Day trading vs. media trading? Yes, the quants are coming. In fact, some say they are already here and evolving the role previously played by media buyers. Is this the future of the industry or just a phase we’re going through? And what does it mean in terms of your career?
I recently had an eye-opening conversation with Jeremy Hlavacek of Varick Media Management. He’s the VP of strategy and business operations at Varick and an active thought-leader in the field of programmatic media buying. I was impressed with his observations on the ad tech/real-time bidding (RTB) environment – and the people that make these companies run.
The job market has been shifting. We’ve all been seeing that every day. Who will be working in digital ad tech in the future? And who is being hired right now?
So let’s look at Varick as an example: it was the first data-driven trading desk for agencies and brands. Started in 2008, it was early to RTB and now uses a multi-bid tech approach (e.g., multiple DSP partners) to make its media buys. Like all young companies, it learned from its experience. 2012 has been a breakout year for the company, and Hlavacek attributes much of the success to the team Varick has built, ready to take on the 21st century challenges of media buying in our data overloaded world.
Media buying used to be relatively straightforward – some young analysts, with their spreadsheets, a little CPM data, and some TV/radio spots to buy. Think media buying in a “Mad Men” world. Now, fast-forward to our “Fast and Furious” world and multiply that by tens of billions of impressions on the web every day. The sheer scope and size of the digital marketplace has pushed this beyond the pale of human ability to execute (I shudder to think about people trying to do this in Excel). Now, exchanges have a big data problem. Every piece of media bought in a real-time exchange environment (Google AdX, Yahoo RMX) requires major data analysis prior to execution. That means not just great software, and real-time data, but humans who can extract it, interpret it, and execute against it. All in the flash of an eye.
The ad tech world is not the first industry to have such a data problem. The financial services world saw a similar issue a generation ago, when automated mathematical formulas entered the pricing and trading processes. They needed people to create automated trading strategies and code algorithms. That grew to include tools for risk management and to solve big data problems. Enter the quantitative analysts, those PhDs in math, physics, and engineering. For years, the biggest market for newly-minted math PhDs was the big banks and trading technologies. They figured out how to put the mounds of financial data to good use, to increase the yield.
Sound familiar? Are buy-side/sell-side visions dancing in your head?
At a place like Varick, it’s using technology platforms to run campaigns and analyze large data sets on a daily basis. Large publishers have millions of impressions for sale these days. And that traffic is constantly changing. You need someone in that driver’s seat, optimizing that buy, analyzing the results, and recalibrating that campaign – à la minute. Traffic spiking? Let’s buy more. Maybe it’s straight inventory from a key publisher? Maybe it’s retargeting? Maybe it’s buying data and cookies? And Varick is doing it for scores of campaigns simultaneously – enough to explode those Excel pivot tables like a character in a bad cartoon.
And these quants are not dry geeks looking at 3D pie charts all day. Today’s media trader is at the nexus of advertising, data, and tech. The best ones are nimble in all three. Jack be nimble, Jack be quick, Jack make all of my campaigns stick. They are creative risk-takers able to develop and test different theories and strategies for campaigns. Different traders have their own styles and personalities. Hlavacek compares the differences in traders to the investment styles of Warren Buffett vs. Jim Cramer. Both make money, but their methods are very different.
So, who are today’s media traders? Those masters of the RTB universe?
- They clearly need to have a math-brain. Lots of BAs and MAs in math, econ, and engineering. But that’s just the beginning, not the ending point.
- Great problem-solving skills. Yes, lots of job descriptions say that. But here you are presented with hundreds of problems that need to be solved. Every day. In real time.
- Strong backgrounds including many Ivy Leaguers. They tend to be smart people who absorb large amounts of data quickly. Miss a minute, miss an opportunity, mess up a campaign.
- Some background in digital – but it’s not a homogeneous group. It could be a big publisher or a display network type, but it doesn’t have to be. It could be yield management experts who are used to selling in to (not buying!) the marketplace. Hlavacek feels these people get the equation very well.
- To excel in this business, they need a good handle on advertising, why and how it works. That hasn’t changed from the Mad Men days. Left brain and right brain. At the same time.
- The easiest transition is for those people with a yield, ad tech, or buy-side background. People who understand the basics of advertising and the high-level strategies will pick it up quickly.
So let’s return to our Varick case study, and see how this worked in action. When helping to assemble this team, Hlavacek met many different types of people. It’s not just a straight digital media hire – Varick considered people from diverse backgrounds; the company needed quants with creativity. People who can come up with new ideas to drive business success. And we can all learn from that.
Looking to get into the RTB world? Yes, people from other industries can get it. In fact, Hlavacek shared instances of a person with a legal background and an English lit major making that transition. But it’s not easy and not for everyone. First and foremost, do your homework. Learn the lingo and read the blogs. Know how an exchange works – and how companies sell inventory through exchanges. If you want into this world, show that you’re serious about it – and smart enough to “get it.”
What doesn’t work? People who show up for interviews not really understanding the company. And we’re talking basic stuff here – are they buying or selling media? Where do they fit into the food chain – publisher, tech, DSP? Be clear on what the company you’re talking to is doing.
Where will the next generation of RTB staffing come from? That’s where the Wall Street model comes in – those math-oriented, advanced education quants from Ivy League schools will always be in demand. Ten years ago, it was financial services. Now, they’re going to trading desks, DSPs, SSPs, and exchanges. And some are making that switch mid-career. Interesting to note that Wall Street is no longer the sine qua non for quants. With the recent market shifts, that need for quants has loosened. And many newly minted quants are looking at alternatives to the large automated trading technologies of the financial world. Maybe we should roll out the “Welcome to RTB” mat.
RTB is a $2 billion market right now and double-digit growth is projected over the next few years. That’s a lot of opportunity for all of us. These companies don’t just need new technologies; they need people to execute using that technology. Just look at all those open jobs out there. In an economy that is still recovering, that’s a lot of opportunities. For all of us.
A shout out to Jeremy Hlavacek for his insights into the field of media trading and its human capital needs. This column is based on Jeremy Hlavacek’s Media Trading 101, a professional development seminar at my company, and a subsequent one-on-one interview.