Transcription: Mike Fitzsimmons, CEO, Connekt Interview

 

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Q Tracy Swedlow, ITVT
A Mike Fitzsimmons, Connekt
 
INTERVIEW DATE: October 30, 2017
Q: Hi, this is Tracy Swedlow and we’re on Radio ITVT.  This is our 10th anniversary, by the way, of all of these interviews that we do.  And today, I’m very happy to 
have Michael Fitzsimmons, who is the CEO of a new company called Connekt, which is spelled C-O-N-N-E-K-T.com.  Michael, welcome to the show.
 

Tracy Swedlow

A: Hey, thank you so much for having me.
 
Q: Well, this is a brand-new company, and it’s doing a variety of things that the industry is working on or needs, and we want to hear all about what it is that you are doing and what your goals are for this new company.  Of course, everyone’s familiar with the previous company that you were head of, which is called Delivery Agent.  So why don’t you tell me a little bit about what Connekt’s main goal is, or the types of services you provide, or how this fits in with happened to Delivery Agent.  Or is this basically a reinvention of Delivery Agent?  Can you tell me?  Because I know you’re doing commerce and interactive advertising.  So, what is this?  How does this differ?
 
A: Yeah, so I think maybe just to address the journey of how we got to where we are today.  I’ll maybe start there and then we can get into a little bit about where we’re going, just to close the loop on that.  So as obviously you know, we spent a lot of time together during the Delivery Agent journey, which we’re all very proud of what we did accomplish during that timeframe.  That business was in existence for over a decade, believe it or not, and accomplished a ton of very interesting milestones in and around the ecosystem and monetizing entertainment content through new and innovative technology solutions.  We sold Delivery Agent last year to a private equity firm called Hillair Capital in the Valley.  Hillair looked at the various assets of Delivery Agent and identified what they believed was the most valuable asset of all the various businesses that we were in.  They effectively invested those assets into a new company brought on by myself and David Rudnick to cofound the new company, which is Connekt.  So we were very, very blessed to be able to take all of those great IP, the great assets, the great commercial relationships that had been formed around the advanced advertising space in the Delivery Agent journey and forge those into a new enterprise, which is now Connekt Media Inc., which is the company that we’re here to talk about today.  So that’s how we got to where we got to.  We’re still a relatively small company, about 50 employees.  We’ve grown pretty rapidly since the beginning of this year with a real focus around taking advantage of all the great developments in terms of connected devices and data availability and artificial intelligence and all the great learnings we had during the Delivery Agent journey, and really putting all that to work to help advertisers effectively make their linear TV advertising more effective, and that really is our mission.  We talk about transforming TV advertising, but that’s really what it’s about.  We think this idea of transforming TV advertising for a connected world is a massive opportunity, and we think the timing couldn’t be better with the development of all the various technologies around the periphery that make all this stuff work.
 
Q: I would say, in light of the fact that the new ATSC spec is emerging, that the connected TV marketplace might actually have a fast trajectory up.  There’s a lot of development that’s going to enable local television to take advantage of connected TV and the diginets and the broadcasters and everybody.  So, this might be a good time to see how you can take advantage of that.  Would you agree?
 
A: Yeah.  Look, I think if you just zoom out and you say, “What’s different now than it was 3 years ago, 5 years ago, 10 years ago?”  It is pretty amazing how far we have come.  It’s amazing that just from a connectivity perspective, I think depending upon what data source you rely on, but this year, I believe, will be the first year that in the U.S. over 50%, --five zero--of TVs will be connected to the Internet.  It’s a simple point.  That’s a real thing.  That’s a tipping point in any industry.  But then you also think about just the reality of the worlds around us and linear advertising has continued to be durable.  It’s amazing that it’s still as big as it is, a $70 billion plus industry, but you also have this e commerce market that continues to rapidly grow and it’s over $400 billion.  So, you put all that stuff together and it’s undeniable that all of these pieces shall meet, and that’s really what’s so exciting for myself and for David Rudnick, my cofounder at Connekt, and really why we’re so motivated and excited about the opportunities that are immediately in front of us.
 
Q: Are you still in the business, though, of fulfillment, I think like Delivery Agent was in when people buy something?
 
A: We are not.  That is one of the businesses that Hillair Capital sold off as part of--after they acquired the Delivery Agent company, so that business has been sold off.  We do have partners that are in the fulfillment business, but we, ourselves, do not get our hands dirty with that component.
 
Q: I’m looking at your list of partners, it says Amazon and As Seen On TV, and obviously these are companies, and all the other big corporations you work with like CBS, etc., but are they doing the fulfillment or is there a third party out there?
 
A: Well, yeah, so our relationship with Amazon is actually not around the fulfillment piece.  We actually recently did a deal with Amazon to bring Amazon Pay into our Shop TV ecosystem, which effectively will enable users to use one-click Amazon payments to transact directly from an ad or a show, so that’s pretty exciting.  But just so you know, that’s the nature of our Amazon partnership.  It actually doesn’t really touch the fulfillment side of the house.  Those other media partners that we work with, guys like CBS, etc., we do partner with a third party to provide those fulfillment capabilities for them.  So, they’re not doing that themselves, obviously.  That’s not the business they are in.  And we do help intermediate there, because we do have multiple fulfillment partners plugged into our Shop TV platform, so it effectively enables that to happen, kind of one stop shop, if you will.
 
Q: So, let’s talk about the various technologies you offer for the various formats.  It was nicely explained on your site.  You have four technologies that you offer, and those technologies will deliver different types of advertising and commerce-related services.  Can you tell me a little bit about your overall product and solution strategy?
 
A: Yeah.  So, let’s just put it into those four buckets to stay on that line.  So first and foremost, the data is a massive part of this story, and I think we’re all in the age of talking about artificial intelligence and machine learning and if you don’t have a neural network of some sort doing something for you behind the scenes, you’re not up with the times.  But in reality, for us, it’s massively important.  We were early adopters with ACR and some of the identification technologies.  So, we definitely spent our time in the trenches figuring out how to become experts on content identification.  What we realized is that, although that’s exciting, the really next part of that is also what gets really powerful and we put it into two big buckets, really simplistically.  And our data engine we call “CARL” is effectively our AI platform that powers this stuff.  With CARL, we talk about two concepts: we talk about “What’s On,” which is what is the user watching, or the viewer watching at any given point in time, and then we talk about “What’s In,” which is what is actually in the content they’re watching.  So, this could be as simple as using ACR to identify that you are watching an episode of “Star Trek,” or using an ACR to identify that you’re watching a Toyota commercial.  But then the “What’s In” is then also using our own proprietary metadata to determine what’s in that content.  So, if you’re watching the Toyota advertisement for this specific Toyota Camry with this specific offer associated with it, and then matching that data to who you are.  So, we can really get this picture of “What’s On,” “What’s In,” and what’s the profile of the viewer that’s actually watching what’s on and what’s in?  So that’s CARL.  That’s really the core of our entire offering is this big data engine in the cloud that’s connecting all this data from friends of ours in the industry, on the ACR side, or on the EPG side, or any of those other metadata sources that we’re all familiar with, but mapping all of that data to this other information, that ultimately makes that data much more powerful.  So that’s the core of what we do, is our CARL data platform.  We also have a couple of specific tools that help support that.  One we call FLEX, and that’s what enables us to actually manage these campaign, so we can dynamically manage interactive ad campaigns from one centralized back end, and we can do that across multiple platforms.  So really, a key product for the company that enables scale is if you think about wanting to add that over later, that Toyota ad, across any TV that that ad’s running on, we effectively have a consolidated tool that enables us to do that.  So that’s our FLEX tool.  And then the last piece is what we call TRANSAKT.  We just announced last week that we received a patent for t-commerce for our TRANSAKT platform, and the TRANSAKT platform effectively is the return path.  That’s the piece of the engine that ultimately enables the user to take action against that advertisement that they’re receiving.  So, this could be in the form of a purchase, of a coupon, of setting up an appointment, things of that nature, all the stuff that we talked about for a long time of being able to add an interactive layer, but that’s our Transact technology, which again, I’m really excited about the fact that we got our first patent with Connekt.  As you know, those are not easy to come by, so we’re proud of that.
 
Q: I was going to say, I can’t believe you got a patent.  People have been working on t commerce for 10, 15 years, so everyone else has got patents out there.  I’m happy for you that you pulled that in.
 
A: No, we’re excited.  Just to be clear, that is a piece of IT that we had been working on for many years as well.  We just got the patent issued, though, last week.  Actually, yeah, last week, so that’s an exciting development for us.
 
Q: Woo hoo!
 
A: Yeah, it’s good stuff.  It’s amazing.  We think we’re so far along in this space, but this is all relatively early stuff, so I think there’s a lot of running room ahead of us.
 
Q: I try to explain what t-commerce is, sometimes, to people out there in the universe, people not necessarily in our industry and they’re like “what?”  And they don’t realize that that’s what this is and it’s been nascent for 15 years, right?  I hope we’ll see more of these things.  You mentioned to me earlier that you do have a relationship with CBS to deliver something for their “Star Trek: New Discovery” program.  Is it t-commerce related?  Because I know “Star Trek” fans love to buy stuff.
 
A: Yeah, no, it is.  And look, a big part of what we learned in terms of our journey through this industry is just that, any ability to drive direct fan engagement and help partners monetize that is something that we’re really excited about being a part of.  They are a great partner of ours and we’re doing some really innovative things around working with them to help monetize the new season and doing that through a fully-integrated commerce experience that you can get to from all the various, in the case of “Star Trek,” the various “Star Trek” digital experiences.  So yeah, that’s a great example of our platform in action.  I think some of the other things that we’re really excited about is what we’re doing on the advertising side.  You might have seen the announcement that we made where we hired a new Chief Revenue Officer, Mike O’Donnell, who came over to us.  Mike is just a great leader in this industry and comes at it from a bit of a different angle.  Mike was running sales for a company called YuMe, another large video ad platform.  So, Mike, at YuMe, was running $150 million revenue business and what not.  And, so, what he did, a little bit of a different focus than what Connekt is doing, but the same relative constituents of trying to help advertisers and marketers navigate their way into this new world, and so we’re really blessed to have him, and he’s been building a great team on his side.  And the solutions we’re bringing to market for advertisers are just awesome.  And I think, as you’ve seen, we talked a little bit so far about our technology.  We haven’t really talked about the formats and what it can enable, but what we’ve been working on, both from a linear ad augmentation perspective, as well as an interactive perspective, we also have a re-targeting (retargeting) solution that we’re now in market with that enables us to take the signals from the viewer of the program and directly re-target to them.  There really is just some fascinating stuff happening on that front.  As we know, advertisers are thirsting for more ability to directly connect with the viewers to see their ad.  So excited about that, excited about Mike joining, and then he just brings a great addition to the team.
 
Q: Re-targeting is definitely a very effective way to drive interest and clicks, but are you doing this through--because you’re doing overlays, as you said, overlays in content, overlays for advertising.  Is the re-targeting allowing you to pop up an overlay on some other show if you’ve known that they watched something else but you’re trying to drive their attention back to a different show within that network, perhaps?  Or are you driving it to a second screen?  Can you explain a little bit how that works, please?
 
A: Yeah, certainly.  So today, the primary use of the technology today is for second screen, synchronize a second screen engagement.  But there are certainly opportunities to do what exactly what you said.  We’re sensitive at the moment in terms of how that’s ultimately going to play out.  This is a delicate time and you need to be very sensitive with all the things that could be done that would not be in the best interest of the industry from a conquesting perspective and some of those pieces that we’re highly sensitive to.  So, we’re still working through specifically how the retargeting capabilities will be best utilized on the primary screen over content.  Where we are able to use them actively on the primary screen is through our Shop TV application.  So, as I think you know, or if you don’t, just to refresh, we do own and operate an over-the-top application called Shop TV, which effectively enables us to launch these immersive brand channels.  Shop TV is like a Netflix.  It’s a pre-installed app on smart televisions.  Again, that is a fully owned and operated Connekt application and experience.  So, we are able to launch retargeting capabilities within that channel, and directly to a second screen today.  We’re working through, again, how that works on the primary screen and how to be sensitive to all the various constituents that that might impact.
 
Q: If they launch that app, do the offers only exist within that app or is that what you’re working on is being able to pop up something, once you’re subscribed to that app, onto any channel that they’re navigating?  Or maybe on a network by network basis, whoever has relationship with Shop TV?
 
A: There you go.  Exactly.  And that’s the idea.  So, once we build additional, more powerful consumer profiles, then we can drive more targeted marketing opportunities to you, and hopefully things that you’re just more interested in, with the end game as being creating more value to the user by giving them content that’s more relevant for them, and also driving value to the advertiser by hopefully driving more retail transactions either in their stores or online for the brand themselves.
 
Q: And you said you’re working with Amazon to integrate one click, or the transaction engine, I suppose, for the Amazon Pay.  Are you also integrating with their Alexa platform, to shop while you’re watching TV?
 
A: You know, it’s interesting.  We’re live with Google on the voice side.  We’re not live on the Alexa platform currently, but we are live on the Google platform with Shop TV and our labs, which is fascinating itself.  It’s so fun and it’s amazing what you can actually do.  So, we are working hard on that in parallel, but that’s still a lab project for us and is not commercially available yet, but I certainly can show you how it works at a future follow-up and you can actually play with it.  It’s neat stuff and to see it in action--it uses all the same tools that we’ve already talked about.  It uses CARL, which is our AI engine, to basically use content recognition to identify what you’re watching, sync that with your audio, and then use our Transact engine to ultimately facilitate the transaction.  So, we are doing some cool things on the voice front.
 
Q: I definitely would love to see that.  Will you be bringing that to TVOT?
 
A: It’s probably pre-mature for December.  It’s probably more of a Q1 thing, which I think will be closer to the commercial launch.  I’ll see if we can bring something.  I can show it to you, personally there, but I wouldn’t want to show that more broadly.  I don’t think it will quite be ready for commercial launch until Q1.
 
Q: Okay.  I just have to ask.  So as far as your e-commerce capabilities are concerned, you’ve always been white label when you were Delivery Agent.  You’re still white label now, correct?  And people don’t realize they’re interacting with your back end, except for the Shop TV thing.
 
A: Correct.  No change there.  We’re not branding Connekt as a consumer brand.
 
Q: And so are the partners that you have, like CBS and Sony and Showtime, HBO, are they representing themselves as a commerce-enabling partner?  Do they proactively with you seek to deliver commerce opportunities or are they playing a low-key approach?  Is this in the testing phase in other words?  How proactive do you think your partners are being now that they have access to this technology?  How experimental are they?
 
A: Yeah, no, I think they’re always as they should be, content companies first.  I think everybody acknowledges that fan content relationship is paramount, because if you lose that, you lose everything.  So, there’s always that sensitivity that I think is shared amongst all of our partners with us that you want to be sensitive to.  With that being said, I think we’re all in the industry collectively aware that we need to find new ways to monetize, that the old ways of doing things are changing, and this is certainly an interesting opportunity to embrace.  So how our partners are using it, I think varies.  We have built our solutions in a really modular fashion.  I can’t announce it right now, but we have our first version of our platform which are fully sassed, so they’re fully just available to the third party to use on their own at whatever discretion they would like to, and we have certain partners that want us to do much more of a managed solution.  It really does vary and what we try to do is just build this thing so it’s modular, so any partner can take advantage of which piece of it they want to take advantage of to service their particular needs, which, as we know, they also do vary; they vary pretty dramatically based upon who you are.  You might have a partner like HBO who doesn’t have ads, so they’re not really super interested in doing overlays over linear TV commercials.  So that’s a good example of why you have to be modular in how you approach these things and have solutions that vary, based upon all the various constituents that are in this space.
 
Q: I would think they would want to offer stuff for “Game of Thrones,” though, somewhere in the fray.
 
A: Right, and that’s where there’s a big focus in engaging their fans to sell fan-related products for “Game of Thrones,” that’s exactly--that’s a good example of precisely what they would want to do.
 
Q: Delivering an engagement opportunity for the fans is, I think, is important or should be important.  Do you have a partner that you work with or can you in a modular fashion, like you said, click in with your customers’ fan engagement platform?  Maybe there’s chat or social media or there’s some way that the fans can know that they have access to the commerce aspect of the piece of content that they’re interested in.  Do you understand what I’m saying?
 
A: Yeah, so, sentiment is a huge indicator and some of the stuff we’re working on, on the sports side, this is a really specific example, is taking things like knowing the score of the game in real time to help you make a more relevant offer to that user.  It might seem simple, but things of that nature, knowing who just scored the basket.  So, there’s some just really cool things and this is why I go back to the data side of this and the artificial intelligence side of this.  That is just so important.  When I sort of mentioned earlier “What’s On” versus “What’s In,” I think over the last several years, we’ve all spent enough time with the ACR guys in and around the space that have really been focusing on the “What’s On” piece, just trying to figure out what people are watching and trying to help build new measurement solutions and other great tools.  But really, once you connect that with the “What’s In” and then you can add in sentiment and you can add in consumer profiles, you start to have this incredibly powerful targeting engine, and that’s really what we’re focused on.  We’re really focused on connecting all of those dots, so we can ultimately help marketers and advertisers more effectively reach their target consumers.  That’s what success looks like for us.  So yeah, I think sentiment is a big part of it.  Any other data points, whether you’re getting those from third party social feeds, or whether you’re actually getting those from others, there’s some just incredible things.  We have a partner that’s working on how good of a catch an NFL player did based upon their arm extension and that’s creeping into our system, now a good catch versus a great catch, based upon how far the player’s arm extended, and you can imagine, just stuff like that could feed into our engine and enable us to dynamically serve up an ad for--who knows what the product is--Copper Fit, potentially.  So, it’s just some really cool stuff, like that. I was just saying the data is awesome and there’s so much of it, so our ability to contextually target that sort of thing is exciting.
 
Q: I don’t see a sports partner listed here on your partner page.  Is that something you can say publicly?
 
A: Not yet.  But we’re doing a lot around that category, as you can imagine, especially for the in-content components.  There’s just so many opportunities there.  It’s one of the mediums, as we know, that continues to crop up linear TV and so clearly a key focus for us is innovating in and around.  So, I’ll have a lot to announce there over the next couple of quarters.
 
Q: That’s great.  Where did the AI technology come from?  AI’s been around for a while, but it’s obviously emerging as an important field of development.  We’re going to be covering it ad infinitum at the next TVOT show, December 7th.  Everyone should show up.  So, I’m curious, is this something that was developed in-house, or did you bring on some resources?  Or business developed it at Delivery Agent and you just moved it over into Connekt?  How come it’s ready all of a sudden?
 
A: We had a lot of the foundational components already created as it relates to working with some of the third-party ACR platforms and then our proprietary bit, which is around the “What’s In” part of the equation.  I think, specifically answering your question, we started to invest more heavily in Ph.D.’s on our staff and data scientists and building out that team.  And look, it is fuzzy, and a lot of people are using the terms, and I think back to your question, what is it really?  So, what it really is, is the ability to take millions and millions of bits of data and connect the dots and turn out outputs and algorithms to come out of that that can have machines doing more to predictively market to that end user.  So, when I go back to it, if you think about the input into our machine, that can include ACR technologies that we know well or EPG technology; anything to identify what’s on your screen, and then we have all this other data and we connect those dots, and ultimately, we know if the catch was a good catch or a great catch, this is the right algorithm to trigger and ultimately, here’s the offer for that user.  That’s where we’re going and what it actually means to us.  It seems trivial and it’s just not is we just did a deal with a large sports merchandising company called Fanatics, which is a big e-commerce company that does--and their product catalogue has over 400,000 items across all teams and sports.  And so, as you can imagine, the dots that we’re connecting are “What’s On,” “Who’s Playing,” did Steph Curry just make a three-pointer?  Yes.  Should we offer up this product from Steph Curry, and there’s got to be an algorithm doing work behind the scenes to bring all that to life.  That doesn’t just happen.  So that’s sort of a very specific example of just thinking through how it ultimately is--those dots can connect.  So yeah, we use a lot of the foundational stuff from the old company, but we really did and have gone out and invested heavily in the team and tools to continue to push that forward.
 
Q: Well, what’s the holy grail yet that’s still out there, the thing that will really allow all of this to ramp up really super quickly?  What are your goals for making a--
 
A: So, no new news here.  I think from the industry, and we’ve all been through this for long enough in our various capacities that scale is--it remains the single biggest challenge for an unbridled growth in this sector.  We’ve got a lot of upcoming announcements on that side of additional platforms that we’re deploying out.  I mentioned earlier, just in terms of the data, I think we’re over 50% of TVs are not connected.  But the scale matters, and if you go talk to any marketer in the world, my perspective, they’re all aware that linear television advertising is ripe for innovation.  There’s been a lot of talk about programmatic and addressability.  I think there’s a general belief.  The next phase is around interactivity.  Think about if online advertising didn’t have the ability to click on a banner ad or if Google ads weren’t clickable.  Think about that world.  So, Google wouldn’t be who Google is today.  So, I think just using those data points, it is critical to--scale matters.  We’ve definitely got to get to a point where we have adequate scale and when you go into a marketer, you can actually offer them the ability to do this across 50 million households, and that’s important, and that’s the tipping point, from my perspective, for all this stuff.
 
Q: Well, that sounds good.  What kinds of things do you think you might want to talk about at TVOT?  You want to talk about your sports stuff at the event?  No, you said you couldn’t do that yet.  I hope you can reveal a little bit on what’s going on.
 
A: Sure.  And we have some just really exciting partners and we’ll be making a couple more announcements.  I think we’ll be announcing--there’s a couple more key announcements we’ll make.  Maybe we can try and connect those dots with the actual show itself, but just in terms of what’s most fascinating to me is how some marketers are using the platform; it’s really cool to see.   So, we have some really interesting case studies we can talk about in terms of just some large marketers and large brand advertisers and how they’re actually taking advantage of the Connekt platform and that could be cool, and I can take you through a lot of that in real time.
 
Q: All right, well that sounds great.  I’m looking forward to hearing more about that and seeing all of your announcements.  I’m sure working with the sports community will really help you scale.
 
A: Yeah, it’s exciting.
 
Q: All right.  Well, thank you so much.  I look forward to seeing you in person.
 
A: Great.  Well, thank you so much for the time.  I appreciate it all.
 
Q: This is Tracy Swedlow, Editor and Chief of Interactive TV Today and the Co-Producer of the TV of Tomorrow show.  Mike Fitzsimmons will be at TVOT and look for him at our coffee break.  We really appreciate everyone listening.  This is our 10th year doing Radio ITVT.  TVOT will be on December 7th.  See you there.
 
 
 
 
 
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Region: 
North America