ADOTAS Advertising Week Conversations: David Verklin, CEO, Carat Americas

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So tell me how Carat Americas got off the ground and what it’s strategy is.

In 1998, we started Carat [North America], and began with a couple of acquisitions. We bought a media buying service here in New York called MBS….Media. Buying. Services, and a company in LA called ICG, International Communications Group. In the late 90s, we started with, I would say, $300 million in billings. Combined, we had maybe 125 people.

On April 1, 1999, we won and took over the Pfizer business, which I think was the key moment for Carat in the United States. So April of this past year was our seven-year anniversary. Today, we employ about 1800 people and are at about $7 billion in billings.

We’re a diversified marketing services company, is what I would say Carat Americas is. It’s just that the core of our business is media. The reason why I mention that is I think Omnicom would be a diversified marketing services business whose core business is creative. So today, we have Carat in the United States, but we’ve also built Isobar in the United States, which brought us acquisitions like iProspect, Molecular, Freestyle and Carat Fusion. We also have business like Velocity, a sports & entertainment [business] which is one of the five biggest players in sports and event marketing, or MMA which [stands for] Marketing Management and Analytics, one of the leaders in marketing research and ROI analysis.

So you can begin to see what we’ve done, we’ve moved from a media services company to really a digital marketing services [company]. Today, we’re now about the fifth-largest buyer of advertising time and space in the United States.

So, tell me about your MIXX speech, Gaming: Be a Part of the Experience.

There were a couple different directions we were talking about for this panel. I think the first view is that there seems to be almost universal belief that commercial persuasion being integrated to the gaming environment will grow in the months and years ahead. I don’t know anybody who thinks that commercial persuasion shouldn’t be able to be brought into the gaming environment. I guess you could make the same argument with wireless, right? Most people feel that there’s going to be some forms of commercial persuasion in the mobile environment.

The first bullet I’d want to give you is it really advertising or is what we’re really talking about commercial persuasion? They’re not the same things. We need to think about advertising, it proscribes a construct that is one you and I are familiar with. It’s got a unit, it’s either 30-seconds long if it’s TV or it’s got a certain shape of size if it’s in the online environment.

But in gaming, I think the first thing we’re going to have to invent is a way to involve commercial persuasion in the gaming environment which doesn’t disrupt the user experience. That’s the focus of our panel. Massive has done that, I think, in an interesting way with the advertising units that activate when your avatar is proximate. That’s really interesting, and obviously you can integrate ads into billboards in racing games. There’s also some real debate about whether advertising can be put into the “refresher spotting” periods of some games. There’s also the idea of putting advertising on new maps and new game environments.

The question is really the same question that I think people are asking YouTube or any of the video file-sharing services, which is ‘how do you avoid advertising in gaming being akin to pre-roll in video?’ One of the biggest issues on something like YouTube is to stick a 10-second unit before the video, and it’s irritating. It’s basically sticking an ad in front of the stuff people want to see. It really pisses you off. The user wants to click on a video, and before they get to the video, some irritating ad unit comes in. Is that the best we can do?

That’s pre-roll. I think really the fundamental issue facing video file-sharing is also how do we integrate commercial persuasion into that environment in a way that doesn’t disrupt the user experience. I would argue pre-roll disrupts the YouTube experience, and we should not allow the same thing to happen in gaming.

What we want to talk about in this panel are two or three of your favorite examples which you can explain to people or they can go see of how advertising has been put into the gaming environment and is non-disruptive. The second thing we want to talk about is the definition of gaming. Gaming actually needs to be broken into three different spaces. One is console gaming—the Playstation, the Xbox and is focused fundamentally on 15-40 year-old males. But there are two other parts of gaming I want to discuss on this panel as well that are just as big. One is online gaming, which is more in the whole area of gambling online. I think the first debate we have to have is will that come to the United States?

I think recent government legislation might make that more difficult.

It has. The question is, is that the way it always will be? The fact of the matter is you can game right now. Video poker and casino is not very far from making that work online. That could be a huge business.

Then, there’s the third area, social gaming—mainly PC-based—, which is really appealing to the female audience. That’s Scrabble Online, word games, and SIMS, which actually have a very large female audience.

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