Web3 Ad Markets Explained | Antonio García Martínez

Transcript

this thing called MTA if you want multi-touch attribution what that means is right if I hear about a thing on your podcast I Google search for the thing but I don't convert and then I see a Twitter ad and I finally convert guess what all those three touch points contributed to that user converting it's not the case that Twitter alone or the Google search alone contributes that everybody frankly should get a share of that upside of whatever that is and web 2 it would have been impossible to engineer literally there's no way to do it hey everyone before we get into today's episode I want to take a second to acknowledge vouch with over 4 000 startups insured from napkin sketch ideas to large IPOs vouch is the insurer of choice for crypto companies including l1s l2s Dows protocols and a whole lot

more they're exclusive coverages are enhanced for crypto covering everything from regulatory defense to Smart contract vulnerabilities with vouch you're not just ensuring your startup you are investing in peace of mind so you can keep on building you'll hear more about vouch later in the show all right everyone welcome back to Empire we have Antonio Garcia Martinez uh whole bunch of it was done a whole bunch of things on the show which I will describe in a second but Antonio man welcome uh welcome to Empire good to have you here do you thanks uh thanks for having me looking forward to this yeah I was thinking about uh your your bio leading into this which is why I kind of like jumbled over that first part but uh I was like did I describe him as a journalist I describe him as like a Founder do I describe as like the

first PM for ad targeting at Facebook do I describe him but I think the way I want to describe it is like I don't know I think you've written the best ever book on ad Tech which was chaos monkeys and I remember reading it uh when we launched blockworks 2017 moving into 2018 like trying to figure out the ad market and how it really worked and there really weren't many books out there so I remember reading chaos monkeys and it helped a lot so you know it's funny you're not the only person to say that and I often say it's easy to be superlative when you have no competition so yes it's both the best and the only but kind of yeah written in the past 10 years they're coming so I wanted to have you on because um I would like to make this like the definitive episode on when

someone is trying to figure out like what the ad markets could look like in crypto I I'd like to make this like the episode that folks sent to people and the reason that I want to do this now is uh the last episode we just did was on friendtech and I'm sure you've seen front Tech and I'm sure you've seen like I think kind of the social token narratives coming back which also as that happens you start to get like the web 3 social narrative comes back and that brings into question the business model of web3 social right and obviously the business model of web 2 is advertising and so I want to I think the most helpful place to start is with your background actually right you started this ad tech company you sold it to Twitter you then joined Facebook uh became the first product manager for

like the Facebook ad targeting platform so why don't we start there if you could just share that story and then we can move into like how web 2 ads work and then we can move into web3 sure yeah so um in the midst in the midst of ancient history in 2010 um just down the street from where I currently am in uh San Francisco Soma uh District I had a YC company in 2010 it was It was kind of focused on small businesses and AD tech and as you said yeah it it wasn't what was then used to be politely called an aqua hire which what it meant was the company was basically acquiring the you know the brain power of the actual employees maybe there's a small premium but basically it was just like a juicy job offer and you could claim you sold your

company um not usually a huge success to be honest uh which agrock wasn't but um it was interesting product and as you said I landed um in Facebook in like early 2011 still a year away from the IPO and still when Facebook's ad system frankly didn't work uh one of the more shocking things I did when I got to Facebook it's a scene in my Memoir about it chaos monkeys I go into the dashboards to look at what's called CPM so CPM for those who want to know about ads cost per Mill Mill a fancy Italian or Latin word I'm not sure why attic is using it but basically the cost per thousand at Impressions it's basically the cost per square foot of web inventory and it's how every website from Facebook to the New York Times basically quantifies what it's worth when you load the page and it shows you

some form of sponsored content how much how much does the cash register rate right and so I'd go to the dashboards and the cpms were something like 17 cents which is very low comparable to the ads that you'd see on like blogs at the time this thing called AdSense um to give you a figure of Merit cpms on Instagram's new news feed which are very successful ads are more like eight nine ten dollars so Facebook's monetization has basically increased two orders of magnitude in the past 10 plus years and so obviously the ad system's got a lot better but the time it basically didn't work and and I'd like to claim that like Merit got me there was basically happenstance that had me land um you know sketching out the targeting roadmap for Facebook in 2011. so why didn't the ads work um well a they were very small um they

were not new there were no news feed ads at the time there were these tiny little postage damn things on the right hand side that were basically really crappy uh the targeting didn't work um basically you would Target likes and interests which you can still do inside Facebook and basically with the page likes if you had liked BMW you would be part of the PM the BMW you know targeting group the first product we shipped ooh big innovation we rolled you into a cars Topic in which all the cars Pages were all into that also didn't work as it turns out and uh this is one of the sort of misconceptions about how Facebook monetizes your user data at least as regards what's on Facebook isn't that helpful to actually Target ads uh zuck's definitely not listening to your microphone I know that's the rumor on level die um yeah

um yes Zach if you're listening the reality is that you rarely say anything on Facebook or even in the ambient air that would be heavily targetable like what when do I say I'm traveling to Boston uh next week and want to take it less than 600 right which would be targetable but it almost never happens and so uh what we realized at Facebook is that in order to actually do do proper and there's a bunch of things that happen right like the ads formats got better and news feed got better there was video ads Etc but part of it is we needed outside data outside of Facebook the fact that you looked at a 400 backpack at REI but didn't buy it is actually a juicy piece of targeting data and it turns out if we show you an ad for that for that bag the click-through

rate the CTR ad Tech is all about acronyms the CTR shoots up from 0.5 to 4 right and suddenly the ad kind of works and the cpms go up by a lot and so we discovered we had to do that and so the chaos monkeys opens in the scene with me pitching Zuck saying hey like we have to link to outside data to enable some of this stuff to make it work and you know they've built a lot of stuff since since 2011 but that's part of how how the Facebook ad system started working so my understanding of uh the way that Facebook both actually Facebook and Google the kind of like hack the key to getting this outside data was sign in with Facebook right I remember like yeah so tell me so what so what how did you go about getting that outside data

am I right or wrong there um initially no so again in that scene I hate to be the sort of writer citing their own words it's relevant to the story in in that scene with Zuck like the one nobody really understand what we were doing I was I was the one-eyed man in the land of the blind to be honest like I wasn't the expert here but I knew a little bit about that because I my one startup experience before Facebook other than my own company was a Natick starter the one thing Zuck didn't let us do was touch what was then called platform I hit the like button so the the the real estate that Facebook had now they do use it for ad starting by the way their terms of service have changed but at the time they're very sensitive about Facebook Chrome stuff being perceived as

monetization so what actually happens and again this is part of the attic Machinery you don't see when you go to a website uh what are called pixels like literally it's actually not literally pixels anymore but a piece of front-end code actually runs that syncs your browser session with outside parties that you're not looking at including Facebook um if you want to see it there's this extension I have no affiliation with it but called ghostery and ghost ery you can use it and what it basically shows you is all the pixels or all the ID syncs firing on the website you're looking at and where they're going to and it lets you turn them off by the way if you want to and so install it go to the New York Times which gives Facebook a lot of grief about how they make money and you'll see like 30 odd pixels firing

to everybody including Facebook by the way well and why are they doing this why does why do they pass that data over to Facebook this is one of the key parts of AD Tech that people don't understand they're all fixated on like microphones and [ __ ] the the key thing one of the key things underpinning what my current company does and what I think what's going to happen in web 3 we can get to that is identity what do I mean by identity why for example is Apple's privacy maneuver is a big deal and why is it hurting Facebook so much which it is right for you know what is the nature of advertising all advertising whether it be a billboard or whether it be an ad that one day runs inside a web 3 game right what it's about is you have some initial touch point the

the funnel is the metaphor that most marketers use and you can imagine it being white on top and obviously very narrow at the bottom top of funnel if you want to use the lingo things happen like ad Impressions you browsing your Twitter feed checking out that Discord post very initial touch points in this funnel maybe you click and engage with that content you land on the advertiser site the game developer the decks whatever maybe you engage with the content maybe you do maybe you sign in with your wallet or you install the app you're now mid funnel right then you start using the app and you start monetizing you're making money now you're down funnel right the key challenge of much of marketing is tying together the top of funnel event that Facebook ad campaign you ran or that Twitter influencer that plugged you to that end of funnel

monetization event whether that's happening on chain or off attribution that that is literally the attribution problem which I know sounds very wonky but at the end of the day it's basically answering the question where did users come from how did they get here and how long did they stick around and how much money they spend it literally means that right and a lot of what Facebook also had to build in addition to the targeting is the measurement side of it it's like okay how well did it perform Facebook had no idea if you clicked on a Facebook ad in 2011 had no idea what you were doing on other websites and how well the ads were performing literally zero no clue whatsoever and so one thing that took 10 years to develop in web 2 and we're hoping obviously that doesn't take that long in web3 is what's called

real attribution real measurement like okay I I gave I gave Facebook 30 000 last month what was the actual resulting Revenue right and part of the reason not to show my bags here a little bit too much but you know the company that I'm currently working at in whose offices I'm in um that's what they're trying to answer right like a year ago I got crypto pilled and I started talking to crypto companies I'm like I don't understand how do you not know your what's called ltv's lifetime value like the total value that the user generates inside your app how do you not know what's called your CAC your customer acquisition costs how much did I pay for this user to come in how do you not know your retention I.E how long do the user stick around these are basic basic growth metrics that are just like the

most basic thing in the world that just basically didn't exist in web3 um a year ago and I have a funny not to interrupt you too much there but like I have a funny story there which is um you know one of blockworks makes money in a couple different ways but one of the ways that we make money is sponsorships and ads right so someone like I don't know Ave or uniswap or coinbase or whoever it may be might will run ads and sponsorships with us and it was really frustrating in the early days and even I'm I'm just starting to see a shift in the last like year that people are getting better about it but then the first five years is really frustrating because someone might spend 250k on an ad campaign with us and then we'd go back to them and we want to

create case studies we want to talk about it with other customers and we'd be like hey how was the 250k that you spent I'm assuming you know and they're like oh well we have no idea we we think it went well because we saw we you know we saw some we talked to some people and they heard about us through your thing but like tracking no we have no idea so I know so we'll talk about spindle in a little bit but wait so answer me that question of like why how did Facebook go from it's it's all just Facebook data you like a cars page so we're going to show you a Toyota to hey you are now browsing on like I don't know you click this ad for like an office chair and then you went to the site and then you bounced off of it but then you came back

to it and and then that gets attributed to the ad how did they get all that off platform data so it's a great question so broadly speaking there's two sides to that problem one is the targeting problem uh right and then and and so and Facebook data does get used and I'll get into how it does get used in a second and it's in ways that most users don't don't realize so again there's two aspects to it targeting an attribution on the targeting side how does it work there's this thing called if you really want to read about it called custom audiences Twitter has a version called tailored audience and everyone basically copied Facebook once once the product actually shipped what that means is getting citing REI for some reason which is down the street as an example I'm a I'm a member I'm a loyalty card member

so they know me pretty well um if REI knows that you're part of the the whales to use nft language or gaming language that spent ten thousand dollars or more say last year here's a thousand users what they worry about with the actual like sophisticated marker cares about is how do I reach my users right like they if they're smart and they have the correct data info which almost everybody does in web 2 we're getting there in web3 they know how to reach them along the various channels the question is how well can I reach them if I have my thousand whales can I reach 700 of them on Facebook if I literally give you their email addresses Facebook how many of those can you can you show an ad right and at least when this custom audiences product first launched this match rate as it's known was

something like 60 or 70 which is way higher than potentially Google or something else and so the the you and I I'm the I'm the advertiser you're the ad system for the publisher and me saying I want to reach these thousand people and you saying you got it bro we can reach 60 of them that's like thumbs up great that means that we can share an identifier and Target that set of people okay what's the second half of that it's almost like a yin yang thing to it okay you show the ad to them and maybe other people now I want to measure and see you know how how well do those people monetize does it just if I paid you a thousand dollars to bring in those 600 people that they spend more than a thousand dollars and if so is it a positive row as return on Advertising

spend basically the ROI that every marketer knows in their head right that's the measurement side of it how does that work at a basic level well if you're buying on the REI app is what's called an attribution SDK basically uh just Snippets of code in which REI is basically saying okay this e-commerce event happened Branch metrics or apps flyer or Facebook I'm just mentioning attribution platforms that exist and and they basically take ingest those events they run What's called the attribution compute they figured out where the user came from and they say okay they tally up all that money and they say it turns out you generated two thousand dollars and revenue on a thousand dollars of AD spend that is you know a two extra ton on Advertising spend you made a hundred you made 100 or sorry whatever I said a thousand dollars and a thousand dollars

you spent successful at campaign so there's the measurement component as well right and those two together targeting leads to ad campaigns which get measured which refines the targeting which leads to more ad campaigns and there's this like flywheel that just generates billions of dollars in web 2 and doesn't quite exist in web 3 yet for a bunch of reasons so what is the so with um okay so part of the part of advertising is just joining a bunch of different disparate data sources and Facebook realized like okay we have to take like Facebook data but then combine it with a bunch of off-platform data sources yeah there has to be a joining thing though there has to be a an identifier to a person and again I know we'll talk about this later in web3 it's probably the wallet I would

assume you would argue in web 2 it's what the email address it's an excellent question it depends what type of advertising you're talking about um it's probably the email in the case of a lot of e-commerce in terms of the like actual Hardware specifics there used there used to be a thing called idfa ID for advertising which is basically the device ID on an Apple device um it's um Aid Android advertising ID in the case of Google you used to have a unique identifier on the device if you've heard a lot about this whole privacy thing that apple is doing and the fight with Facebook what they basically did is get rid of the idfa what that means is again if you're Facebook and I'm the advertiser and we're I'm running an iOS campaign on iPhone We can't agree on the common name

for a user so we can't actually do that tracking from the top of funnel to the bottom of funnel we have to go through apple and I won't get into too much details but Apple kind of fuzzifizes it in in a big way in theory for the sake of privacy which it sort of does on the other hand it is the case they're building their own ad system so there's a certain competitive gamesmanship going on here as well but if you destroy I think we're you know to use database language it's a primary key right like there's a primary key for that user within that medium and that primary key in the case of mobile is basically going away and it also is in the case of web right so cookies right Brave famously obscures a lot of details about the browser doesn't accept cookies Safari is

also dropping it so third-party cookies are basically going away on web as well and so I one of the interesting long-term advantages of web3 and why I think web3 marketing can end up becoming more sophisticated frankly in the web too is you do have a blockchain equivalent of it called the wallet address um which can serve as that that primary key instead so the impact of Apple taking so the impact of Apple asking you to opt in or not opt-in they're basically giving you the ability to remove that primary key that joins everything together yeah correct yes and who gets impacted by that decision and the decision to you know Safari and brave and stuff like that removing removing cookies who is the like most hurt by this um often it's Google and Facebook or the

ad networks it's often The Advertiser um just taking a very I was gonna say The Advertiser right because yeah their tax are higher their customer acquisition cost is higher which by the way they're they're passing the savings on to you yeah so as given that the marketing budget is part of their cost of goods sold if they're marketing costs go up your Costco up yeah everyone thinks it's such a good thing but like the counter to that is that um I don't know it's kind of nice getting ads served to me that like are very relevant as opposed to getting I don't know now on Twitter right now I'm getting served like the most irrelevant ads I'm like what is this thing doing here get out of here I like getting sort of like my nice office chair ads I like looking at those yeah look I mean I love

privacy as much as the next guy and I use incognito mode occasionally to like see stuff in the you know in the browser without being tracked by everybody but like broadly speaking ad tech pay for the internet or paid for the web 2 version of the internet and bad ads actually are not very good user experience and some form of advertising will have to exist and so at least that's how I'm rationalizing to myself um I I do think web3 by the way does open up interesting new monetization avenues that aren't necessarily ads or I think the ads will be a lot more interesting and engaging it won't just be like a little square of like literally like a JPEG that you're kind of like ignoring it could be ads can be defined much more broadly right to me it's a piece of it's a piece of targeted

commercial media that presents some sort of call to action to a user and that could be anything that could be an nft drop that could be a token drop that could be somebody in your Discord saying hey this new deck is amazing right like that's an ad in a sense if they're getting paid on a referral basis or something it's effectively paid media so there's a lot of more interesting ways I think you can create ads in web3 again I don't want to reproduce like the the crappy ads that you see on web too yeah but some but some form of commercial Discovery has to exist or any sort of mediocre system to like survive basically so can you so this is another thing that we think about at block works is like just I mean the state of the ad market right because we're impacted by

it and one thing that we're talking about right now is like website ads like just display ads and if you look at historically display ads have gone the CPM year after year goes down every year the CPM of display ads goes down can you just talk to us about like almost the state of web 2 advertising and like what's happening in that world and like why things are happening in the way the way that they're happening so you mentioned that acronym against CPM so just to remind everybody it's cost per Mill which is cost per thousand wildly confusing right a lot of I mean I've gotten so used to it that like I just see the world that way but yeah it's it's um but yeah again it's the cost per square foot like literally a thousand you load you know you your website gets

served a thousand times how much money did you make did you make three bucks or 13. and cpms depend uh the like more Niche audience that you have typically like the are harder to reach audience the higher CPM so like a block Works podcast where we're reaching like real crypto professionals very high CPM uh CNN's website reaching like I don't know hundreds of millions of people very generic audience two dollar CPM maybe so right and and again getting back to the cost per square foot analogy it's like you're you're kind of like the rich part of town right your cost per square foot a condo in your neighborhood costs a lot more than a condo in CNN's neighborhood right because the real estate's just more expensive because people looking at it the human attention to be blunt is just worth more on your website than CNN

um but how does media get bought and sold so ads there's an interesting historical story here ads used to get sold CPM right in podcasting world I think they largely solar in which you know the publisher does a direct deal with the advertiser say and some old school properties like New York Times probably still have direct sales forces right and they probably still have what are called insertion orders in which they insert an added to the page and stuff which by the way comes from the print World they used to insert things into that I O to the printing the iOS right this is a very old school language so that still works kind of but how many ads and certainly the most performance oriented ads get actually paid for is what's called I'm going to hit you with another acronym CPA right cost per

action and what does that mean instead of paying for the top of funnel auction like splatter New York Times in the news feed or whatever with a million ad Impressions I'm just paying for the thing I want the user to do so if they come in and register and and pay for the paid plan of my app say that is the a I want to drive and I'm I know that that user is going to monetize at an average of say a hundred dollars so I'm willing to pay say 60 to get somebody Google Facebook the media machine to get that user and get there which is great for the advertiser it's not quite risk-free but it's almost risk-free in the sense that like somebody else has to eat that risk like if the ad is poorly targeted or the ad creative sucks or if it

doesn't show up on the mobile app I The Advertiser don't pay for those ad Impressions I only pay pay for the users who came in the door so advertisers love it you might ask well but why why does the advertising Machinery agree to even give you that deal doesn't it suck well no because you get to Arbitrage right the difference between what you're paying the publisher some CPM right and they just want to get paid a CPM versus getting paid that CPA in other words if you can correctly Target the ad if you can make the ad perform really really well it's just a lot of people click on it and a lot of people actually convert and buy the thing you can make a lot of money in that Delta between the 100 or whatever 60 CPA you're getting paid and the one dollar CPM you're paying to

advertisers there's a lot of money there and that's why Facebook has you know whatever 30 or 20 gross margins because the gross margins on that sort of AD business is actually very good if you know how to run the ads and so a lot of the ecosystem has actually moved to more of the CPA world where you're not you know the advertisers doesn't even necessarily know where the ad is running or the specifics of the ad all they know is that yes Facebook or Google brought me 100 new users this month um and so but again that word only exists if you have some way of measuring oh the user came in and did the thing that I wanted to pay for and that user belongs in Facebook so as the as the media models went from CPM to cost per click which was Google for a long time

to cost per install in case of mobile cost per action attribution had to go further and further down the funnel measuring all those events and kind of transmitting it back to the ad Network and saying okay you actually drove this user and so in the web 2 world that took 10 plus years to happen when I started NASDAQ in 2008 Yahoo was still you know remember Yahoo Yahoo ads used to be a big deal and you used to pay 30 cpms for like the banner ad on top of Yahoo autos totally untargeted not tracked very well like not all not a lot of logic there but that's how much you'd have to pay and then by the time that I was like leaving you know Facebook by whatever 2013 2014 you already had the beginnings of some sort of CPA World in which Facebook would only charge you for the Performing

ad and but again the attribution sort of train had to follow all that logic in web3 I think a lot of things are flipped like a lot of things would be just the mirror image of webto and I think one of the things that's weird is all the monetization events we already have an attribution database it's called the blockchain right I mean it's hard to query and it's hard to organize the data and the data infra is very rudimentary by and large but I know who actually bought the cryptocurrency or or bought the nft or went to the nft or did whatever swap on Deck like I I can see the bottom of the funnel better than I can see the top of the funnel right web3 people like you can run a query inside Dune that at least gets you a high level aggregate of what happened on chain even

if you don't know where the hell they came from right and so the attribution challenges and the analytics challenges in web3 are a little bit different than uh maybe ungerving ahead of myself here a little bit but it's very it's it's a little different in web 3 in many ways it's more advanced frankly than it was in web 2 when I when I started web2 yeah why is the ad Tech stat oh so I went to this publisher conference a couple week a couple months ago and uh every sponsor was this like ad tech company I was like how many freaking ad tech companies are there so I looked up ad Tech ecosystem like one of those ecosystem Maps I was like I gotta understand how all these guys sit and it basically it's like you got the advertisers over here the Publishers over here and which and the

Publishers connect to the audience and in between those folks you've got the agencies the media buying desks the dsps the ad exchanges the ad networks uh the horizontal ad networks the vertical ad networks you know the the dmps the media planners the the retargeting folks the the ad servers the various the ssps the dsps platforms the analytics platforms the creative optimization folks the brand safety platforms now why how has this world like this it's an insane world yeah yeah so for those who haven't looked it up there's a thing called the lumescape which was the original one but now the lumescape is a little dated but if you go and you literally see a map of these logos organized by function and it is literally thousands of logos it is this blinding map of the world um yeah no I mean it

it's you know I don't know it's it's it's weird it's it's just it's a very convoluted Rube Goldberg machine in which people just specialize in various parts of it I just feel like this doesn't happen in other markets like when you look at how other markets develop there are typically super disparate companies and then over time Acquisitions happen mergers happen you know economies of scale like the best people just get even stronger it doesn't does it happen in the ad I guess I mean I guess Google has dominated Google dominates it yeah it's not necessarily M A consolidation but there's been just revenue and budget consolidation the the best bulk of the marketing spend still goes through Google and Facebook and all those little boxes like the joke and attack is that like yeah we're the

lifeblood of the internet and yet everybody's broke except Google and Facebook right so all those little boxes they take kind of a cut as the data and the users flow through them but it's often not a particularly juicy cut how many platforms is an ad going through before it hits the audience if you're in like What's called the programmatic stack like that that whole Machinery it's touching at least five or six boxes in that diagram easily yeah at least yeah yeah and by the way a little bit of that is happening in web3 as well we can get into that but I think you can start seeing a little bit of that specialization on the web3 side as well eventually I mean you have to you you just unless you are the Facebook right you just can't build it all you can't vertically integrate the entire thing

right I have a couple more questions on web too then we'll do web three stuff one thing is um why are you so convinced that Instagram is not listening to well first a like there's no value I actually read a wired piece about it that I always just like hit everybody with measmine we'll link that in the show notes yeah also secondly you'd see it I mean in your network Trace you would actually see the equivalent of a voice call going to like the mothership 24 7. you just don't see it right like would totally wedge your phone or it'd be running locally but then like the amount of AI that would have to be happening on your phone you'd see the CPU pinning all the time as Facebook sits there and runs like ml trying to purchase your voice and you've seen either those things and

again leaving all that aside the technical it just doesn't make sense like in this conversation how many things did we say that would have helped us Target you an Instagram ad almost nothing right I told you that I want an office chair price range what color yeah yeah exactly so you just don't okay that's interesting I guess I guess it goes to I guess uh everyone thinks all consumers think that their information that they share about themselves is more important than it really is that yes the chapter on this in chaos monkeys I call the narcissism of privacy not that I'm anti-private like obviously I believe in the privacy and the Fourth Amendment the whole thing but I think a lot of the the disconnect and thinking about it is that people think that like

the thing they'd most hate to have Escape like the conversation with your partner or something is actually the least interesting thing to go conversely said yeah like they don't care about that at all right they care about things like your your Google search record maybe actually they would care about um one place by the way your Facebook data does get used um is what's called look-alike targeting which is kind of one of these under-discovered things what that means is getting back to the REI marketer example of like what is the REI person want again they've got 3000 whales they know how they can talk to my various platforms what they want is like another thousand whales like hey Facebook help me find another thousand people like these people and so what happens is they upload that list of emails they match five or six hundred of them and then you

do what's called audience expansion or look-alike targeting what that means is they use so the fact I don't think we're actually on Facebook our friends on Facebook would say we were and so we we had a lot of contact with each other it's probably the case that we're in the same socioeconomic Stratus and the same Urban sort of consumption lifestyle like it may be the case that Yano is very similar to Antonio if Antonio actually shopped at REI and so that sort of audience expansion thing does use your data frankly but it's less about like what you said in a call and it's more about what is the sort of similarity metric among all the consumers in the United States and that that is valuable yeah Facebook does does monetize that yeah we use that all the time at block works is great oh you look like

targeting on on Facebook or on uh yeah yeah it's great yeah yeah um let's see you got to imagine Zuck uh gotta imagine one of the biggest regrets that Zuck has is not owning a phone huh uh yes yeah that's right um for those who are wondering like what the hell are we talking about um it's been reported at this point but they were building a phone and uh it was when I was there and um the big fear and you know I think Zuck is very strategic in his thinking is at the end of the day seeing from the point of view of Google and apple who are kind of mortal enemies of Facebook Facebook is just like another app in the app store right they don't actually they don't actually own the user and I think that's come to buy them and it's it's true if you control

the hardware layer you control the identity you control how the ad system works and uh potentially yeah that might have been a mistake in retrospect do you think that um so right now our data lives in the cloud do you think that data eventually goes back to living in hardware and in this case it's not like you know big clunky Hardware things but like living on device instead of in the class yeah I mean that's um yeah uh so I um I was at a company attribution company called branchmetrics that's one of the leading attribution companies and the reason why they hired me was not to work on the admission system is to build an ad system and the idea there was to we kind of accidentally discovered it but it was pioneering work we built an ad system that actually lived on device what that

means is like even turn off wireless like search for a thing in the search bar and you'd be serve a search ad because the the matching and and the actual ad unit was actually loaded on your phone and then Apple again you can can read the public pronouncements and read read through the lines there a little bit they're building an on-device version of that ad system supposedly because it's more private which it sort of is the the data doesn't have to leave the cloud that said it's also a better way of targeting in many ways if you actually have all the all the ads matching at Malvern logic and you have all the ads metadata on the phone it actually works better it loads faster and it's just it's a better it's a better ads experience actually so if you're willing to undergrad the complexity of like

pre-loading the ad system pre-optimizing it sending it to the phone having a bunch of ml run locally it's actually a better experience for the user and you can tell the Privacy story and to be blunt you can screw the Facebooks of the world who have a cloud-based ad system so yeah no that's pretty clear that's the way forward for them why do you think Apple hasn't just launched an ad Network oh no they have they have I mean I I briefly worked there now built it I mean they they they're I mean they have a if you go to Apple search ads if you go to your Universal search inside the iPhone you'll see right yeah yeah yeah I've demo I can't believe I'm like demoing an Apple's search experience but um go to uh oh office here we go So I entered taxi thinking would be taxi

apps and there's Taxi Driver 3D is one of the things that showed yeah there's a commercial there they make billions off the thing yeah I did not know that hmm I guess they do in the App Store too you can find yeah yeah um all right let's get to crypto stuff um let's get to the fun stuff so what is the state of like crypto marketing today and just like the ad markets in crypto today I mean if you'd ask me that question a year ago I would say non-existent other than like nft drops and token drops which again is a form of paid user acquisition I think things have improved a little bit between my company and a couple others um you do start having some real measurement and whatever my measurement is somebody tweets a thing they click on the thing they go to the decks they sign

up with a wallet they spend money and you actually track all that together yes you can now actually you have you have basic measurement and you can track like web to add to uh you know Dex user basically yeah yeah you can um yeah and then not only can you do that um one of the interesting things about web free marketing um is this whole fixation with referrals right and what that means is it's kind of like affiliate marketing with like Amazon like I give you a link right because I'm an influencer you go and trade in the decks and generate a thousand dollars in trading fees that goes to the treasury or whatever I get 10 or 15 or whatever of that which is pretty juicy actually if you think about it right like the amount that a given Trader can trade on on the decks and

often be pretty high and so me getting 10 to that spend is actually material and so that referral it's built in a very affiliate model but you often see it in ways that are kind of B2B so for example you can just see this if you go to coin gecko they have they have referral links on their on their site so if you go to GMX for example um the the GMX page and you go to the website page that's actually referral link so coin get actually makes money off of the geometric referral program and other referral programs um you also have aggregator so Quinta for example sends traffic uh Lyra and synthetics and other ones and they make money off that referral program and so you're which by the way it's like totally legit right like it's yeah I mean if someone's upstreaming me and sending users my way

and those users actually monetize right like measurably on chain you should get a cut of that right and it's believe it or not like some things are rudimentary in web 3 but their native thinking is actually quite sophisticated right there was nothing like this there still is nothing like this in web 2 right like the the attribution system on web 2 like if if a user sees a Facebook ad in a Google ad and they come and spend money inside my app I can't pay both Facebook and Google right the system forces you to pay well you can only pay the most recent point of attribution right right in crypto you can actually start to pay out across the whole attribution stack which is actually like this Holy Grail of advertising basically yeah exactly this thing called MTA if you want multi-touch attribution what that means

is right if I hear about a thing on your podcast I Google search for the thing but I don't convert and then I see a Twitter ad and I finally convert guess what all those three touch points contributed to that user converting it's not the case that Twitter alone or the Google search alone contributed to that everybody frankly should get a share of that up side of whatever that is and web 2 it would have been impossible to engineer literally there was no way to do it and web3 it's not that hard at all like we so we have a a referral program that basically takes the attribution like say you shared a link on not to totally put you inside your own podcast but if you were to share a spindle link for summer referral program the users would engage with it go to the thing

you'd get a piece of that action and it could not just be you it could be somebody else as well because our smart contract can pay out to whoever whoever touch points along the way so I think you're going to start seeing a lot more interesting exactly and that's a holy grail of web too right I think you're gonna start seeing a lot more interesting models in monetization in which it's much more fair it's much more transparent to everybody right the user The Advertiser the publisher everybody in which yeah everyone gets a little Kickback for having driven that user action that drove like real value yeah so is it fair to say that the two main um like advertising mechanisms right now in crypto are nfts and nfts and token drops I'd put that in like one bucket and then referrals referral links I mean the other one is questing you

can't questing is a form of AD effectively um for those who don't know questing is it's funny a lot of things web three are just basically reinventions of web 2 content they used to be a thing called offer walls which is basically quests what a quest means is you can go to layer three or Galaxy or other providers and it's like oh hey go do these four things that kind of get you a little bit down the funnel and help you engage with this product and if you like it you'll stick around and spend more money and it's kind of a very engaging ad unit again adds very Loosely sort of defined and they're getting some traction and we've we've actually published case studies with layer three um about you know questing studies and you know the users retain that you can you pay you pay for the quest by the way

but the users monetize more than that it's positive row as hey happy happy like it actually worked so yeah I would I would say it's drops which is basically just like firing money out of cannons and hopefully hoping people walk in the door because the noise of the cannon and like picking up money from the ground and walking to the store to quests which are kind of like sort of AD units uh and then there is some web to marketing going on right like there are people spending money on Twitter and conventional ads trying to drive them into web 3 games and stuff um so there's a little bit of that but like web3 native that's that's about it all right everyone wanted to talk about vouch again our favorite insurance provider for crypto companies if you are building in crypto you have probably come to realize that contracts need

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phenomenal lineup of speakers a lot of the guests that you hear on Empire are both going to be speaking there you will have the opportunity to meet them there and a lot of the topics that we cover on Empire ZK attack roll ups account abstraction Mev app chain thesis a lot of that kind of stuff that will all be discussed at permissionless this year so because you are a listener of Empire you get a special discount that's right Santi and I negotiated with our marketing team you get 30 off if you go to blockworks.com forward slash permissionless Empire 30 is going to get you 30 off your ticket today when I'm recording this that's about 300 off your ticket so type in Empire 30 when buying your permissionless ticket you get about

300 bucks off click the link at the bottom of this episode it's in the show notes do it quickly because prices go up all the time and if you are going to permissionless hit me up let me know shoot me a DM on Twitter I would love to meet up with you there so what you're describing though like I don't know someone clicks a link on a blockworks newsletter and they get driven into uniswap what you're saying is like now for the first time ever uniswap can can track that but in my mind I'm kind of like so what a little I mean it's good for us right because we can like I don't know we'll get more renewals or something but like it's not that big of an advancement that's that's no different than like I don't know REI tracking like that they ran an ad in our newsletter and someone

bought someone bought something but it does sound like you're saying look there's gonna be a thing that comes after that which is this like multi-touch attribution because everything lives on this like open chain is that am I reading it the right way well I I mean you might be underselling a little bit I mean it's it's amazing that in the span of basically a year or or not much more than that web 3 has speed run like 15 years of web 2 ad history and gotten to the point where you can share a link and get paid for it like that that didn't exist in 2005 like not in any way shape or form didn't exist in 2010 basically like it could be very difficult for you to monetize that newsletter of yours um in a very ad Centric way so I mean yes we're not quite yet there but almost

at feature parody with web 2 but it took them 20 years to get there whether you got there in a year or two right so like this is this is good news right but but I agree with you in the in the in the next World right in the next iteration of this um once everybody has spindle or once everyone has like real measurement of some form or another um I think you're gonna start seeing exactly the interesting multi-touch models which are a little bit different I think the good thing about it is that like once we start having web3 consumer right we have like wallet aware experiences right whether they be literally coinbase wallets or whatever you know wallets web3 experience that exists on chain you're gonna start seeing the ability for them to monetize particularly well because an interesting thing about web3 is that ltvs like lifetime value the

average value of a user is higher than web 2 by and large at least with what we've seen right like the amount that like a whale user dumps into decks is stratospheric it could be tens of thousands of dollars we actually had that one time in 2020 or 2021 we said we um we had one of our podcasts had a referral Link in the show notes to like buy bit or like I don't know so it's you know one of these exchanges and it you know we we hit it we had we hit like a jackpot whale or something and I was like all right here we go and then one day it stopped and like paid us every month until it stopped well yeah well let's get into that because that's yeah but that's that's the reality right like the ltvs are super high dau's can

be low but again getting back to the lesson of cpms fine low Dau but High LTV the cpms can actually still be pretty healthy if you've got City and feminization and let's let's analyze why did you lose your uh referral bonus probably I don't know the details of the program maybe it was intentional but what often happens particularly hey there's examples out there like like GMX is a is a good example in which the the that user might have gone in and used a different referral link and your ref ID tag on chain got overwritten and even though like you should probably claim first clicked attribution Forever at least those along for the window they simply don't have the attribution to do it of course in our referral product you would but in the case of a lot of these home brewed uh referral products like

literally your ref ID just gets [ __ ] hammered by the next transaction and then that's it your money goes away even though Frankly Speaking you onboarded the user not the next guy but that's you know that's one of the things we're hoping to improve yeah I think one of the interesting things is going to be um like on chain to on-chain referrals like let's say um let's say I use like zapper or xerion or something and like uh so I'm you know I'm in I was in both earlier today and um I was trying to see if either of them had the ability to like lend or borrow directly inside the platform and you can do it but you can like you can like swap inside the platform and the way that they do it right now is like they have a native integration probably something like

paraswap or something like that but you could also Imagine a business model where like they send you out um yeah I mean if you if you trade if you trade Lyra on Quinta just Lyra is a spindle client right example I know a lot of their inbound comes to Quinta and Quinta is basically an aggregator kind of like gem is an aggregator to openc and every also another client and like they're sending value down funnel and in the case of Quinta they are writing it on chain and they are getting good for that interesting yeah yeah I think that so when we talk about referrals I think the individual affiliate model like it'll be there but that's actually not going to be the bulk of it I think it's it's going to be one big aggregator Upstream sending value Downstream and

getting paid for it that's the real platform yeah I mean here's another example of where this could be is uh you know who could build a huge ad Network coinbase base yes yes yeah yes that's right um that's really some of us hope they do some of us hope they do and some of us hope to be involved in that yeah well we've actually we've actually got a base case study dropping either this week or next oh nice I do remember you you me and um and Jesse from base we're hanging out in Denver that was the first time I think you and I met in person um yeah so I mean it's gonna be public so whatever and it's already public because they announce it but so Layer Three is running a bunch of Quests for a bunch of dapps at launch for this

on-chain summer thing and we're going to be measuring a lot of them and doing a case study with them interesting very interesting so uh okay so if there's ad tech there have to be ad marketplaces well I'm curious if you think that these ad marketplaces are going to be open or closed um and maybe if you could explain the differences between those two things as well no we've been we've been thinking about a lot actually um yeah what what does here's a question for you know like what does the uniswap of user growth look like like what does it mean right because an ads Marketplace again to be very mercenary and cold-blooded about it it's literally a Marketplace in human attention right I'm a publisher right I have attention and I want to turn into money I'm an Advertiser I have money and I want to

turn into human attention right that little yin yang is the dialectic that rules all in an ad system so what is that what does that look like in web3 um I think it's going to be interesting it's going to be at least partly on chain for sure it's going to be composable and permissionless it already kind of is so when we when you started just as an example when you start a referral campaign inside spindle that actually is a non-chain smart contract in which there's enough metadata there for you to potentially do something and aggregate that demand in an interesting way right in a way that you don't necessarily have to use your API even work with us in fact I think uh coin gecko actually generated ref ID and then generate an ad creative and just ran it that even tell us they just ran a piece

of activator put our spindle link on it I'm like all right permissionless advertising we're now advertising I forget what it was I think Lyra um on coin geckos like wow that's interesting can you do it both ways could it be the case the publisher says you know put something on chain okay I'm a publisher these are the sort of users that tend to come to me this is the ad format I support this is my minimum CPM go right and that exists on chain in very transparent way and there's an attribution system that actually tracks this publisher led to this Advertiser getting this much revenue pay them Etc like yeah you can start seeing the makings of that emerge uh the question is like on a protocol level how is it tied together right amms are off obviously very automated in the sense oh you've got a liquidity to pull here and

you've got this much demand for ethereum versus whatever and then it all kind of magically works with evm what does that look like in ads and I don't think anyone's quite figured it out yet but I think it's going to look something very similar to them so Facebook has this close is there is there a better model like Facebook's yeah yeah is it right that Facebook's Marketplace is closed and Google is open right it's open that's right yeah I mean this is one of the fights that I fought and lost uh at Facebook um people who've read cast monkeys know the the little mini dramas of my career but at the time Facebook was undecided like one of the products I had launched was What's called the programmatic ad exchange what that means is for those are wondering what the hell's programmatic or real time it's kind of

like Michael Lewis's Flash Boys in the stock market when on on in Google's ad system when you load a page or you load a uh an app what what happens is and you don't realize it because it's happening billions of times a day like that but what are called bid requests go out to advertisers I load a page it hits the ad exchange the addiction says oh [ __ ] this person showed up they sent out a bunch of requests to a bunch of what are called dsps basically ads buyers or pieces of software that buy ads they return with a bid they rank the bids they serve the ad boom and then they do it again in the billing time today so that's the Google model and anybody can kind of plug into that huge dataverse I mean it always seems to work better when

you use Google boxes instead of other boxes but in theory there's other boxes and it's an open ecosystem and it's a little bit more transparent even though of course Google makes in its own advantages in the Facebook case I mean there used to be a thing fbx that was my baby but that eventually got shut down how it works now is you have to upload your targeting data okay here's a list of emails and then Facebook does it all and you kind of you don't really get a lot of transparency to what's going on other than eventually knowing that okay Facebook sent you 10 users but which ad got served which ads where did they appear you know nothing about that Facebook handles all of it so yeah it is very much a wealth garden and it's just um it's a it's a model that all the other

social networks have followed so Twitter is very similar LinkedIn is the same snap is the same they just philosophically culturally I think just don't look at the world very differently I think Google does and they like keeping things in their own yeah the one disconnect I'm having here is um So In traditional world like you fund an account right you might fund Twitter or Facebook or whatever it may be uh you deposit the budget somewhere and then like you put in your campaign details and you're creative and all that kind of stuff and it kind of gets sent out to the world often to Publishers and different places but the thing that you know is a requirement is if is for a publisher to have a place for that ad to sit right right where is that ad sitting on chain

good question if you want to come out of the office so we've got a whole diagram we're trying to figure it out on the whiteboard in the back of my head I'm trying to figure out like how this applies to block Works obviously and like a lot of our Revenue comes from advertising so I'm trying to figure out how this helps us too but all right so so one disconnect here is that like the natural clock cycle of ads which is like literally real-time millisecond is way too fast for any blockchain so I don't care whatever blockchain L1 claims that it's got a TPS High Enough the real-time ad exchange world is just at at Branch we used to ingest something like 300 000 QPS I.E events per second that's that dwarfs all of web 3's transactions per second put together times five right right I don't think

people realize that the ad markets are so similar to the stock market and they also they I mean you trade them and people they trade on not just like quantitative data but also Elon takes over Twitter people don't advertisers like CMOS don't like Twitter don't like Elon so like the price of an ad Dollar on Twitter is gonna fall um there's momentum in the ads markets like to run the equity markets yeah yeah but yeah but yeah but the ads markets are super fast so like how does that [ __ ] live on chain it's a lot of it's not going to live on chain so like when the publisher loads the page you have to have a publisher SDK that serves the ad that just serves the ad real time you can't hit something on chain or do anything on chain and so a lot of the

real-time aspect can't live on chain but I think if you think about a lot of the other state that goes into and ads buy like okay here's my budget I'd like to leave that ad on for three days or this you know the number of ads that you would see navigating a given website isn't that high right it's not like thousands of different ads so if you actually break it down to the state that doesn't change that fast a lot of that could live on chain and then specifically the performance data and how they get paid that obviously natively has to live on chain because again that's that's the exciting thing about the blockchain right like again going back to Branch what example of a web contribution platform it's it's sitting there getting this fire hose of events and shuffling data around to everybody why not just have one database

for it that everyone addresses that's exactly what we have in web3 you don't need to send you know hundreds of thousands of server to server pings every second forever right to make the system work you've just got one system but yes the big question is what fraction of that data lives on Chain versus does it who is going to be the master of the so you guys are building like a branch right sort of although it's getting bigger than that right because we've got the referral side and then who knows how much yeah how far the little fingers will go yeah but um who's gonna be like the master of the ads in in what like I don't know here let me let me run a couple by you like you I mean you could we just talked about the like base base Network and

coinbase like they could be the master of the ads uh you can see another world where like the Solana phone ends up being like the master of the ads like who do you think ends up being the master of the ads in crypto yeah I've often asked myself like who's the Facebook encrypt I know that might come off as a as a negative connotation as a former facebooker who literally has Facebook posters in the office gonna fix we literally have to move fast and break things poster in in the office um yeah who would be the Facebook crypto I mean obviously I think coinbase has a very strong Vision there we're very Pro base um the the chain they uh they obviously have a by web3 standards a huge number of Mau through the wallet they have the coinbase.com experience uh they have a questing platform they have a small ad

system if they actually make that work if they make the L2 take off and they have whatever it is 10 million Mau or whatever know what the number is but something around there and actually point that at a chain daps to actually start getting um you know start getting engagement you actually have some some ability to actually promote growth in that coinbase wallet experience whatever I think that could be very very interesting and I think yeah I think they have all the makings of like a real consumer ecosystem in web3 in a way that like nobody else has all the pieces Under One Roof and so we're very excited about it yeah one thing that we talk a lot about in like defy world is uh like just I don't know just cross chain liquidity basically and this this conference you know if you think about an ad market

like a stock market or like a crypto Market uh you have to think about like ad liquidity actually and um and then it makes me think about you have to tie that into like uh ad attribution as well so how do you think about uh cross chain attribution oh it's hard so uh I don't know it's public yet but whatever one of our customers is axelr who's uh who's a bridge oh yeah and uh man was it hardest [ __ ] to do to be blunt I mean we we spent a month trying to trying to get them on board I'm sure we'll do a case study better whatever it's just you know knowing that you go from chain a to chain B is a is just a hard measurement problem and then particularly if you look at like what is the usage pattern for bridging you know maybe they're

doing a quest in which they they Bridge you know from chain a to chain B to go do a thing and then they Bridge back right and so it's actually like a round trip and do you count that twice or do you see that as one user Journey you've obviously got by the way however many chains I don't even know exactly how my head is our next Lars dozens at least and so you've got this you know covariance Matrix of dozens by dozens of potential interactions that you have to render in some usable way there's a lot of interesting challenges on the the cross the cross chain thing um so yeah that was that was an interesting uh case for us to uh to actually work on um there's something else you said that I actually wanted to uh to fix it on um oh the liquidity problem is an

interesting one um yeah again if if you're thinking about like what's the real web 3D gen ad system like how does it work what is the liquidity problem what do you need cash for well what you need cash for is actually to run ads budgets is what you need it for right because one of the interesting things about web3 that it's again very different to web2 and web 2 I pay I pay Facebook 30 bucks for the user right I I kind of own the user the user comes in and uses my app and they spend 70 bucks and they turn out and that's the full lifetime that is that is a full that is experience I pay for the user I own them I kind of milk them they disappear end of web3 doesn't work that way you don't buy users you kind of rent

them in the sense that like either you have to constantly pay them rewards blur comes to mind for them to stick around or promise some rewards for them to stick around or you're in like in your case right you're getting paid for the user that you brought in almost like an annuity like a bond like literally 10 of this guy's Revenue was being paid to you in like regular installments it was like an annuity and when you stop getting the insums you're like what the hell right so like there wasn't a Singleton cack it was an ongoing thing but that raises a problem right the monetization in web 3 is an ongoing thing like a coupon payment on a bond however if you're working with traditional Publishers they expect to get paid up front for media right so either you convince them to take a REV

share or you pay up front and so you have a liquidity mismatch between so then how do you how do you float that well there could be interesting solutions to that that is really interesting very applicable to blockworks business actually so are you firing a um are you firing a uh an attribution event every time someone's writing on chain like you guys must be firing a crazy amount of attribution events huh well so very good question like can you explain actually a little more about like the details of how spindleworks have you we're totally we're totally bold in public so go to our blog a Blog that's one of XYZ if you care about privacy and all that stuff we talk about it publicly we're very public about how we build and there's nothing like weird or Shady so um on the web 2 side it looks pretty Normy

I mean it's like Branch or like Google analytics right like you go and you fire a page view when you go and you look at the page like it's not that strange and weird and it looks very Google analytics where it gets a little weird is when you sign in with the wallet and you go on chain and you start doing stuff and you're kind of out of web too right so what do we do there I mean in my opinion to be blunt and not that your question was dumb at all but just like the the very what what people tried doing before spindle existed is actually trying to fire events and mimic Double Entry bookkeeping what's happening on chain with a web 2 system so they would fire events into a conventional webto attribution system to mimic what's going on chain because they had no alternative

right but that's kind of like it's almost I wouldn't say the dumb way to doing it but it's a very hacky way of doing it because you're never going to keep it like it's you're never going to keep up with what's happening on chain they they would in fact drop events and not see what's going on the smart way to do it which is the hard way um is actually indexing the subgraph correctly and measuring what's happening on chain correctly and backing that into the revenue number that you care about that's how we do it and so we we track the web 2 stuff in a very web two-way and then we track the web three stuff in a fully web three-way and then we We join that in a different way but that that's how we do it so we don't fire we we fire our events to ourselves but

the advertiser is not firing anything to us that's happening on chain they don't need to do anything in terms of integration it's fully on us so if you were fully on chain like a D5 protocol you would literally need nothing to integrate with spindle we would do all the heavy lifting of of indexing stuff do you pay out on chain yes you have to the the marketing budgets are usually a native token on chain they're not going to pay in Fiat they're they don't the D5 protocol doesn't the reflex of shoveling 20K a month to Facebook they just doesn't exist you it has to be natively interested yeah so our referral smart contract our attribution is centralized and off chain because the compute is just too fast and there's too much going on for it to be on chain but that gets paid in a very oracally like way to a

Smart contract that then does pay natively unchain huh yep that's really cool I mean again we don't believe in decentralization as religion but we do think there's a proper web3 way of building things and we do you know we try to we strike what we hope is the right trade-off but to the extent that it should live on chain for the sake of being transparent composable permissionless we do both on chain and for the the extent at which it's like it's a complicated compute it would be expensive to put on chain we don't and so yeah what is it why is why is this the hmm what's my question here is this good is this like do we need to add some why are why are ads good I have I have many thoughts by the way as an ad business but like why are why

do you think ads are good because I think the reality is that a lot of consumer use cases aren't not going to be supported through anything other than ads as a matter of fact a lot of the consumer a lot of web to Consumer wouldn't exist without ads which I don't know like hey I'm uh I'm as much of a letter as an ex-guy I used to use pine for email 20 years ago and I thought it was a great email client that said I still use Gmail now so um and again I think you have to Define ads very very broadly it's not necessarily showing you like a square of some shitty thing that you're ignoring on a consumer experience it's like your favorite influencer who maybe is a taste maker in some part of crypto you care about is getting paid for that influence in a way

they are a publisher right they're a decentralized publisher similar to your podcast right people pay attention to what you know you influence a lot of perception in crypto and if you drive users to a certain depth then I don't know you should get recommets for that if you weren't getting paid for that this podcast wouldn't exist probably right and so yeah that's where I think ads are good and I think also like like here's like the stone cold hard-nosed web 2 ad Tech Boomer reality right for web3 to get to a billion users on chain and this doesn't exist now it's a major problem that I think about all the time there has to be a way for me to turn money into users like real legit like users who care about my app if that machine doesn't exist we're not going to get to a billion users on chain it's

just not going to happen because you need to have some way to turn on I launch a new app I want the world to see it and find out about it they want to find out about it if they knew about the app they would use it and would become recurring users something something has to fix that that disconnect and we call that ads and again it doesn't have to be those little display ad units but there has to be some form of targetable media that presents the user with a call to action at some point yeah what do you think the onboarding solutions or the onboarding platforms his role in um in like tracking will be so like let me give you an example so like the first time ever someone ever downloads metamask right or like installs metamask metamask could drop you an nft in your

wallet so that you and then anytime you trade on uniswap or you go into you bridge over to using axelr into like I don't know Avalanche or something like that like that nft kind of sticks with you and that's like one form of non-chain cookie but it feels kind of like an obvious thing but maybe like a really Arcane like we're thinking very I don't know web 2 model here what do you think of that model I mean I won't comment on metamask specifically but if you're asking me broadly speaking broadly not metamask yeah just onboarding Solutions and like their role in tracking and things like that yeah I mean they're top of funnel right like I think wallets rightly are turning themselves into the portal for web3 right if I go use coinbase or metamask like I can discover new daps or nft

experiences inside my wallet and I think they should be because that's how users are getting on chain right in some form or another um and so yeah I mean there in some sense yeah they're top of funnel and so like how here's a random View From The Trenches as well right when we launched spindle like we originally thought right like dapps would use this the most to look up funnel right like I'm a dab I'm doing things to make users love me right like where are these users coming from that's the pivot me looking towards the top of the funnel and pivot it by Channel and pick out the fact that look blockworks actually drove this many users turns out some of spendless users are not depths actually they're what you would call top of funnel people who are it's the first user's contact with the

chain and what they care about is not how they got I mean they sort of care about how they got there what they really care about is okay what does the user do after me right what is the like is there some nft collection or NFC Marketplace out there that it turns out I'm driving a huge part of their revenue I didn't even know it I'm definitely not getting paid for it like what is going on in the world right we call this Eco internally it's basically like what is the ecosystem view of the part of the chain that I inhabit and we have a decent number of uh of use cases in which that's exactly what they're looking at they're looking down funnel it's really interesting um I I think what we see going on it's funny my employees troll me so much because I've used a metaphor so often

they actually bought me one but I often use a metaphor of like a volt meter right which if you've ever had been in double e or whatever it's like you're in a circuit you put the two probes and you measure like the voltage drop on different parts of the circuit part of what spindle is frankly is sticking our little probes top of funnel and bottom of funnel and seeing how much money and people are actually transiting between those two points in the funnel that's kind of what we exist to do and sometimes it's the upper probe using spindle and sometimes it's the lower probe using spindle but measure measuring we are and the question is once you measure how do you establish some business relationship I.E some rational piece of value transfer that you know makes that relationship you know deeper and more effective so what's the pitch for Block Works how

can like if you were if we were sitting in a room and we were thinking about using spindle like what is the what is the low hanging fruit for Block Works to use spindle see you said you had a newsletter right of newsletters we have a you know nine podcasts we have conferences we've got the media website that you know millions of people read every month um and we have ads across the whole business so I mean podcast attribution is is fascinating but more complicated right because it's audio right always necessarily an audio call to action it's a little bit different and typically you have like you know Casper mattress use you know referral code blah blah that's about the extent of it but on more visual media yeah dude you could sign up for doing rev share referral programs with various dexes and then run the link

inside your newsletter as you've as you're already doing and you can get paid for it um I mean you you could put our SDK on your website and see where users are coming to you in a very Google analytics way are is are any of your properties like wallet aware do people log in with a wallet um our research platform is the only thing right now if you own this nft you get access to it but we've um it's something that we've debated which is like do you put a wallet on your website um to get really interesting like like right now you we have web 2 first party data on customers which is like or on our readers which is like I don't know like maybe here's your net worth or like here's your actually that's not even really first party data is net worth

it's like uh you know what is your job title what is your company like things like that what a having a wallet on our website would allow us to do is you like this person's a power user of Ave and they read a lot of articles about like Bitcoin okay we've got like this weird Bitcoin Maxi who like loves Ave that's like a I don't know that's why I like having a wallet attached to the to the website would be really interesting well that's exactly right so that's our next question so if if if you do if you are well unaware and you could fire us the wallet sync event we could a give you interesting wallet profiles that would answer the question you just said of the person's heavy Ave user or whatever you could also see like okay did I drive the user to go do something like did I write

like at a state of object just you dropped obvious on mentioning a state of audio report a state of on-chain lending report and somebody actually goes and does a bunch of online lending right like you'd want to know that right and potentially work out a deal I mean it's your journalist so maybe you can't quite shell things quite so hard or maybe you have to have separate sponsored content or something but you'd like to understand like what is your impact right like how much how much stuff am I driving on chain or if you do you do a review on base it's like okay how many new use how many new base users did I drive and how much in gas Vis did I drive for for coinbase you'd want to know that right it'd be interesting potentially if you worked at a sponsorship with them or something we

could track yeah you know who you know who's gonna someone's going to make a killing building like the nerd wallet for crypto um yeah probably and you got in that in Phil you guys will be involved in that somehow all right interesting we're happy to measure we don't typically do like direct consumer facing stuff just because yeah like the consumer stuff we're here to measure and to be clear we don't pick sides we'll measure any chain work with any dap like we are data Switzerland like we don't pick winners or like have exclusivity with any dap or anything and everything we do is orc Scopes we work with competitor a and competitor B none of the data touches each other any of that stuff we're just here we're just here to be the voltmeter so to speak nice I like it um anything we missed about the crazy world of ads

dude I think it's amazing in what uh just over an hour I think we covered everything we answered every question in Webster marketing okay incredible effort close to it ever ever yeah what do you think happened to cpms well what will happen to cpms in crypto over time here because there's two there's two or like one in one world advertisers outside the only people who care about reaching crypto users right now are crypto people like or crypto companies so in one world uh cpms end up going much higher in crypto because non-crypto companies want to reach those crypto people either because they launch their own crypto things uh or because they realize it's like a very affluent group of people who try new technology

et cetera so that drives cpms higher the other would uh thing that would drive cpms lower is um I don't know like Bloomberg and Bloomberg like when Bloomberg media was getting big like they had like 100 cpms but now Bloomberg media does not have 100 cpms obviously and I think just as you get scale cpms go down um I'm curious where you think that goes yeah I know people are clearly um targeting crypto audience we partnered with a company called um addressable that does just that right they use blockchain data to Target people on Twitter and stuff and a lot of their advertisers from what I understand aren't even natively Unchained right they just want to use blockchain data to Target ads because it is Rich so I I do think some TPMS definitely go up and I think just you know tossing out random

Publishers ether scan coin gecko cornmeca cap adaprader a lot of these crypto heavy sites in my opinion are probably under monetizing in terms of what they could be monetizing at if they had proper ads targeting an attribution of course I would say that but I I do think their cpms will go up in time as the ad set gets more sophisticated uh but to your point I do think there's some crypto media out there I won't name names whose rate cards I've seen and they're insane and there's no way that media is worth that much and if they were to put a spindle link on it and actually measure their value I suspect the cpms would back out to a tad bit less than what they're charging but what do I know I would love to do the measurement study to see what that is

but supply and demand Market my friend it's just a Marketplace there's more demand than Supply look uh real measurement is like when the tide goes out and you see who's wearing a bathing suit and who is it yeah that's what that's what measurement does I did see that rate card the other day it did I have no idea what you're talking about yeah I don't know what you're talking about good pod man good chat excellent yeah I think it's been entertaining right this is uh We're not gonna make people go to sleep with too much ad Tech chatter we pushed the limit but yeah okay so awesome man I will be well we will uh talk again soon [Music]