AdExchanger's Industry Preview Gary Vaynerchuk Keynote | New York City 2017

thank you jry morning so you know the interesting part was when I was looking at the profile of who's in the audience I actually was in the back room like hey can we just do all Q& A because I think the fact of the matter is a stunning majority of the people sitting out here could be doing what I'm doing and vice versa and so I think what I'll do is I'll talk about a little bit about where I see things and really try to create a framework for maybe the Q& A session which I think will bring even more value um so my career started in a very entrepreneurial way and there was no media metrics there was no you know Awards there was no proxy other than did the marketing I did sell more wine for my dad's liquor store uh that was the kpi and so my background of selling baseball cards and then building a wine business you know uh for context I built Wine Library a wine business I launched in 1996 I really started running it in 1998 and in a 5year window from 98 to 2003 I built my dad's local liquor store which had no you know I had no money we we're doing $3 million a year in Revenue 10% gross profit so you have $300,000 before expenses my first Year's marketing budget literally was $144,000 so this is a very small business and in 1998 to 2003 on the back of a very young internet and looking around the crowd I'm sure some a good majority of you remember that early Internet it's nothing compared to what we're dealing with today I was able to build that business from a three to a $60 million business and I did it on adtech and marketing I did it because Google AdWords came out and I bought the word wine for five cents a click before they raised the minimum um and I learned a lot from 99 6 to 2004 I had an email newsletter that had 91% open rates um because it was 1997 and nobody was doing email marketing and my whole career has basically been find New Frontiers be the guy that buys four beachfront properties in Malibu when nobody sees it believe in that develop it wait and then be very excited that people are buying seven streets away from the beach for 10 times the price and build a framework that is actually profitable to allow me to hold my breath for 24 to 36 or 48 months to let the consumers catch up to my beliefs what has been stunning to me in the last seven years that I've now been involved in running an agency and working with the clients like PepsiCo and Unilever and Toyota and Chase and things of that nature is I didn't realize how lucky I was as an entrepreneur for Vayner media I was able to over the last 5 years grow us from 22 people to 800 people from 3 million to 100 million in Revenue because I can continue to do my model I can do what I did this last year which is grow vayer from 67 to 100 but make less money because I'm an entrepreneur I have no board or publicly you know trading product that allows me to only be stuck in 90 day or 180 day or 365 day Behavior I believe this entire conference and this entire space is broken not in a bad way broken from the way I see the world because everything is based on short-term behavior and data that isn't actually practical to the reality of the business how many more times are you guys going to go into a meeting where the math within the ecosystem that you play looks positive it's going well the roas is amazing but the person's business is in the tank and to me that disconnect and the fact that our clients and the market has to worry about 60 90 180 365 day Behavior and the fact that so many Mee the first meeting I was ever in this industry I sat through an IAT with a bunch of different agencies and everybody presented and I literally thought the business had quadrupled in the last year and then you know I'm pretty added out I went to the last page of the slide and the business was down 177% yet everybody was Kum bying around math and metrics that had nothing to [ __ ] do with the actual business and so to me what I'm fascinated by is I only do one move and I would challenge so many of you in this room to whether you're 100% Allin on this like I am or 19 mve to 25 please if I can bring any value in any way we need to start having a bigger debate around a couple of things one common sense needs to start entering our ecosystem what is

fundamentally different in this Corporate America adte B2B you know environment that I now find myself in unlike the entrepreneurial Silicon Valley world I came from like the common sense Factor seems to be zero the behavior is so predicated on what's in the best interest of the person at that moment working within that machine whether on the client side or the salesperson the amount of people that sit in this room and actually deep down you know deep down lie detector your Children's Health on the line don't believe in what they're selling is stunning and to me that's fascinating that's just an interesting debate it also speaks to something that everybody should be paying attention to which is we are going to a very interesting Channel conflict decade or two that's emerging so much is about to go DTC so many of the clients that we trade on are about to go direct to Consumer over the next 20 years how many people here real quick so I can figure out where I want to take this talk how many people here are retiring in the next 10 years and I don't mean you're going to crush it and sell your company and buy a boat I mean you're [ __ ] old and you're finished 10 years raise your hand that's what I thought looks like it's zero I mean where do you think the world's going to be in 10 years and so we need to start caring about the consumer a lot more my biggest problem with the way I have defined historically programmatic or things of that nature is I lived in 1997 internet where I was getting in certain websites 11% clickthrough on banner ads right you know we're living in a world where a lot of people think I'm a digitalist uh and I don't like traditional media yes I do not like a television commercial I think it's overpriced for the attention that I day trade every day but I equally don't like a banner ad at all I just don't believe Common Sense wise that anybody actually is concerned consuming that product and by the way the things I love in stream Facebook or Instagram that's going to go away too because this is one big game of cat and mouse right email work because nobody was doing it I got 90% open rates here I am 15 years later and I've have 30 one% open rates and that's pretty darn good and so this is what's always gonna happen and so I think in general what's fascinating to me is what's going to play out the next year that if you're a practitioner that if you don't actually just read headlines in the 14 magazines and websites we all read that if you really had to sell to survive you would realize that the most underpriced ad product in the world right now is Facebook advertising that if you had to sell something to stay alive to feed your children you would put your money there if you were a fulltime practitioner across all the options Google search is incredible and I love it but when you start understanding the difference between sales and marketing and start understanding that Facebook is the first platform that's come along that can do both it's quite impressive when you then say the next thing that you would look at most likely is influencers on Instagram and getting them to give you product placement or shout out if you actually traded on everything if you actually spent money on everything these debates matter because what happens is you start realizing that if you reverse engineer the consumer's action ual attention then you have a much better chance of succeeding and so I sit in rooms every single day if I was willing to Pander and if I had a different Mission at hand like build the biggest agency I could and sell it we would be doing a lot more Revenue because it's very easy to sell to the market what they actually want to buy versus what I actually want to sell them which is the thing that I think most sells product and so I think as a macro and I'm going very high level I would just like more debate about math being only one part of the equation and I'm just stunned by the enormous amount of time we're spending and just to remind every marketer in this room if math was what marketing is this would have been figured out a long time ago and so I'm stunned by the fact that everybody throws around metrics and how good your products working and we don't deploy the part that matters the most which is was it actually consumed I understand you threw it in front of some screen that I potentially saw it but was it consumed and that plays in traditional chance I'll tell you as a weird side note the number one Rabbit Hole I'm in right now is live read radio and during DriveTime radio to me as an underpriced asset as those prices continue to go down because people think it's dead they're actually being consumed because you want to talk about real native advertising the jockey reading while you're listening to the station so for me I have this funny very unemotional thing right I even the thing

I'm most excited about I mean in a weird way even though I trade on Facebook and Instagram and Snapchat and things of that nature I'm not hurt even though I wrote a $5 million doll check into Snapchat that Snapchat is declining a little bit because of feature changes on an Instagram world it's just the market is the market where I think a lot of people here as they come as vayer has now become a bigger media spender as we continue to spend money in media and not just be a creative shop I've come to meet a lot of your companies and a lot of IND and when walking in to our organization I've been fascinated by the way people are positioning their product you know one of the biggest things I learned when I was building Wine Library with Google and it was the great reason I didn't build a PMD on top of Facebook is there's nobody here that's going to outd develop the platforms themselves when you're building on the mercy of these platforms have you not seen the historical nature of what happened with Google and Twitter like these plat listen I come from that world I promise you here's how the founders talk at 2:00 in the morning at a South by Southwest I'm GNA let all these [ __ ] idiots build on top of my platform I'm gonna pick the best one I'm GNA tell them that if they don't sell to me on a nickel on a dollar I'm going to buy their competitor I'm gonna have you read the API access ter TOS you can't do anything you're doing you're you know they're letting you do it in their vested interest and so I think there's a lot of interesting macro TR friends that are going on that you know when I say those things I'm watching a lot of smart people kind of shake their head have that nod like you know and I get that and so I ask and implore this room to do a couple of things number one the only thing I do for a living is try to reverse engineer what brings value to a customer and by Nature advertising does not do that in a world where it has been proven my great Angel Investing mistake so far is that I passed on Uber at $4 million valuation twice right left a whole lot of money on the table I invested in it a little bit later so hopefully I'll do okay but it was when I realized that Uber wasn't a transportation company Uber was selling time is why I made the BET right now if you look at your behavior nothing is more important besides time has become the emerging thing outside of health and well-being of your family and money time has become the newest and emerging and has the most momentum of value to all of us watch this how many people in this room by show of hands now get angry when somebody calls them raise your hand High hi I want everybody to see this higher you guys are half ass again look at this these are human beings thank you that are upset that another human being called them because they subconsciously understand that we now live in a technology world where you are stealing my why are you bothering me why don't you hit me up on text maybe EMA and I'll get back to you on my time don't bother me you don't know what I'm doing right now like they ring like Mom what the [ __ ] are you doing text me you know like that that's where we're at so if you are actually upset More than 70% of this room upset that somebody calls you which is very easy for you to get away from you just silence it put it down and these are most likely either people you love like or solidly know you're telling me that we as human beings are excited to go to espn. com and have a piece of [ __ ] Banner ad pop up that we can't get away from and now we're mobed out right and I don't know if you guys have been paying attention but those little X's are small as [ __ ] and so when you go to click it you're actually clicking into the ad and so back in nerdsville mathland everyone's like oh [ __ ] 2. 3% click-through ratio yeah meanwhile that consumer hates your brand because that brand stole their time and so we trade in this Collective on math and we don't deploy any common sense and really what really pisses me off we actually don't give a [ __ ] if the stuff is selling or not and you know what's even scarier I actually don't really blame you because it's not your business you should worry about your business the brand manager and CMOS don't actually give a [ __ ] and that's the punchline is does your product or service work to somebody in a position where their life depends on selling stuff because of your technology not their job how many brand managers CMOS Chief media officers tell me to my face that the decisions they're making have far more to do with how they're scored internally on their mmm or whatever else not what they actually believe is in the best interest of their business that is not the world I come from that's not the world that my family immigrated to this country could live on there was none of that and that's the great stunning

intriguing thing for me in this Marketplace and so to me that's what I combat everybody thinks I'm loud or a futurist or U I'm irreverent or this and that I think I'm practical as [ __ ] I think I'm completely grounded in one thing does this communication create the donation to the nonprofit to me to buy this sneaker does it make you do something and I don't think the rest of the market is trading on that and I used to be mad I used to think I was smarter I realized neither one of those are true I'm just put in a position I've put myself in a position to actually care about that end result and many others have do based on their situ I'm not mad at somebody who's making six figures has college loans and has to pay for them or has a family to support and internally this is how it's scored or externally I'm not mad but just because that's the game you're stuck within or your client stuck within doesn't mean it's right and that is the friction and I implore everybody since you're going to be here in 10 years in business to realize that's going to start shedding itself out because the biggest brands in the world one little fun fact 97% 95 to 97% of the Fortune 500 cpg Brands lost market share last year because they're throwing money in the garbage because you've got four to five holding companies and I'm not by the way I'm not mad at the biggest media agencies in the world they're doing what's right for them they're publicly traded too all the way up the ladder to the holding company level they're going to push the things that they make the biggest margin on of course programmatics exciting good solid margin of course upfront television's you know it's not really planning Facebook with 47 different cohorts and creative against it like it's not I know it's not and by the way I'm not Mother Teresa the only reason we're doing it is because I don't want to build an agency I want to buy the brands eventually and run them through my machine and do private Equity so it's not that I'm this great you know Noble dude I'm trying to buy the [ __ ] Jets and so I'm on my own kick but I know it's right because I know when I AB test and look at it I know that we're trading on metrics that are not practical and so again to be on the right side of History to have leverage I I'm asking the industry to start debating like why does it look good and that's why I like things like moat and their Ambitions and things of that nature like we have to get to this place like I can't wait till we all have chips in our head or wearing virtual reality contact lenses or whatever we're doing where the math really plays out did we actually consume it did we actually give a [ __ ] and I know we're not in that world and most of us probably won't see that during our careers but that is the only place I think about and that's why the stuff I bet on are much more predicated on a whole lot of intuitive understanding of what will drive the emotion of the consumer and it's also why I completely am infatuated with the creative because once we get in front of people look this keynote I've got your attention that worked that was the framework of this but if the content sucked I would lose so the creative is the variable of success the problem is that has its own major issues because the majority of creative is made for the sake of that agency getting new employees or new clients right and so we have a very intriguing world that I've found myself in the last half decade I'm enjoying it I love the people in it I just think that we have to have more challenging conversations because I believe that we're not doing enough in the best interest of our clients and they're already starting with not caring enough about their actual own businesses and so we're left in a place where people are struggling and so you know something has to change to do the right work and uh these conversations need to happen so I'm looking to throw them out there I know I went pretty high level I've got five minutes I did want to answer one or two specific questions if anybody has any detailed questions about anything in Social things that nature I'd love to answer them now but thanks for listening thank you anybody have a question like if you have context on some of the Spiel I talk about outside of this talk this gentleman right over here it's coming from right behind you what's your name hi my name's Kevin Rippy I'm with neore inet how are uh the question is you say Facebook is the cheapest inventory on the internet I believe so yes by what order of magnitude in comparison to the others yeah like I'm not sure but like is it here here's what I know that with every you know I'm involved in a lot of early stage startups that need to create transactions I have my personal brand that tries to sell books or things of that nature I have the wine business and I have you know the $200 million we spent last year and watched it pretty carefully what I'm most fascinated by when I sell selling look Google intent-based selling is incredible right like if I'm looking at by wine I'm searching that's incredible what I don't think we've understood and what we don't deploy enough about is the collateral

damage of ads as they've been in the ecosystem for a long period of time Facebook has a sweet spot right now right like what it has is it has so much scale the biggest brands in the world are still debating dumb [ __ ] and aren't pouring real money in when you look at who's getting the benefit a company like wish the shopping app that goes from zero to you know two billion dollars in revenue on the back of a 100% Facebook advertising and so I look at a lot of those proxies and so when I've AB tested 3 million spend on Facebook versus 3 million dma spend on local commercials or when we've done 500,000 on Facebook versus 500,000 on Google and things of that nature the thing that excites me is I don't care about just the first transaction the thing that a lot of people like last touch attribution do you know how [ __ ] up that is like enough like it's completely dis we're we're we've become so transactional because math is not debatable and so we use it as a proxy and as a leverage but it's not telling the full story of what's happening and so what Facebook does listen if you're a big brand if you're Nike Facebook's bad because it's blue letters and you're losing the brand Equity that you actually trade on in a Google environment on Facebook you can go Dr but you can also I mean all the upside you know we were so lucky to have ABI as a client when Lucas and Ricardo are actually creating an opportunity for us to make a three-minute video when the Cubs win the World Series and you like TV commercial work the problem is nobody watches those anymore so you have to replicate it in a 2017 environment that is Facebook's game to win two and three and four minute videos that actually mean something to you that don't look like a commercial like right now at Vayner do you remember when the Supreme Court Justice said years ago like I can't Define porn but when I see it I know what it is that whole thing that's what I'm doing at Vayner right now zero commercials we're making videos on Facebook to sell [ __ ] I can't really Define it for you vayer I'm approving every video for the next 6 months and the punchline is if it feels like a commercial to me at all it's not getting through show me documentaries show me scenes from a sitcom you want to sell you know a cocktail show me a scene from Sex in a city in a 2017 environment show me something people will actually watch because what we're doing is we're trck like I love when people say oh these Facebook's metricks are off I'm like none of that [ __ ] matters I don't give a [ __ ] if they score on 3 second views 10c views people like Google's better I'm like Google's forcing you to watch that before you watch what you actually want you're not actually consuming it you're just letting it play through so you can watch the [ __ ] skiing video like we are just not deploying common sense and what blows me away is everybody in this room as a human when you're not wearing your job description on your name tag and when you're a human like Saturday you know exactly what's going on you get in Monday and you have Financial vested interest to push a different thing and that's where people are going into so I don't know the full magnitude one thing I've gotten better at is not talking about [ __ ] I don't know what I do know is this I'm telling you if people wanted to build their family business they would spend every penny that they could on Facebook right now the great mistake of my career is I love standing in front of you and saying I grew my dad's business from 3 to 60 million the truth is it should have been 3 to 300 million I spent too much money on Direct Mail and outdoor and radio and Banners when I had the Google Arbitrage and it was at scale I wasn't smart enough to go hot committed I'm not a poker player but when you have the best [ __ ] hand you put it all in I'm spending every [ __ ] penny that I have full control of on Facebook and Instagram influencers and nothing else because the spread on the day trading part right now is so extreme it is so underpriced and then you have people that think that it's overpriced or you have somebody that reads a headline that Proctor and Gamble has changed you know like it's just sheep mentality of a bunch of [ __ ] headline readers that don't know what the [ __ ] they're talking about people have opinions on Snapchat ads in this room they've never run one they've never looked at it they've never seen the full funnel to did it sell 8,000 pairs of [ __ ] sneakers [ __ ] they don't know what they're saying is what's in their vested interest and for me the only thing that I was smart about is I'm just trying to be historically correct as leverage to do business over the next 50 years so I'll say what I don't know I'm just change my mind every day I mean I'll sell anything you want to buy rocks I'll sell them to you like I don't have any emotion I don't allow it's why build a tech I didn't allow myself to be boxed into to one thing I'm selling attention and if that's DriveTime radio mlof if that's [ __ ] if newspapers want to sell $4 ads I'll buy them because that's the right price you know what I mean cool it's Showp in right here and then I'll get out of here I know oh [ __ ] I'm already negative 20 I'll go real fast yeah Mike uh huge fan talk to a lot of my clients about day trading for attention they come back to us and say okay well if you're a financial Services guy you're doing predictive

stuff right ahead of day trading ahead of this ahead of that and so we've been looking at ways to take agile iterative approaches into predicting trending hashtags trending keywords before it even happens so real quick example just to make it clear to everybody so if we know Hurricane Matthew is coming in two weeks three weeks we buy the keyword we start selling duct tape and glow sticks and water and everything else before it's a trending thing yep how does that are you doing stuff like that or how do you think about we're doing that around culture so that's super practical and smart and I would call that transactional and I love that [ __ ] I do it for Wine Library quite a bit I'm much more into that culturally it's understanding that Shadow Boxing is happening it's understanding that meditation as a consumer Trend in the way that Soul cycle and health happened is a trend and so we're making a lot of bets it's understanding that 14 of Atlanta's hip-hop artists are about to become the next DRS and Lil ways we're doing it a little bit more creatively and culturally it has more upside and more downside the transactional stuff I think is massively interesting the problem is for everybody in this room most of their clients don't sell the entire funnel right when you're a cpg brand you're not selling it direct to Consumer you're selling it through CVS and that's why we're at the mercy of all these metrics the problem is the metrics and the sales don't match up that has to be talked about like it anyway there's other people I don't want to be rude thank you have a great day guys