsky

Joe Zawadzki has been at the game for almost 20 years.

After starting his career as a financial analyst building real estate valuation models, he launched his very first start-up— a suite of apps for online shopping—in 1999. In his next venture, Poindexter, he found his wheelhouse of applying technology to advertising. The rest is history.

Zawadzki spoke with Gartner analyst Martin Kihn about his career trajectory and his presence during the pivotal moments in the evolution of programmatic. A portion of this interview is included below. To read the full discussion, visit Kihn’s blog here.

WHEN DID YOUR AD TECH STORY START?

It was around 2000 or so. We were doing clustering algorithms for personalization, using our tech to decide what to show people when they navigated a site. The purpose was to improve conversion on the site. It was a natural extension then to wonder, you know, how do I get better prospects onto my site in the first place. The obvious way to do that was to do an analysis of the best customers, what they looked like. We had access to B.I. and a lot of insights around [existing] customers. So we could potentially do a lot. The problem was the media buying process itself was broken.

HOW WAS MEDIA BUYING BROKEN?

At the time, it was basically you go to the top twenty retail publishers, you buy space on all of them. Sort them by click-through rates. And, you know, God will figure out the rest. We had these strategic accounts, including AOL, American Express and Delta Air Lines. They had these great insights and as it trickled through the value stream of media, it just got watered down to age and income. You’d take that and bounce it against the publishers and get an index. Measure engagement with a banner using clicks. I thought: This can’t possibly be the best answer!

WHAT DID YOU DO?

Well, we launched a passback network. [Note: “Passbacks” are ad impressions that do not get a qualified bid, i.e., remnant inventory.] We would get an impression offered to us by a publisher and we would score it in real time and pass back what we didn’t want. We did about 85-90% passbacks on an ad by ad basis. There was a big discrepancy for redirects [i.e., data leakage]. Basically, we lost 2% of the traffic for each hop along the passback chain. What that meant was the publisher might sell for $3 CPM and keep 5%, passing back 95%, say. That rejected stuff would drop back into the system as a house ad usually at about 25-50 cents [CPM].

It was basically a terrible system — very inefficient, obviously. And it didn’t scale. But we represented extremely valuable marketers, sophisticated and demanding with big budgets and quantitative goals they could commit to. We basically forced publishers to do what we wanted from a business model, workflow, and technical implementation standpoint. Which worked as well as forcing people to do things generally does.

At this point I’m wondering how can we bring this real-time idea to the publisher landscape. Basically, how can we help advertisers buy the wheat and not the chaff. Poindexter was a buy-side solution. And it became obvious to me that to do this [real-time impression valuation] thing at scale we would have to fix the publisher problem.

We had this dynamic advertiser performance solution already. And I had the idea for POE for Publishers [Note: Predictive Optimization Engine, the core of what would become [x+1]’s ad tech platform]. It was a product for publishers. We were selling into the DoubleClick Sonar network, which was the performance media arm of DoubleClick. At this point DoubleClick decided to sell off its media business to L90 [later Max Worldwide], and DoubleClick itself was pure tech — an ad server.

Later to be sold to Google, of course. At this point, the story gets complicated. (For a more detailed telling, see Mike Smith’s fascinating 2014 book Targeted.) So here is Zawadzki, CEO of Poindexter/[x+1], and he’s working with a refugee from DoubleClick’s media business, an ace sales guy named Mike Walrath. It is now 2005.

At this point, the size of the opportunity got better. We realized we could mash together two media offerings around our ad server. Walrath and I were spending hours and hours each day banging out this idea. We were basically going to adapt the ad server so it could pick impressions that performed the best. We wanted to automate a process that was manual.

And just as we’re getting closer to making it work, L90 gets acquired by Excite. Now Excite already had its own ad server, so it didn’t need this thing.

BUT YOU DIDN’T GIVE UP ON THE IDEA?

Mike and I still saw this as a real opportunity and we were like, Why not do it anyway? Walrath left Max Worldwide. He was doing go-to-market strategy on the publisher side for [his own start-up] Right Media. We were building the core tech underneath. We spent about nine months building this idea out, working with Brian O’Kelley who was Senior Director of SmartServe, which was our own ad server.

This was on 23rd Street and Fifth Avenue. We were building the product. We had all of the joint venture and entity formation agreements ready to sign, and I went into my board. They were the investors and I was this crazy founder guy. I didn’t have the greatest relationship, you know. And the board shot it down. They said no.

Read the rest here.