Martin Kristiseter joins George Leith this week to discuss the current relationship between vendors and media companies, automation, and the adoption of streaming. Martin is the Managing Director at Compulse, a marketing technology and managed services company that makes omnichannel advertising more efficient and profitable for local agencies and media companies. Prior to joining Compulse, Martin led innovative digital media initiatives at a number of companies, including Marketron, where he developed a reputation as a leader who can take a vision and turn it into a reality. Compulse and Vendasta can both strongly agree on a few things:

• Lower take rates are important in empowering businesses to Conquer Local
• Automation is absolutely necessary for agencies to succeed
• Streaming is here to stay, and accessing this source of communication is imperitive in remaining relevant

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Introduction

George: This is the “Conquer Local” podcast, a show about billion dollar sales leaders, marketers leading local economic growth and entrepreneurs that have created their dream organizations. They wanna share their secrets, giving you the distilled version of their extraordinary feats. Our hope is with the tangible takeaways from each episode, you can rewire, rework and reimagine your business. I’m George Leith, and on this episode we welcome Martin Kristiseter. Martin is the managing director of Compulse, a marketing technology and manage service company that makes omnichannel advertising more efficient and profitable for local agencies and media companies. Martin has 16 years of experience in digital media, ad and mark tech and omnichannel marketing. He engineered the merger of his former company Datasphere with Compulse Integrated Marketing and Zip TV. Combining the resources, staff and technology of these three companies to form Compulse, which relaunched in July of 2021. When I met Martin prior to joining Compulse he led innovative digital media initiatives at a number of companies, but where I met him was at Marketron, where he developed a reputation as a leader who can take a vision and turn it into a reality. And hopefully we can get Martin to open up about some of that journey. He’s a native of Norway, which, I’m part Norwegian, so we’re gonna connect well. And Martin currently leads the Compulse office from his home in beautiful Denver, Colorado. Get ready conquerors, Martin Kristiseter is coming up next in this week’s episode of the “Conquer Local” podcast.

George: Well Conquers bringing you Martin Kristiseter today, the managing director of Compulse. Martin, thanks for joining us all the way from beautiful Denver, Colorado.

Martin: George, great to be here with you. Thanks for having me.

George: Martin and I met as I mentioned in the intro years back when you were over at Marketron and I always admired your forward thinking vision and innovation where you were, I know Marketron from the broadcast days. That’s how we scheduled the ads and we scheduled the music around the ads and radio. And you’re there building essentially a stack of products and services when we met. And then you arrive at Compulse. So could you kind of fill in that gap of how you leave that very innovative role at Marketron and you end up working with Rob and the team over at Sinclair and then ultimately build Compulse.

Current State of Vendor and Media Company Relations

Martin: Absolutely. Yeah, Marketron that was an exciting run. Just kind of looking back, Marketron acquired a company I started, which was painfully early in the messaging space, the SMS space. So we were enabling TV and radio stations to better engage your audiences through SMS text to win and get text alerts, et cetera. And Marketron acquired that. And when we joined Marketron, it was kind of the king of the traffic systems back then. It was 2012, WideOrbit was kind of just coming to market with more of their radio products. And what happened between 2012 and 2016, ’17 was that the traffic business was quickly eroding. WideOrbit came out with a superior product around radio traffic. They used to just be TV, now they had a really good radio traffic system. And then they went after our biggest customers that were radio that also had TV. And they said, hey, why do you want two traffic systems? Let’s have one traffic system. And their pricing was superior as well. So we ended up losing. It was a very quickly eroding traffic business. And we were looking at us like, where did we go from here? And we basically said, look, we need to build up a digital business. And the digital business needs to go after our current customers and try to enable them to sell digital. And a lot of these Marketron customers was kind of the mid to like long tail, smaller radio broadcast groups. All the big guys was currently at WideOrbit. However, the big guys were the guys that were actually selling most digital. So we built up this system that we named Pitch, and it was a planning, a fulfillment and a reporting solution around some of the digital tactics. And we went to market with that. When I departed, I think 98 cents on every new dollar we had at that company came from that solution. And I think nine out of the 10 top customers we had at Marketron were not even using Marketron’s traffic system, there were digital only customers. So it was a really transformative time. But what I did see as we were doing it was just the arbitrage. We were a reseller of other platforms and we were marking it up. So think about a dollar spent in work in media was really being sold directly to a media company at $4. And they went to market at 10, $12. Between a dollar and 10 or 12 was just a whole bunch of arbitrage and fat and middle men. So I was looking at that becoming probably, it was great party at that time. And it’s probably still a great party for many companies in the arbitrage space, but what I saw was there needs to be a better business model to enable media companies like the Sinclairs and the Innovations and Tegnus and Nexstars to have a profitable digital future, this take rate of 50 plus percent or more needs to become a whole lot less. And my pivot with Sinclair building Compulse was to really build a technology platform that can integrate with the third party systems of choice that can be WideOrbit, Operative, what have you and just make a better workflow system that’s more streamlined, but that does a subscription. So it’s a SaaS business. You take a very small SaaS business per station and you pass on the media costs instead of marking it up these crazy about a margins. And what we’re doing by doing that is really bringing a ton of profit back for the media company partners that we have and that gives them a profit bill, a longevity when it comes to digital revenue and a digital business versus a quickly eroding margin compression that most of the media companies have seen us kind of OTT went from 60 to 50 now to maybe $35 CPM and you’re buying it from the same guy selling it to you for 28. So every dollar you’re losing in retail, it’s just erosion on EBITDA. And that’s really what we wanted to fix.

George: Well, you know this from the days when you started talking to media companies, they look at that traditional revenue line, like it’s this high margin line. We all know that it probably, if they added it up, it isn’t as high as it looks, but over the years they like, oh, we got this 80% or 90% margin over here. And then we start selling other people’s products and there’s a cost associated with those items. I just wanted to put this in a tie it up with a bow. What you’re doing is you’re removing some of that, so that when we sell to the auto dealer, to the lawyer, to the medical organization, there’s that actually some ad spend that’s going into the inventory that can get them the result that they want.

Lower Take Rates and Higher Margins for Media Companies

Martin: Yeah, the whole goal is to try and put as much of that spend into working media versus just paying multiple middle men. You don’t have to be overly bright to see that needs to happen. It already kind of happened in search and social where we became fully commoditized as a bit of a cost plus. And same thing is gonna happen in programmatic like OTT and Display and the rest. We think that this business model is the one that’s gonna be the kind of the future business model. And instead of being like a fast follower, we wanna be the shoe that drops that kind of changes that. It’s a big undertaking. It’s a big undertaking in technology and the investment, which obviously our ownership have been very graceful in regards to giving me somewhat of a blank check to build this out. And it takes time to also make sure all the media partners are comfortable working with Compulse, which is a standalone LLC and a standalone entity but mostly owned by Sinclair, which potentially could be a competitor in some of these markets on the linear side. But I think as you look at digital, even if you put all the radio on the TV, the print guys, the local media companies together, we are hardly a blip on that 200 billion plus dollar opportunity that’s happening in digital. And we’re obviously working really hard to educate our partners to see the world that way, because we should really be coming together more and put our spend together to reduce our fees versus thinking of the linear shop across the street as our core competition on digital ’cause we’re not.

George: So Compulse is, as you mentioned a Sinclair owned company, but it’s its own LLC. And you have been out shopping with that very now famous line that you have with the blank check. So it’s nice to have the dollars to be able to go and invest. So what have you been been acquiring to build out the stack?

Martin: Yeah, so it’s been a bit of there’s been some acquisitions and then a whole bunch of developments. The platform that we came to market with last year, it’s called Compulse 360, it’s one stop shop in regards to a omnichannel digital marketing platform. So it has a planning component, omnichannel planning, omnichannel fulfillment as well as reporting. And some of the stack we built, so the dash boards we built in house, the planning tools we built out in house, obviously through all the integrations with the usual suspects and fulfillment platforms to get the avails back and stuff in real time. And then we acquired a DSP about a year ago. We acquired a DSP in zip media, which was, we owned about 30% of that at Sinclair at the time. We took it down. And the reason we wanted to own the DSP was kind of back to that middle men to try and control more of that arbitrage. Because the typical, big DSPs in our space with media, the kind of mid to long tail DSP guys, they’re not charging 10, 15% on top of media. There’s a whole bunch of arbitrage in there. So really when you look at it now, when we have control, when we can see it, we saw that we had stations paying $28 to a DSP that cost $13 to buy that OTT inventory. So now we’re able to buy it at $13 and pass on all that savings onto our partners. So that was a big acquisition we did back last year and it gave us not only the technology, the DSP, as well as a deep end of ad tech talent, it gave us a global ad ops team as well. So we have a team on shore and offshore now. It partners to, so most media partners do not wanna build out a very large in-house ops team, it just costs a fortune, they can benefit from our global team. So just an example, if you hire a person here in Denver to be your campaign manager, it might cost you 70 plus thousand dollars, sometimes up to 90 now and it’s a revolving door too, there’s a lot of turnover. And the team that we have in India is a fraction of that. You can get some folks in India for $5,000 that are equally as trained and certified across fulfillment platform. So we’re able to, again, bring the margins back down and the take rates back down, just because of how we structured it. Outside of that, we’re actively on the acquisition train here and there is a bunch more in the hopper. We did one more acquisition in December, which was around one automotive basically. And it goes into our automotive offering. It was called 360 IA out of Lafayette. It was a smaller operation with about 20, 30 folks, but had really great ad tech platform directly to dealers. We’re able to bring that out to our partners as well as the dealership platforms to hopefully consolidate more of that spend that might go to dealer.com or other specific point solutions.

George: Well, and I think it’s interesting to note if you’re customer base, or maybe you’re channel partner base, if I could use that name, ’cause it’s very similar naming convention to what we have. They are media organizations and traditionally those media organizations do well in automotive, in medical, in legal. And it seems that you’ve built out vertical offerings around that, could you explain a little bit around that? ‘Cause I noticed that the NDA, the National Auto Dealers show, you guys were there in a big way with the drive auto brand.

Martin: Yeah, so drive auto is Sinclair’s brand for automotive. So all our partners have their own brands, how they differentiate themselves from the competition. At the end of the day, Compulse is what’s really powering it. So we work behind the brands. We power, for example, for drive auto, we acquire the dealership platform. So that’s actually what’s powering most of that business, as well as all the fulfillment around digital marketing, whether it’s search or social or OTT or kind of inventory based ads you might see in display or in social, on TV. Compulse through that ad ops team that we have globally, we’re the ones that actually do all that fulfillment on behalf of drive auto and innovation and other partners that we work with have their own offerings. But at the end of the day, we’re basically the brand behind the brand that’s powering it.

What’s Driving the Demand for Video?

George: So we just finished, as I mentioned to you before we got on the show, Gordon Borrell’s conference here, and it ran into a whole bunch of your team. You guys had a great footprint at that show. We’re gonna interview Gordon actually later today in our interview cycle. But I do wanna touch on one theme that I heard throughout that two day event. And that is around over the top advertising connected TV, everyone was talking about video. And I know you wouldn’t have been making these investments if you weren’t bullish on it as well. What is it that you see that’s driving this wave of video and the demand for it? ‘Cause if there wasn’t demand from the advertiser, it wouldn’t be driving the revenue growth that we’re seeing. What do you think is at that at the base of that demand?

Martin: Yeah, look, there’s been a C change during COVID obviously in regards to adoption of streaming. 80 plus per percent of all the households have streaming devices. And whether you’re consuming Netflix or HBO or any of the station specific apps for that matter, there is just a whole lot of consumption that’s happening through streaming now. Linear is still obviously the king in regards to the ad spend for most of our partners, but streaming is just growing very, very rapidly. So through the acquisition we did on Zip, now the Compulsed GSP, we have all that direct connection to the biggest pubs out there for some of the lowest rates that we can enable our partners, takes Sinclair for example. They might own a couple of connected TV apps. I think they have News On and STIRR. Those are two specific apps. News On is actually really sizable, kinda like localized news partnering with the Nexstars, and the Grays and other partners out there to basically put their stations on. We’re able to basically enable them to not only sell into their own CTV apps through the same system, but get the extension and the scale of the local market to be able to find those audiences on streaming as well as what we can do on the linear side. And the beauty of this is tying it all together in that omnichannel dashboards and a converged kind of selling. You could show what ran on linear, what ran an OTT and all the other tactics potentially. Incrementality, really what audience did you find on linear now, what do you find on streaming? And basically through this platform, enable our partners to grab their fair share of that streaming budget that is getting really hot, rapidly growing and there’s a bunch of competitors fighting for it even outside of the typical TV stations.

George: Well, and I’m glad you brought up the competitors because I found my myself sitting in that crowd, I’ve been doing this for a long time, as you could tell by the gray hair. And I was sitting there going, wow, there are rock stars on stage that if they were sitting with an advertiser that was spending a million, $2 million on budget across their automotive group with a team of people that are really smart, you’re really gonna have to up your game in those discussions. Obviously you’re seeing that ’cause some of those rock stars work for you.

Martin: Absolutely. The beauty of our team is we hired a bunch of guys from the TV space. And the streaming side, it’s obviously the same content, t’s video, it’s just consumed a different way, but very similar in regards to the audience going after it. Same advertisers that we have the relationships with through all these media partners that we work with. But yeah, ensuring that our sales reps know how to talk to it and talking to it in a digital fashion in regards to the attribution, the things that are readily available with streaming that just weren’t up until fairly recently on linear. Now you kind of starting to put the converge together. You can start seeing what a linear drive, what an OTT drive but just the level of position and targeting and capabilities we have now on the streaming video side is really groundbreaking. And the team has been successful in regards to communicating that value prop to our media company partners and training those guys to go out there and fetch more of that local streaming dollars.

George: I don’t know the answer. I don’t see it in the show notes, so I’m just gonna throw a curve ball from left field and understand something. Do you work with one reporting platform or do you work with numerous reporting platforms? Because I believe if we’re gonna take a rockstar, have a conversation with a large advertiser, we better be able to dial a reporting in to a very granular level.

Martin: Absolutely, so we’re agnostic. So we have built what we think is a great reporting dashboard. Now, if we have a customer that says, look, we wanna use the VDAA dashboard. We wanna use Tableau, or we wanna use tab clicks. We support any and all. All this is through the data feed, we are able to get our data from the DSP or any other platforms into any dashboard of choice. But yeah, we do offer up a omnichannel reporting dashboard that is slick, that gets down to the very granular level. And that’s obviously something that comes with the platform and every campaign. But we work with larger agencies and advertisers through our partners that might say, look, everything needs to feed into our BI system. And we’re happy to support that as well.

George: With those larger spends, they’re usually able to invest deeper into business intelligence or data science teams. They’re gonna have ways that they want to consume it depending on the CMO or who’s ever responsible for the spend. It’s good to hear that you have that level of flexibility. If you look in your crystal ball and one of the things I’ve always admired in the years of knowing you is you’re always thinking down the road. So without letting out any trade secrets, ’cause I know you won’t do that, as you look in your crystal ball, Martin, what do you see in the next 24 months to 36 months in this space?

Into the Crystal Ball of 2022 to 2025 for Vendor and Media Company Relations

Martin: I hope I can tell you that in the next 24 to 36 months we have somewhat created the trade desk of local. Basically a platform, the Compulse 360 platform that works across the industry with a lot of our partners, whether it’s Cox or Nexstar and Teg and others we’re able to support any and all. And really customize the platform to work for and their reps with their own and operated inventory integrated into it. And really help consolidate more of that spend that’s happening locally. As you’re probably gonna hear from Gordon, as you’re talking to him later this afternoon is, oh, digital’s huge, it’s a 200 plus billion dollar opportunity locally. But it’s that elephant in the room that nobody wants to talk about and that is none of that spend or the vast majority of that spend happens at the retail rates that our station partners are out there charging. And unless we fix that, all that is just a pipe dream in regards to what could potentially be available. We need to change the business model. We need to take down those take rates to enable our media partners, social media partners to be competitive, to get their fair share. And I hope the platform and the partnerships like you guys and others that we have, we’re able to bring to market the solution that will really serve the need for the advertisers and at a rate that makes traditional media companies competitive. And we will see a rapid growing, but also profitable digital revenue stream coming out of those station firms.

George: No, and I like that you’re calling it out because it’s something that you’re right. You don’t have to be a rocket scientist to know this has been going on for a long time. And I think the advertisers just took it. I remember talking to a good friend of mine the other day and he’s taking over the family business from his father. And he said, moving forward, the marketing dollars will be spent based on ROI, not based on who can buy me the best golf game, the best trip, the best steak dinner. And that relationship piece that’s in my legacy, that’s how I was taught to sell. Build rapport, take ’em out for dinner, give ’em concert tickets is now being replaced by a buyer that really is digging deep into the numbers and knows that it’s an investment, knows the dollars are precious and wants to know that it’s performing an ROI. And it seems like you’re meeting that customer base where the rubber hits the road. It’s pretty cool to see. If people wanna learn more about Compulse, how to get a hold of you?

Martin: Go to compulse.com. It’s probably the quickest way to do it. You can get a hold of me obviously through LinkedIn is probably the quickest way to get ahold of us. But yeah, check out compost.com and read up on our solutions and reach out, we would love to talk to you.

George: Good, and I appreciate getting the learnings today. We’re gonna make sure we put all this in the show notes. And by the way, Martin’s team is producing some great content on those LinkedIn channels. I mean, they’re consuming and liking it as I continue my learning around. Hey, by the way Martin in Canada, CTV is the Canadian broadcast television network. So when that acronym gets used, there are people in Canada going, oh no, but it’s connected to. There’s a lot more to this on over the top, connected TV, attribution rates. There’s a lot to unpack there. And thanks for bringing the content that you have online to take salespeople down this road to learn a little bit more about it.

Martin: Thanks, George. Yeah, we’re happy and hopefully we can continue to produce some great content for you all.

George: Appreciate having you on the show. Have a great day.

Martin: Thanks George, you too. Have a good one.

Conclusion

George: I love talking to Martin. He’s one of the sharpest people in the space. And what he’s building at Compulse is really interesting because he mentioned it. Compulse is owned by Sinclair Broadcast. Sinclair Broadcast is one of the largest television broadcasters in the US. And he actually has built a managed service and a technology company that serves a number of the large broadcasters. In fact, maybe even competitors in the market, but they’re supplying services that are outside of that linear television business. So let’s dig into some of the things that Martin talked about. He talked a lot about arbitrage. What the hell is that? If you’re wondering what it is, it’s when you a wholesale rate for something and there are a bunch of middlemen in there that need to eat. And what that does is it drives up the retail rate that an advertiser is going to pay at the end of the day. Now, unfortunately, when this happens inside an advertising spend, you may be as the advertiser spending $25 a thousand to capture an audience, but actually only 12 or $13 is being spent on ad spend or on the inventory. The rest of it is going in the middle. Now that’s a hell of a lot of creative. That’s a hell of a lot of video that’s being shot if we’re talking about OTT. A lot of times it is not even building creative. It’s just feeding all of those miles that are involved in the middle. So what Compulse is dead set on doing is reducing the amount of arbitrage in the middle, getting a fair profit for the services that they’re selling, the inventory that they’re selling and making sure that the advertiser gets amazing return on investment, which then usually leads to an increased ad buy. Our CEO, Brendan King, very famously has told our CMO Jeff Tomlin, you have an unlimited ad budget, just prove to me that it’s working. And a lot of advertisers are like that. I’ve been selling advertising for a long time. So I’m a big believer in the mission that Martin is on. Where can we put more ad spend against the inventory and make it work better for the advertiser? The other thing that Martin talked a lot about is the ability to empower those organizations to provide the right services. And there is this rise of over the top connected TV, can we also empower the trusted local experts? There’s a lot of data to support that when somebody looks to run video advertising, they reach out to their local TV rep, their local cable rep. And that’s because those are the people that they feel are video experts. But Martin and Compulse are dead set on being the provider of that information and that data and that technology so that trusted local expert can walk in there. And that’s what we’re all about here at the “Conquer Local” podcast, empowering those trusted local experts. Today, has been a deep dive into video advertising, utilizing OTT, over the top, CTV, connected TV and streaming. If you like Martin’s episode discussing ad and mark tech, let’s continue the conversation. And check out episode 217, the evolution of search engine marketing with our good friend Sandy Lore, where she talks about the new marketing stack. Please subscribe and leave us a review. Thanks for joining us this week on the “Conquer Local” podcast. My name is George Leith, I’ll see you when I see you.