Speaker 1:
From the Library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're inside the Ice House, our podcast from Intercontinental Exchange on markets, leadership and vision and global business, the dream drivers that have made the NYSC an indispensable institution of global growth for over 225 years.
Speaker 1:
Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism right here right now at the NYSC and at ICE's Exchanges and clearing houses around the world. Now welcome inside the Ice House, here's your host, Josh King of Intercontinental Exchange.
Josh King:
The stock market and the economy are both complex organisms that require dissection of an ever growing number of trends and behaviors. Understanding why and how a market will move is the hard part, but what you're looking at is really quite simple. A New York Stock Exchange floor trader once told me that a good chart simply looks like a line bisecting of page from the bottom left to the upper right.
Josh King:
In preparing for this episode, I came across two charts that fit that mold over the past five years. Neither is a reflection of a specific security but both have had an out-sized impact on the market over that period. The first is a graphic showing the number of special purpose acquisition companies or SPACs that have listed growing from 20 in 2015 to 248 in 2020.
Josh King:
The pace, it isn't slowing either. In fact, in the first quarter of 2021, we are on pace to break last year's full year total. The role of SPACs in helping companies tap the public markets has been perhaps the top story in equity exchanges over the past year.
Josh King:
The second chart has played out in more subtle ways, like the growth of the streaming service Disney+ from zero to 100 million subscribers in a year. Buoyed by Hamilton rendered for video when the Mandalorian spin off of the Star Wars franchise. It allowed Disney, that's NYSC ticker symbol, DIS, to make up half the ground on its rival Netflix's first decade headstart.
Josh King:
Since 2015, US consumers time ingesting digital media has grown from five and a half hours a day to almost eight hours. I'm certainly contributing to those numbers. Most notable along that trajectory is 2018 when, for the first time in history, digital media consumption exceeded traditional media. Our guest today, Joe Marinucci, found himself at the cross section of both of those trends last summer when he listed the digital media company he started to connect consumers and advertisers on the New York Stock Exchange through a SPAC combination with Leo Holdings. Our conversation with Joe Marinucci on the secret sauce behind Digital Media Solution's success, leading a modern company and how marathons are easier when conquered as a team. That's all coming up right after this.
Speaker 3:
Whether it's markets, exchanges, or networks, connection makes everything possible. The connection between data and technology, innovation and expertise and most of all, between people and opportunity. For over 20 years, ICE has transformed markets, products and processes to make things work better, faster, smarter from modernizing energy and commodity trading to revolutionizing the bond markets. Whether it's the world's largest stock exchange or the dream of homeownership, we do more than see the big picture. We create it. You may not know our name, but we bet you know our network. ICE, make the connection.
Josh King:
Our guest today, Joe Marinucci, has been the CEO of Digital Media Solutions. That's NYSC ticker symbol DMS since he co founded the company in 2012. Joe led the company through its successful SPAC merger with Leo Holdings Corp in July 2020. And prior to DMS, Joe was the president and co founder of Interactive Marketing Solutions that offered a broad array of direct marketing solutions to the company's clients. Joe, welcome inside the ICE House.
Joe Marinucci:
It's good to be here. Thank you, Josh.
Josh King:
Joe, the 2020 Global spend on online advertising was over $330 billion. The majority of that amount went into mobile ads. I've certainly taken note, Joe, of the algorithms, how they serve up the ads that reflect my interests or aspects of my lifestyle. We were talking a little bit offline before the conversation started. I'm a skier, I'm up in the mountains and suddenly, everything in my feet is about new clothing, equipment or gear that I could buy. For those that don't get how the process really works, take us into the machine to tell us how consumer companies allocating their advertising dollars are doing it to the best advantage of this new normal.
Joe Marinucci:
You've got to look at data, technology and media reach and they're all going to intersect inside of the different businesses, especially advertising businesses that are looking to connect advertisers and consumers. Data is what will tell you which ad to put in front of which person and which place at which time. Running a company like DMS, our mission is to provide value on both sides. That means that we have to serve relevant ads to consumers and also provide ROI to the advertisers.
Joe Marinucci:
If we can serve relevant ads to consumers, where the consumers have intent to interact with those ads and interacting with those ads, if we can ultimately connect those consumers with the advertisers, we're creating value on both sides. That ultimately ties back to the data into I guess, the specific portion of your question, which is how does that all come to pass behind the curtain, so to speak. That data behind those behavioral patterns, some of that might be geographic in nature is what's going to lead to ads being served to you.
Joe Marinucci:
If you're sitting up in an area of the country that's cold and your propensity to be skiing is high and it's the winter months, it's unlikely that you should be seeing ads for say like boogie boards in bathing suits. The fact that you're seeing ads for ski vests, and hiking poles or something like that, it shows that the ecosystem's working in there, there's value creation there because the ads seem relevant.
Josh King:
Insurance, Joe is a big part of Digital Media Solutions. We've gotten used to the Aflac Duck, the Liberty Mutual e-move and Aaron Rodgers opting for his state farm agent over his football agent. I'm curious how effective you think that all is, the old model. But beyond that, how does the decision making process work online as consumers interact with insurers?
Joe Marinucci:
Well, I certainly like those ads. The EMU ads are really good and Aaron Rodgers is great, too. There's a brand marketing component there, as well. I personally don't think that brand marketing is going away. The DRTV advertising component that you see out there, specifically, with the ads that you're mentioning, the fact that we've been talking about them shows how effective they are. When you get into the digital advertising ecosystem, we are certainly seeing acceleration and significant growth in the insurance vertical because insurance is still in the early stages of the digital transformation of adspend.
Joe Marinucci:
That is, as you've said, the biggest segment of the market that we serve. It's almost half of our business. We feel really good about where we're positioned as more of that spend comes digital. That's being driven by just I would say efficiencies in the model, so to speak, where... The linear accountability in the adspend is transparent. And when you can measure ROI, and you know that $1 spent can be attributed to this particular customer, who you wound up writing insurance for, that's a really efficient model. Obviously, that brand advertising that we were talking about earlier, is working, because we're talking about it, but it's also establishing those brands.
Joe Marinucci:
There is a place for that 100% because then those brands are more effective when they go spend their dollars digitally. But you're going to get more transparent, linearly accountable ROI digitally than you're going to get anywhere else, which is why those dollars are coming digital.
Josh King:
The dollars are coming digital and you're the beneficiary of that Joe. Let's do a little primer on Digital Media Solutions. You've got three segments, brand direct solutions, marketplace solutions and other solutions. They each delivered revenue in the fourth quarter respectively of 62 million, 48 million and above 4 million. Walk me briefly through each of them to give our listeners a sense of the value that DMS brings to its customers.
Joe Marinucci:
On the brand direct side of the business, when we are placing ads out there in the ecosystem regardless of the channel, whether it be Google, whether it be one of the social platforms, maybe one of the native networks or through the programmatic exchanges and they're rendering on your phone an app somewhere, the brand is the advertiser's brand.
Joe Marinucci:
In the insurance example let's say the example is All State, the brand All State is featured. That's the only brand that the consumer can see. There's one consumer, there's one brand, it's the consumer one to one with All State, all the way through. When you shift over to the marketplace side of the business and we've seen marketplaces come to prevalence here over really like the last 15 years or so, you've got marketplace solutions and consumer finance, travel and hospitality, home services and insurance.
Joe Marinucci:
If you want to take insurance as an example insurers who are looking to bid on those consumers' interest and the consumers have interest in potentially having a new insurance policy written and different insurers are going to bid against that interest. Marketplaces are really effective solutions because they allow consumers to price shop which consumers see value in that. Interestingly lending tree coined that phrase, when banks compete, you win many, many years ago and that resonates with people and the empirical data supports.
Joe Marinucci:
People want to price shop, they need to see competitive quotes from multiple companies. If they feel like they've shopped the market, they're more likely to buy because they feel like they have the right data to make a buying decision. It's kind of like why people, many, many years ago would drive around the different auto dealerships before all the auto comparison shopping sites came to be and they had to go see multiple dealers to make sure they were getting the right price.
Joe Marinucci:
On the marketplace side, I guess to define that solution, you have one consumer and many advertisers and the brand is not the advertiser brand to start with, it's actually the website itself. An example for DMS would be protect.com. That is a marketplace solution that we have out there that allows consumers to price shop in the insurance segment, specifically in the auto insurance segment right now.
Joe Marinucci:
Consumers would see the protect.com which is our marketplace solution, they would come on and then ultimately behind Protect, they would see many advertisers. So one consumer, and many advertisers on the marketplace side, allowing the consumer to price shop, brand direct, one consumer one brand, one to one relationship. And then that other category of our business is really foundational and supportive of the two main categories because brand direct and marketplace make up close to 97% or they do make up 97% of the business at least for the full year '20.
Joe Marinucci:
The other 3% is our software business. Really the software business, it's where we take our proprietary technology and we white label it, and we make it available to our advertising clients, because they have a need on their side from a system's standpoint, where they are not, let's say fully capable of measuring ROI with the current systems. Our systems obviously work phenomenally well for us hence why we are where we are today on the back of really tremendous growth over the last almost 10 years.
Joe Marinucci:
When we see our advertisers dealing with what I would call connectivity issues, meaning they are not able to efficiently and effectively measure ROI, we will take our software, we white label it, we deploy it on their side as software as a service and in doing that, we create that linear connectivity that they need to be able to efficiently and effectively measure ROI. That is what allows them to actually deploy digital dollars in the ecosystem, the digital performance advertising ecosystem. So if we've run into that connectivity issue, we will solve it with technology to allow them to spend those dollars efficiently.
Josh King:
I mean, solving the problems of your customers with technology, Joe. In that context, I'm curious in this new normal that we've been experiencing over the past 12, 14 months, how to 2020 into 2021 affect accelerate the rate of change from traditional advertising campaigns to this digital performance advertising that you use?
Joe Marinucci:
Our primary focus was first internally with our own people, because we really didn't have feedback from the advertisers at that point in time in terms of what was going to happen although we were reaching out and we were asking questions, the answers we were getting, were basically, "We're not sure. We don't know." And then our focus kind of shifted internally on okay, these are unknowns over here. We're not sure what's going to happen. Let's focused on the people that we have internally and how we can circle the wagons.
Joe Marinucci:
We told our people like, "Hey, look. We're very focused on the internal health and wellbeing of you," because what powers DMS is people, process and technology. That starts with people and if the people are at risk, then the whole business is at risk. So we came up with a slogan, "Protect yourself, protect your family and then focus on the business."
Joe Marinucci:
So we had this people first initiative that we rolled out and we felt In doing that, everything else would take care of itself. And then ultimately, what wound up happening behind that to answer your question is we started getting feedback from different advertisers. There was a period of slowing down, as people looked to redeploy their workforce from these office locations that they were in to these new virtual environments, there was some disruption in the ecosystem.
Joe Marinucci:
If you think about large enterprise level clients that have large contact center solutions, they may have to move thousands of people off site into their homes, there's some logistics issues there. Just generally throughout the ecosystem, that is what created some disruptions, that we clearly needed to work through that with our advertising clients and there was some throttling of media spend around these workforce realignment issues.
Joe Marinucci:
But then behind that, we saw the dollars come back and they were shifting digital. Some of that was just the simple function of there was places where those dollars were supposed to go that were just not viable. Examples would have been like March Madness didn't happen in 2020. We all know, we talked about the catchy commercials that the major insurers run, they didn't run those commercials because the event didn't happen.
Joe Marinucci:
Sporting events were shut down. The natural evolution that occurred was those dollars went where they could go, because the major advertisers still had initiatives on and as those dollars started to shift, because other channels were just effectively shut down, it accelerated some of those dollars coming digital. That's ultimately what we saw once we worked through those workforce realignment issues and we were working through those workforce realignment issues, because we, DMS, we had to send our people home too because it was just prevalent to us and we did this in early March, that that's where things were going and as I said, we wanted to move quickly to help everybody get comfortable with the fact that there were going to be some pretty significant changes and we wanted to be as proactive with helping our people as we could.
Josh King:
And talking about people, process and technology, Joe, so much is going on for DMS in 2020. I read the transcript from your fourth quarter earnings call. Perhaps it was being able to report a 56% year over year revenue increase, but your team really least seemed right at home with that aspect of running a public company, but you were new at it. How did you prepare for the transition to being a public company and the regulatory expectations that come along with it?
Joe Marinucci:
Well, so this is a journey that started back in 2019, which is really when we started thinking about taking the company public. That's actually the point and time where we met the folks at Leo Holdings. We met them organically and then ultimately, we did have bankers involved, Bank of America, on our side was a sell side advisor to us. We effectively had a year to plan for what we wanted to do. We had our reasons for wanting to take the company public, like most companies and we saw a tremendous amount of value to the employees, then taking the company public. We've seen the value that a lot of our peers have been able to realize in terms of just employee retention and having a public company and we have an appropriately structured long term incentive plan that goes along with that.
Joe Marinucci:
That effectively means that almost the entire company has some degree of vesting and ownership in the company, which that in and of itself creates a lot of value. But then ultimately, with where we saw the growth trajectory, the business going, the growth of the market, we thought that the company was best suited to be in the public markets for the company to be able to capitalize on its growth strategy, which is both organic and then inorganic.
Joe Marinucci:
In the form of M&A, we felt the capital markets would help us execute on those strategies long term. This is a journey that started quite some time ago in 2019. Because it was a longer journey, it gave us the appropriate amount of time to prepare. We were able to spend quite a bit of time on the transitions that we would need to make from private to public company. I guess most importantly in that, it was very much a team effort. To the woman and man on the team, everybody decided that this was what they wanted to do, this was not something that just a few people at the top force fed on everybody.
Joe Marinucci:
We basically all agreed and from that point on, everybody decided to lean in. It made it easier because it very much was a team effort. Everybody very much was leaning in. And as a result of that, the work just got done. It got more challenging because we were going through our audits in the middle of the more difficult parts of the pandemic. Our partnership with [inaudible 00:20:01] was certainly tested because I don't think that auditors were used to doing these virtual audits and running audits over Zoom. So a lot of things got figured out on the fly. But we did get it done and people in that process were leveling up and because they had runway to level up and make the necessary changes and transitions, I think that's ultimately why we were able to make the transition as smoothly as we did.
Josh King:
On that same earnings call, talking about the team you have together, you mentioned Vasundara Srenivas, who joined in March, I guess, last year from Boeing to become one of the newer members of your team as DMS's CFO. She's the most recent of a number of high level appointments that you've made over time. Tell us about that process of assembling a team to put together and what are the attributes you look for when you are bringing a leader aboard?
Joe Marinucci:
Right behind Vasundara was Tom Bock and then behind Tom was Tony Saldana who came to us from SCAD. We're looking to hire senior experienced leaders that can help our organization grow and... Quite honestly, in the modern workforce, things have changed so much. Things have changed so much in the last year. I can tell you that the importance of a person's ability to connect with others now is probably more important than it's ever been because you and I are meeting, we're over Zoom right now. Basically, everything that we've been doing for the last year has been over Zoom.
Joe Marinucci:
We find that people that have the ability to listen more, to ask smart questions, who can empathize and show compassion for others, aside from having the requisite experience, are the modern leaders of the future because quite honestly, if you can't listen to what people are saying, if you are not capable of asking the right questions, if you can't empathize and show compassion to others in a way where it resonates with them, you're not going to be able to connect with them.
Joe Marinucci:
If you can't do that, you're not going to have as effective a business relationship with somebody especially virtually as you otherwise would be able to have. We're actually looking at a fairly unique set of skills that are sort of outside the mainstream when we're hiring people now, because it is just so important that people be able to make connections, build connections, because quite honestly, a connected workforce is a creative workforce. A connected creative workforce is where you're going to derive growth. That's how we're looking at people now.
Josh King:
Talking about people are at different levels of the organization, Joe, you glance at DMS's hiring page. It shows your company is really growing from top to bottom, from early career opportunities, like as a TikTok media buyer to the C-suite roles that we've just discussed. How do you scale, not just your CFO or your GC, but all the people that you're going to need while maintaining the company culture and values, particularly in this remote environment?
Joe Marinucci:
We're growing. We're going to continue to grow and we need to monitor that growth, because we need to make sure that we have the right people to employ the right processes, to build the right technology, to make sure that we stay on the front side of the wave. Yes, we probably have a lot of open racks. I was smirking at the TikTok buyer because a year ago, I don't think anybody knew what TikTok was or they were just starting to learn about what TikTok is. Now, it's a job rack on the company website.
Joe Marinucci:
But it's really important for us as a growth company to be able to maintain our ability to be agile and nimble, but at the same time, we can't allow ourselves to get overwhelmed. So I don't want to see situations in the organization where somebody's got say like 10 direct reports and they're just reactive to their direct reports. That's usually indicative of, we probably need to hire, create another layer, look to create more of a team structure there so that we can keep people free so that we can maintain that agile and nimble workforce. We're very cognizant of the workload and we want to make sure that it is dispersed and people aren't overloaded, because we want them to be having fun at work.
Joe Marinucci:
We don't want people to feel like they're crushed. It happens from time to time, but I think we do a good job of picking up on that. We're going to invest. When we talk about investing, we're investing in people, process and technology. The fact you see all those racks shows that we're growing because we're investing in those people.
Josh King:
I want to digress just for a minute on this position that you and I had a little smirk about and that's the TikTok media buyer. Those of us whose knowledge of the advertising industry is too colored by scenes of Don Draper enjoying a three Martini lunch and committing Benson and Hedges to a two-page spread and good housekeeping will be shocked when they understand the modern ad buying approach when DMS puts its TikTok media buyer to work. Contrast, the old and the new for us. How does it work these days to get the right commercial impression in front of a TikTok user?
Joe Marinucci:
Well, you're still going to leverage the same toolbox that we talked about earlier. So you're going to have data technology and expansive media reach and inside of expansive media reach, that's where all the platforms would plug in. So the TikTok media buyers are specialist at placing ads inside of TikTok, leveraging our data and technology so they just have a deeper understanding of that ecosystem, because the TikTok user's different than the Facebook user who's going to be different I would say audience groups on Google.
Joe Marinucci:
You have to have an expertise on these types of platforms. And TikTok is no different because it's relatively new. We have to stay on the front side of the waves. This just goes back to what I was saying before about, we're going to invest in people, process and technology because you either stay on the front side of the wave in this business or you don't. It's just like surfing. Once the wave gets by you, you're done. You're not going to be able to catch back up to it.
Josh King:
We could talk about surfing, Joe, we could talk about bike riding. Manifesting an idea into a publicly traded company is often compared to a feat of endurance. In fact, according to what we've been able to find, there are more than 25 million articles and books that use the analogy of a marathon for running a business. I guess it's an okay comparison, but it ignores the team that a person needs to succeed.
Josh King:
I think a better example might be something like a bike race, where a peloton of riders and a chase support team work together to achieve a goal. You started DMS in 2012, the same year that you put together a team of strangers to compete in the Race Across America distanced at 30% longer than the Tour de France. Which one was harder to get off the ground? A company or your Race Across America troop?
Joe Marinucci:
Okay. One correction there. In 2012, I had a friend of mine, Ted Kennedy, who now sold his business to Lifetime Fitness but was running a business called CEO Challenges and he was putting together a CEO team of riders to do the Race Across America to ride from... Yes, it was Oceanside, California and the pier in Oceanside, it was to Annapolis, Maryland. It was 3,000 miles. I had done some events with Ted. He called me up and said, "Hey, I'm putting a team of CEOs together to do Race Across America. Would you like to be involved?"
Joe Marinucci:
I had no idea of what it was. I said, "Ted, I don't know what this is. What is it?" He told me what it was. He's like, "Well, we're going to get six guys together and you're going to ride your bikes across the country and we're going to start in Oceanside and we're not going to stop until we get to Annapolis. We're going to ride all day, all night, and it's going to take five or six days and that's what it's going to be." And I said, "This is a race?"
Joe Marinucci:
He goes, "Yes." I said, "There's teams?" He goes, "Yes." It was actually eight people, not six. I said, "I'm in. I'll do it." That was the first year that I did Race Across America. I had no idea who these people were that I'd be riding a bike with. But listen, they were all CEOs from different companies throughout the country. We had a great time. A bunch of things went wrong, but that's kind of like what entrepreneurialism is all about. Like you're faced with unique challenges, you can lean in, accept it for what it is.
Joe Marinucci:
You get excited to go to work every day, because you know you're going to be faced with unique challenges and that's part of the job. The spin on that is, I did put a team together in 2016 of people that worked at DMS to do Race Across America, including my co-founder, Fernando, who had never ridden a bike before, at least a competitive bike.
Joe Marinucci:
Of course, he had ridden a bike but he hadn't clipped in to a real competitive bike and we started training for this. I put a training camp together up in the hills of South Carolina, with [inaudible 00:29:03] at his hotel up there. And I'll never forget, I remember like it was yesterday. We were supposed to go out for our first training ride. I think it was like a Monday morning or Sunday morning, whatever the first day we were there was. Everybody's out in the parking lot with the bikes and Fernando was sitting there with his bike and he hadn't even clicked into the pedals yet because he was unsure of what to do.
Joe Marinucci:
George who had ridden on all those Tour de France teams all those years that had won the Tour and he's obviously a very accomplished bike racer, very experienced bike racer. He's got a great personality. He rolls over to Fernando and he's like, "Hey, I'm George." Fernando was like, "Hi, I'm Fernando." And George goes, "Are you ready for this? You ride much." Fernando says to George, he goes, "First time." George looks at him and me, he's like, "This should be interesting."
Joe Marinucci:
He thought it was a joke and he rolled away. That was the first time Fernando had ever clicked into a bike and six months later, we had him out on the road in the Race Across America. But again, it just shows the willingness that the senior team at DMS has to just accept the challenge, lean in, take it for what it is, figure it out and just make it happen. Bike racing, great analogy, especially on a race like Race Across America, where you start and you finish and you don't stop until you finish and all kinds of things go wrong, but you figure it out. It's kind of how we run the business today.
Josh King:
On that first Race Across America 2012, Oceanside to Annapolis, I don't know how many of those states or how much of that road you've ever been on before, but what surprised you as you looked out from your sunglasses. What did you see that you didn't expect?
Joe Marinucci:
It was the riding at night that was the most interesting because... Especially in the southern California desert, where things get quiet and you just see a lot of different things that you otherwise wouldn't see because we're so used to flying everywhere and you fly over all this stuff. But then you ride a bike across the country and you across the Rockies and you see all these different towns and... It's something else. It causes you to slow down. You just see things differently and it's almost like seeing things in slow motions.
Joe Marinucci:
You sit in an office and you're almost sensory deprived and now you're on the back of a bike riding across the country and your senses are being battered, it's day, it's night, it's hot, it's cold, it's hilly, it's not, it's raining, it's not, you're going across the river. There's a cornfield, it's all these things. It simplifies like, "Oh, I've just got to ride my bike for the next 40 minutes and then I get to come off and rest and then I'll ride my bike again. And then I'll come off and rest. I ride my bike again and come off and rest."
Josh King:
Were you always a rider? Where did you grow up?
Joe Marinucci:
I grew up in New York. No, I was not a bike rider. I went to high school at Burton Catholic in New Jersey. I actually wrestled and then I went to Brigham Young University in upstate New York and wrestled there too. After college, I stopped wrestling. I started doing triathlon and as a result of doing triathlon, that's where I met Ted Kennedy, ultimately, who got me into this race across America stuff and as a part of doing triathlon, you have to swim, you have to bike, you have to run. That's where the biking came into my life.
Josh King:
Who were the leaders and the mentors that you look two growing up that shaped both your style and led you on this career that ranged from this extreme athlete to an entrepreneur, I guess with a stop as a police officer in between your advertising startups.
Joe Marinucci:
I would tell you like the first real mentor I had was my college wrestling coach who I still stay in touch with to this day. His name's Mark Gumbel. He is a national champ, really solid guy and just... He got me to appreciate the value of grit. You get out what you put in. After that, after getting out of college, I worked down in the city a bit and I started... When I started triathlon, I worked out with a bunch of guys at Chelsea Piers in New York and I just had some really good quality friends there, a lot of them were in the finance industry but they also were really high functioning athletes and they had really decent balance in their life.
Joe Marinucci:
That's kind of where I started to focus on the four key areas of life being obviously you have to maintain your body, your physical health. That's important, because if you don't have your physical health, I don't know what else there is. You're really going to struggle. And you have to obviously maintain your mental health too because that's a big issue, especially with COVID.
Joe Marinucci:
There's balance in your personal life whether you're married or single and you have kids, and then there's business. So you have to look at those four key areas of life. I would tell you in the last 10 years, like this is really where the focus has been. I've worked with like... Fernando and I support each other. Fernando is my COO and we both look at personal developments, a lifelong quest where you've got to consistently challenge yourself to grow and you've got to maintain balance across those areas of your life.
Joe Marinucci:
It's really important. And then you're plugged on the police officer thing and that's an interesting story. I was not a full-time police officer. What actually wound up happening there was in 2008, I tried to join the Army National Guard up in New Hampshire and when I wrestled in college, I actually had a plate inserted in my neck post-college from a ruptured disc I have. So I have a fusion of my neck with a titanium plates and screws.
Joe Marinucci:
In trying to join the Army National Guard, I had to disclose that obviously. They're going to figure that out. That requires a MediCal waiver which The Army does not give medical waivers to people that have titanium plates holding their neck together. I fought with the Army National Guard for a year to be admitted as an officer and they ultimately denied me because of that medical condition. A good friend of mine was Chief of Police in Moultonborough. His name was Tom Dawson. This isn't New Hampshire.
Joe Marinucci:
At the time, I was living up there and Tom found out that the Army National Guard denied me and he said to me, one morning at a half marathon, we were competing in. He said, "Have you ever thought about law enforcement?" And I said, "Tom, I have a full-time job." And he mentioned to me he's like, "Well, you were going to join the Army National Guard and get deployed and be gone for years, Joe. What about law enforcement?" And I said, "I couldn't do it." And he said, "But we're hiring a part-time position. What do you think about that?" I had this desire to serve and I was like, "If I couldn't serve in the Army National Guard, I could still serve through the law enforcement position in the local community."
Joe Marinucci:
So I took them up on it, I had to test out, I had to go to an academy. So I did that while I had my full-time day job. I was basically working nights and weekends, part time and then ultimately, what happened was the business shifted. I had to make a decision, was I going to be more focused on being a part-time police officer or did I really want to build a business? This is right around the time when we were starting DMS. It required me to be all in on the business and we decided to move to Florida, which is where a lot of the central people that were critical in the early days of DMS were. So I kind of had to give up on the part-time police position and relocate the family to Florida and...
Joe Marinucci:
As much as I liked being involved in law enforcement and giving back to the community, ultimately I think I made the right decision for my family. As part of our mission at DMS, we've supported a lot of great causes. We ran a coast to coast marathon in Florida as a company a couple of years ago. We were supposed to run it again last year and we were doing it to support the headstrong foundation.
Joe Marinucci:
Unfortunately, because of COVID, we couldn't. But Zack who founded headstrong is a friend of mine and I very much appreciate the cause and support of military veterans and their mental health. Even though we couldn't run the event last year, we had promised headstrong that we would donate $100,000. We obviously made our donation and hopefully, at some point, we'll be able to run our marathon again and continue to support the HEADstrong Foundation.
Josh King:
We're very familiar with HEADstrong here. One of our first guests on the show was Kenny Pocari. He and his wife Evelyn are deeply involved in HEADstrong. We heard that story on one of our earlier episodes. It's an incredible cause. I want to get into so much more with you, Joe. We're going to take a break here, but after the break, Joe Marinucci, co-founder and CEO of Digital Media Solutions, and I are going to discuss how DMS got its start and scaled the mountain of digital performance advertising. That's all coming up right after this.
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Josh King:
Welcome back. Before the break, Joe Marinucci, the co-founder and CEO of Digital Media Solutions and I were discussing DMS his recent listing on the New York Stock Exchange and his background that has brought him to this defining moment in the evolving story of how a consumer decides what to buy.
Josh King:
Joe, as ICE's Head of Communications, one of the areas that I oversee is the company's social media. I don't personally track my usage, but Americans spend two and a half hours or so on social every day racking up billions of impressions. How impressions translate into consumer behavior and how best to monetize the social platforms remain both big and sometimes controversial questions. What are the puts and takes here and is online behavior, the trillion dollar question to unlock the true value of online advertising?
Joe Marinucci:
On a daily basis, there is an enormous, enormous amount of impressions across the various media exchanges. I think the number is well north of 25 billion because that doesn't even include Facebook, because they don't report the impression share that they have anymore. What we really look at is not the totality the ecosystem, we're looking at a more targeted engagement. So we actually rolled out what we call the DMS consumer engagement score, which measures our targeted engagement.
Joe Marinucci:
We're actually looking at about 7 billion impressions for the entire quarter. That's the targeted reach that we have. It just goes back to being able to leverage data technology and media reach to put the right offer in front of the right person and the right place at the right time. Instead of accessing the totality of the ecosystem and the enormity of those impressions, we're really looking to leverage just a very, very small sliver of that, which when you think about how small that sliver is, it also shows the tremendous opportunity for us to grow further.
Joe Marinucci:
But I guess more importantly, what we're looking at is that small sliver represents the right consumers to engage with, with the right ads at the right time. That's really what's important to us. As big as the ecosystem is like, we're operating in a very small quadrant of it because that's where we see the engagement right now and we're going to continue to focus on that. As our business grows and that engagement grows and our quadrant grows, we'll stay there and we'll stay out of the totality of this other side of it because the intent might not be there. And that's really what we're focused on, targeted engagement.
Josh King:
When you and your co founders drew up your original idea back in 2012, what was on the drawing board then and what's been some of the big pivots, you've made as the technology in the ecosystem has advanced?
Joe Marinucci:
Well, the interesting thing is when we started the business in 2012, we were very focused on first party media strategy, which meant that we were going to deploy our ad dollars in the ecosystem, engage consumers with those ads, generate that first click engagement and bring them through journeys that we owned and operated on websites that we hosted or that our advertisers owned and operated on websites they hosted.
Joe Marinucci:
So digital assets were always a part of this. That first party media strategy has been the cornerstone of the business from the very beginning, it has changed over time. TikTok is a great example. TikTok, clearly did not exist in 2012. The strategy has been the same with the first party media strategy. Ultimately, what that means is we've got great partnerships with companies like Google and Facebook, because we're deploying our dollars with them and we're leveraging our assets to spend those dollars with them.
Joe Marinucci:
In some instances, especially on the marketplace side, it's with our brands. The platforms and the channels that we deploy those dollars in continue to evolve, so that's really what's changing. We've got connected TV now. We've already talked about TikTok. It's our ability to continue to be able to deploy those ad dollars, not just on Google, not just on Facebook, to be able to do it programmatically and on these new platforms as they evolve. In doing that, we stay on the front side of the wave.
Josh King:
DMS is leveraging things like artificial intelligence, machine learning to constantly improve the process to connect consumers and brands. How did you introduce those concepts into the business?
Joe Marinucci:
Well, when I was in college, I took a statistics class and everything was in a spreadsheet. In fact, I think back then, we were using Lotus 1-2-3. That's how you came to statistical conclusions on what was probable to happen and you had a calculator. Those days are long gone. I guess I just dated myself, but now, spreadsheets are starting to fade away. A lot of work historically had been done in spreadsheets or leveraging technology solutions and visualization tools say like a Pentaho or a Looker, but even behind that now, the interaction that you need from an individual, it's more so management at a higher level because you can use AI and BI to make a lot of these decisions and you can have people sitting on top of that to monitor the decisions.
Joe Marinucci:
Basically, what's happening is the revolutions at which the decisions are made, speed up and the efficiency of the ecosystem starts to speed up with that. As those decisions speed up with the revolutions and the efficiency picks up behind that, the flywheel starts to spin faster and you start to be able to move quicker. That's ultimately what moves the business forward. AI and BI are really interesting and we're obviously leveraging that. You still very much need people to oversee these processes but it effectively allows us to scale growth faster than we otherwise would.
Josh King:
My understanding is that part of the special sauces of Digital Media Solutions is how you measure engagement and turn that data as well into a revenue source. What makes it different?
Joe Marinucci:
We are able to leverage the first party data asset that is the result of us deploying very substantial media dollars over the last 10 years and having engaged with those consumers directly as the advertiser effectively. We have that first party data asset, which is critical. It's tied in to our proprietary technology and our expansive media reach, so we effectively have this closed loop system that we're able to operate as we deploy more media dollars, as we engage with more consumers, either on behalf of our marketplace brands or on behalf of our advertiser brands, we continue to be able to enhance that data set and as consumers move through journeys, which are powered by our technology on the different media platforms, which would be inside of our extensive media reach, the system just grows.
Joe Marinucci:
Being that it is a closed loop system, as it grows, we continue to get more scale behind it. Ultimately, that's really what powers growth in the business. And our ability to do it agnostically on both sides is so critically important. We have a demonstrated proficiency to be able to do this in different verticals, whether it be insurance or in the subcategories of insurance, home health, life, auto, whether you get into the different eCommerce bands that we do business in, home services, health and wellness, consumer finance.
Joe Marinucci:
So you've got a really diversified business on this side. And then on the other side, from a channel spend perspective, we don't have a meaningful concentration there. The reason for that is, we're looking to put the right ad in front of the right person, in the right place at the right time. It does not matter whether that ad is displayed on TikTok, whether it's inside of Google, on Facebook or potentially on the programmatic exchanges. We're just looking for the best quality engagement for that consumer to connect with them when the intent is there.
Josh King:
We talked about all those reasons, Joe, that you and your co-founders decided that it was time back in 2019 to think about the ways in which you were going to go public whether that was a traditional IPO or a SPAC combination. One of the acquisitions announced a few months after the Leo Holdings deal was announced last April and right before the deal closed, was your acquisition of Smarter Chaos, one of America's fastest growing companies, which touts its ability to manage the chaos of digital marketing. I'm curious, nine months since that was announced, is the chaos under control?
Joe Marinucci:
Matt Frary, who runs that business is a great guy. I've known Matt for a while. He comes up with some catchy things that he likes to say. I'm not sure if there was ever any chaos there to be truly honest with you. There might have been some sensationalism in terms of how they were using the term. But look, when we go out and we acquire businesses, the first thing that I can tell you is we're only looking to acquire businesses that we believe will be accretive to us and will provide value for both consumers and advertisers.
Joe Marinucci:
But more importantly, where I wanted to go with this is the businesses that we are acquiring are being fully integrated, harmonized and synergized inside of DMS. That generally implies that yes, the chaos to the extent it existed would be completely under control and normalized inside of the greater DMS ecosystem. And then hopefully, we're creating additional value so we're getting something other than one plus one equals two out of an acquisition because we shouldn't be doing acquisitions if it's just one plus one equals two. We should be getting some lift.
Joe Marinucci:
We look at acquisitions as getting segments of curves and then acceleration on the backside of that. Acquisitions for us, as I said, putting the curve stuff aside, we very much look at them as a way to invest further in people, process and technology and that's certainly what came over in the Smarter Chaos acquisition. We got great people, we got good process and solid technology. That's the reason why we did the deal. We're very close to having that business fully integrated and harmonized inside of DMS.
Josh King:
People, process, technology. I think since 2016, DMS's M&A activities have done about 13 deals. I'm sure there's going to be many more in the future. Joe, what's the best way for listeners to keep up with everything you're doing, both on the bike and in the boardroom?
Joe Marinucci:
We have an exceptional corporate marketing team. They are routinely updating our website with everything that's going on. We've got a great investor relations site as well. Anything important, anything relevant that matters, it'll be on the site. If we feel it's really that important, we're probably making an announcement on it. You can keep up with everything we're doing at Digital Media Solutions by visiting us at digitalmediasolutions.com.
Josh King:
Well, Joe, looking forward to seeing all those announcements upcoming whenever they come. Looking forward to seeing you back at the New York Stock Exchange when you make it back north and I really appreciate the time you spent with us inside the ICE House today.
Joe Marinucci:
Yes, thank you. It was fun Josh. I'm looking forward to being back at the stock exchange too. Maybe at some point in time when we can not have to socially distance or wear masks. We'll see when that comes.
Josh King:
All right. We'll take a bike ride up the West Side Highway. I'm looking forward to it. That's our conversation for this week. Our guest was Joe Marinucci, co-founder and CEO of Digital Media Solutions. That's NYSC ticker symbol DMS.
Josh King:
If you like what you heard, please rate us on iTunes so other folks know where to find us. If you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected] tweet us @IceHousePodcast.
Josh King:
Our show is produced by Pete Ash with production assistance from Bryan Hopkins and Ian Wolf. I'm Josh King, your host, signing off in the Library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
The information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties expressed or implied as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content herein. All of which is presented solely for informational and educational purposes.
Speaker 1:
Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of length or clarity.
