Ad Budgets Shift from Social Media To Connected TV: Steelhouse

in front of Congress. One thing we've heard less about is what's been going on in the minds of big advertisers and how they're going to be using Facebook going forward. Here to talk a little bit about it from that angle is Mark Douglas, chief executive officer of Steelhouse, which works with advertisers of all sizes and tries to give them some context from a data perspective of how to go about doing so, and his bay in Los Angeles. Mark,

thank you so much for being with us. UM, So just let's start with how much advertisers have actually pulled back in the wake of the Facebook reach, if at all. UM, we haven't seen any advertisers pulled back, and we have UM close to a thousand pretty sizable advertisers that use our software. Um, what we've seen is actually a lot more concern about GDPR, which is a whole another topic.

Basically there being yet global basically is a global UM protect a privacy protection law that's coming out of the EU, and so I think there's and that has that has some stiff penalties. If you violate it, you can be penalized four percent of your revenue. What's the concern on behalf of advertisers. Well, because the virtually every company in Europe has to conform with it, and it's brand new, it goes in effect on MA and UM. Europe has

more consumers than actually the US does. So in other words, the idea here is advertisers wouldn't be able to access the information of European users. Therefore they couldn't target the odds as well as the idea they have to dislose. But what the information that they're collecting is being used for.

So Apple actually this past weekend released OS updates for every every Apple OS, iOS, Apple TV, Mac os and now when you open their operating systems or any of the apps, they just slose to you that they value your privacy. They dislose what data are collecting, how long they're retaining it for. That's going to happen in Europe for essentially every company in Europe and every app in Europe. And Apple did it worldwide. I don't know if they did in China, but they did it certainly in the

US and Europe. And that that happened for Apple this weekend. It has to happen for all companies that operate in Europe. So if someone, if you're a US company, soone gets on an airplane, when they get off the airplane and they read and they use your app, you now subject to that law as a company. And that's coming on. Mark. I want to give you about the thirty seconds or maybe even forty five seconds, give us the short version

of of Mark Douglas. Because you're born in the Bronx Aviation High School, you learned to code in Seattle Oracle Center of you E Harmony. These are all part of your biography. Yeah, so um, yeah, I'm a Bronx kid and UM dropped out of college about one semester and then UM taught myself to program, bought a book and borrow a computer, taught myself to program and then UM just kind of found kept connecting with the right technologies.

I learned how to program on Windows, which is now way back from the developers at Microsoft that wrote it, and then eventually met Larry Ellison and then that you know, was in Silicon Valley, and now um, I'm in Los Angeles kind of enjoying the l A lifestyle, but I

think working harder than most people. And you know, I bring some New York five to l A, so working a little harder than most people in l A. The reason I wanted to introduce your background here is because I want to get to this idea of how you reinvent yourself and specifically the reinvention of video and video on demand. Tell us what's going on with things like video advertising, Direct TV now, Hulu Live, Fox Now, and the way that marketing and advertising is going to be

working with video in the future. So, you know, one thing that's really interesting. If you ask UM, if anyone in the industry, what's whether to where the biggest um at tech companies, the first name they'll say is Google and the second name they'll say is Facebook. Well, actually that's not right. Fox is actually bigger than Facebook. And if Fox and Disney combined, they might be bigger than Google. So and that's all television ad revenue. All that ad

revenue is going online and so connected to TV. More than six percent of Americans now watch a majority of their television on demands, so use it. It's started with Netflix, but now it's basically every channel. And so when you watch television is broadcasts we might I say broadcast, I mean just cable. Um, those ads are just broadcast based on time slots. Like the people watch the show have these qualities and we want to, you know, kind of

put our message in front of them. But you watch the same exact show on connected TV, um, you can you Basically the targeting on those ads is now much more personalized in the way that Mark Zuckerberg talked about basically gave a tutorial on Internet advertising this week and for a lot of centators even just the Internet, and um, so you get kind of the same kind of targeting

now for television. It's a huge transition. Okay, So given that that is a huge transition, are you seeing that Facebook and frankly Google are losing some of the lure that they once had because these targeted ads are perhaps even more effective given the fact that they are more notable as the only advertisement and they're on a specific show, and they're also not skippable. The ad completion rates broadcast television or fourteen percent, so because most people DV are

the ads. The ad completion rates for connected television on demand television are nine percent because they're completely unskippable. And you're right the the earl. We can now measure this at sealhouse. We can now measure this. And the TV is a powerful medium and it's showing up on connected

TV also, so we're seeing already some budgets. That's where we're seeing some budgets move where the early adopters have connected to the advertisers who are early adopters are starting to move some budget from UM social media, from other digital channels like mobile advertising, display advertising to television and UM. We're seeing response rates for the consumer that are just, you know, kind of really really strong. Approaching paid search

in terms of effectiveness. If you're in the marketing or advertising world and you're listening to Mark Douglas, what are some of them I'm going to use the term buzz words, but what are those key things that you want to be spending your weekend learning about so that when you go into the office on Monday, you can have a constructive conversation about how your business is going to operate

in the future. The that's an interesting question. I think, um, you know, the topics we touched on are really the ones I'm putting most of my energy into, and it's there. There's basically another way to think about it is that

traditional media is making a comeback. It's kind of been predicted, you know, like Google dominates and Facebook dominates, and Display dominates, and essentially traditional media because it's not just connected television, digital radio is like with and or with Spotify, who I think just went public or is about to go put don't know they went public, got it, and so that is making a big comeback, and I think that's

where we're putting a lot of attention. I think any advertiser should, especially traditional media advertiser, should be thinking, how can you know? How do I how do I now target traditional media? Thanks very much for being here, Mark Douglas, Chief executive Steelhouse. You're listening to Bloomberg. It's been one of the biggest secrets in the global oil business for more than forty years. These are the financials of Saudi Aramco.

Well secret no longer here to tell us more. Will Kennedy, Managing editor for Europe, Middle East and Africa, Energy and Commodities for Bloomberkey, joins us for London. Well Kennedy, thank you very much for being with us. Just to give people a little bit of a sort of description as to why this is so relevant and interesting, not only if you're an investor, but just if you want to

understand how the oil business works. There were two things to say I think him One, Saudi Arabia has suggested that it might like to I p O this company, and it would, given its scale, be the probably the largest sequity deal ever. So that's made it hugely interesting to investors and everyone around the world. And secondly, this soil at Aramco pumps underpins the whole Saudi economy. This is the income stream that pays for social spending in

the kingdom. It's increasingly assertive military and uh the royal family. So I want to just get your sense. Do you think the potential investors looking at the numbers reviewed by Bloomberg would feel more positively towards the company considering the fact that it's the world's most profitable one, or take a take a little bit more of a placious stance. There were there's a mixture of things here in Lisa.

I mean there were some extremely good positives. Clearly, even last year when our prices were below where they are now, this was a company that was making considerably more than any other company in the world. Um, and it will be making even more money this year as all that vallees to seventy dollars and beyond. Do you see a balance sheet that's pretty much pristine, no debt at all. You see oil production costs which by our estimates perhaps a quarter of ex On and Shell, the two biggest

publicly traded companies oil companies in the world. But there are probably negatives for investors, and the one that probably needs highlighting more than any other is is the tax regime. What we discovered is that saudio Abia has imposed a new tax regime, a royalty regime, which takes a share of every single dollar the company owns earns sorry um,

and that that take rises of oil prices. So it goes up once I'll get to seventy, it goes up a and to once ago to a hundred to investors may feel that really limits for them the upside of any rallying oil prices if they were to invest in a company like this when it went public. Now, what are we talking about in terms of actual profits? I believe what do they say about the almost thirty four billion dollars in income for the first six months. That's

according to what Blimberg News has seen. Yeah, that's right, and that was in seventeen when prices were a lot lower. And to put that in perspective, I mean they produced ten million miles a day. Excellent Shell between them probably produced somewhere about seven million miles a day, but those

two companies made just seven point four billion each. So you can really see that the low costs that Aramco have to pump their ta million miles a day from these giant fields under the Society desert mean that it's far more profitable than its nearest piers in among the western all major's. Excellent Shell. Now, the Saudi crown Prince Mohammed been a salmon who has justly been visiting the

United States in the last couple of weeks. What is he said about about Saudi ARAMCA I mean, he he has while he was in America all along his our start again him and forgive me he made He made selling Saudi Aramco doing an I p O a centerpiece of his reform for the kingdom, and he said that it might be worth as much as two trillion dollars and it would be key to key to change in the economy of the kingdom of preparing it for the

oil age. I mean, he's still stuck by that. What has changed that he says they'll only sell it when the time is right, when oil prices right. One thing that I'm struck by is how much flexibility does the Saudi Arabian government have to love the additional taxes or take additional profits from the company. It has all the scope that it wants. I mean, it can change the tax regime whenever it wants. And I think you're rightly st highlight that that's probably going to be a key

concern for investors if they look at this company. Clearly, the primary role of Saudi Aramco is to support the fiscal uh power of Saudi Arabia, and if they need to, that's going to take presidents over looking after minority investors, and that you know that maybe we'll be enough money for everyone, but that's going to be something for investors

to think about as they assessed the risk of this investment. Well, Kennedy, thank you so much for joining us, and congratulations, really really fascinating story at William Kennedy, Managing editor for the E M e A Energy and Commodities Team, UH for Bloomberg. We are joined now by Bob mulroy, chief executive officer of Partner Therapeutics, also former founder and chief executive of Merrimac based in Boston. Bob, thank you so much for

being with us in congratulations. Your first drug, lu Keen, I hope I'm pronouncing that correctly, was just approved by the FDA to treat acute radiation sickness. I am a little concerned, however, about the sort of fact that this drug exists and the fact that the U. S. Department of Health and Human Services office actually began stockpiling this

drug in case of a nuclear attack. Is that the main purpose of this drug, so lucine isn't actually an older drug, and its purposes really to help restore your entire immune system and so in diseases where you might have in affections, it's very important. Um. And in the case of a radiation sickness, which you could occur from a nuclear accident, but that could be a leak at a power plant, it could be from a radioactive mind that's deep in the ground. So there are many different

possible sources of radiation sickness. But but the US government did after nine eleven make a decision to stockpile drugs that could help in a public emergency, and lucine is one of those drugs. So how many people do they have doses for? So I'm not sure that that's public information. I know that they are targeting, uh, you know, covering hundreds of thousands of patients with the stockpile over time, and what they've done today, I'm not sure that's public.

But um, you know, we're excited that this new approval and the new data that's been shown with luke. I'm where it's the first drug to be shown effective at treating patients who have been exposed to radiation forty eight hours after an incident. Is really important because in an emergency, you can necessarily dose everybody right away. You've got to get the drug and the medical treatment to the potential patients who have been exposed. Um so luka I really

is a is a breakthrough in that area. Just tell people a little bit about your background, because you're the former chief executive of Merrimack that ran into some issues that caused you to leave and you had to cut the workforce there. Tell us about why you decided to put together Partner Therapeutics and the strategy behind Partner. Well, I've been in the industry for twenty five years and

I love drug development. And after leaving Merrimack, I partnered with a gentleman named Debashi's Road Chattery who ran oncology at exactly at Sergeon, Well he was chief medical officer there, but he ran oncology at Sinofie and Glaxo and and we've been good friends for years. And what we saw was a trend in the industry where um, the larger companies were focusing on fewer and fewer targets, particularly in

the immunotherapy space. But there weren't a lot of companies thinking about what would you need to make those immunotherapies work. And so we said, well, let's try and work on the elements of the components you need to get immunotherapy work, and so one of the key components is stimulating the immune cells that immune therapies can trigger. And Luken we

saw it was a key ingredient to that. And if you think about luke on, it's only one of two drugs and combinations with immunotherapy that have been shown to work in cancer. Now, if you happen to be a patient who is undergoing or undergone chemotherapy or bone marrow transplant, how would Lukin figure into your life. So today Lukens approved to treat patients with with a m al acute

Milo leukemia or under a bone mile transplortation transplantation. And what happens in those cases is you need to uh in amail for instance, the cancer is against the immune system and destroying immune cells. So UH Luken can help reconstitute and rebuild your immune system. UH when you're getting chemotherapy for treatment, so you don't have an infection, so effectively replace the cells that are cancers that are geting

killed by the chemotherapy. The same is true with bone mile transplantation, where you have to regrow or restimulate or replace that immune system. Because many of those patients they don't die of the cancer, they'll die of infections as a result of the cancer reducing their immune systems effectiveness. Lukin restores the immune systems so that they don't they

don't suffer those effects. I want to talk about the process of getting the drug approved by the FDA, because there's been talk that the FDA is trying to expedite approvals in response to the to the cries for cheaper medications. Did you find that it was a faster process than you've heard and experience than in the past. It was a very fat process for us, but but not one

that's a typical today. We applied for something called priority review, which is available to any drug that is deemed to be important to the public health, to a particular treatment of a condition where you really have a breakthrough therapy opportunity, and so we applied for a priority review in the f d A granted that priority review and review the drug in essentially a six month time frame as opposed to uh, you know, typical twelve or fourteen months. What

are you working on now? What's in the pipeline? Well, for luke On what's exciting about it is that uh uh emunotherapy, which is the latest wave in cancer is is a really important growing area and lucan is in a whole number of trials, including a big Phase three in frontline melanoma today as well as in trials with

cancer vaccines. And in the second area, uh, lucan has plays in a very important role in the immune system, where we're finding out that our diseases like Alzheimer's and Parkinson's that have a big immune system component and potentially in those indications that there have been early dated in Phase two showing if you can restore the immune system you can benefit those diseases as well. Just real quick, any any wish for an initial public offering anytime in

the near future. Well, right now, we're going to focus on on on growing lukine of the business and working on building our pipeline of other drugs um but uh, we'll see how things go. And just to offer the opportunity, you did pick up a manufacturing plan from Santa Few, right, That's right, that's right. So we did acquire a biological manufacturing facility outside of Seattle, Washington, which helps make lucine.

But we're hopeful other products that we're bringing into the pipeline they can make for us as well, and so we'll have. An important capacity in today's world is the ability to supply product reliably to patients and too physicians. Uh and and that's a critical thing as as capacity industry gets constrained with all the development. Thanks very much for being with us. Bob mulroy is the chief executive

partner Therapeutics. They are based in Boston, home to a Bloomberg one of six one Boston New Report int thirty in MetroWest and the South Shore. There seems to be escalating fissure between the left and the right in the United States? Is it the same among chief executive officers

of American companies? Here to talk about that and the consequences of these fissures is Joe Minerrek, Senior vice president and director of Research at the Committee for Economic Development, also a former chief Economists at the Office of Management and Budget during all eight years of the Clinton administration. Joe, thank you so much for being with us. You co authored a book last year, Sustaining Capitalism, Bipartisan Solutions to

Restore Trust and Prosperity. In your conversations with executives, do you get the sense that they are trying to foster more bipart partisanship, or if you've seen the partisanship sort of spread to the c suite. We have something of a self selected audience. I don't want to overstate this, but uh, the folks who engage with us at the Committee for Economic Development believe in bipartisan solutions to the

nation's problems. I think that that. However, I think I can assert that that is fairly representative of the business community. When you have problems in business, Uh, they're not republican or democratic problems. There are not republican or democratic facts. They are not republican or democratic solutions. Business leaders tend to be focused at solving problems, facing facts, and uh, coming out at the end with success and our perception, my perception is that the folks I talked to are

trying to find a way to solve the nation's problems. Well, Joe interact, I beg your pardon is is there a development of a parallel economy or a parallel government? Because in your book you talk about how that that lawmaking is polluted by special interest lobbying, re election fundraising demands, and revolving door job appointments. That seems to be pretty contradictory to what you're describing when you talk about business leaders. Well, I'm talking to business leaders who want to try to

find solutions. And I find that many business leaders, even those who don't engage with us directly, do have a sense of the need to face facts when they are dealing with issues with respect to their own businesses. So we do have, I believe, an opportunity to work with business, to have business cooperate with government to try to find ways to solve the problems that we face today. I know there will be differences with respect to particular issues.

It of course gets very tricky when you have business leaders from different parts of a particular industry where there are issues of regulation or issues of alternative technologies, where you have the potential to have one side win and the other side lose. But the business community, by and large, in my experience and the people with my work, try to find a way to solve problems. And right now we have some very big issues that we need to address, and folks I talked to are willing to do that.

So let's talk about some of the big issues and just wearing your hat as the head of the committee for Economic Development, but also as the as the senior vice president of the agency, but also with your former role at the o MB. How concerned are you about the deepening deficit in the US. We have been on a path where our debt has been growing faster than our elective income. The debt to GDP ratio, which is economist jargon, has been rising, and that has been going

on for uh, just about two decades now. That is not sustainable. We can't continue along that path. And the longer we wait, the bigger build up of debt we will have. And that to me is a matter of enormous concern. Uh. It's a matter of concern for me personally. I have two daughters and three grandchildren, and I have a hard time looking at them in the eye sometimes. You know, I can imagine my grandchildren saying, ten twenty years from now, you know, why didn't pop a deal

with that? I thought it was supposed to be something he worked on. Uh. And that's that should be worrisome for everybody. The head of a corporation wants to leave a corporation behind. UH. That is sound. And I've spoken of business leaders telling me that they consider the nation's fiscal and balanced to be the greatest threat to the future of their businesses. Really, that's that's really, you know.

It's It's interesting though, because if you hear some economists and some members of the current administration, they'll say, if you look at the deficit with respect to the GDP of the nation, UH, it's not so big of it. It's not so big of a deal. What do you say to that, Uh, If you want to measure that by recent history, you have to understand that you have not just lowered the bar, you buried the bar. For the last twenty years, our budget UH position has not

been sustainable. And you want to say, well, it's not so bad, it's better than it was in the depths of the UH the financial crisis. That's true. In the depths of the financial crisis, we were setting records for the size of our deficits, you know, trillion dollar deficits

for the first time in our history. And now we're in a position where if you start from where we are and you draw a straight line with a UH with a ruler in the direction in which we want to go, in which we are now going, UH, you will find that in we're going to have uh deficits that are back in the trillion dollar range again. Uh. Ten years from now, in the nation's debt will be greater than it's gross domestic product. The debt to GDP ratio will be over for the first time since the

end of World War Two. Uh. And now we're talking about setting that standard in a peacetime economy, when the economy is growing relative to of course, the the the enormous emergency in World War Two when we we would borrow all we needed to to finance our freedom. Uh. We have no excuses today for that kind of behavior. All right, So what so what do you said us

that people who are listening to you do? Earlier today, I got the chance to speak the Congressman Dave Bratt, Republican the Virginia seventh District, asked him about teacher pay at the time when you're running one and a half trillion dollar deficits according to the OMB, and there was a disconnect in terms of trying to make any kind of inroads into Well, you know, maybe the money should have been spent on education. What do you do? Well, I'm talking here and the members of our organization are

talking about bipartisan solutions. I think the first thing that we have to recognize is that our budget problem is so large that the only way that we are going to solve it is if we have everyone at the table and everything on the table. We need our nation's leaders in the Congress and in the executive branch to recognize that there is no way to solve this problem where one side gets everything at once and does not have to pitch in. Alright, everybody is going to have

to be involved. Well, thank you for being involved, and thank you for Sustaining Capitalism, the book that you co authored last year. Joe Minrick is the director of Research at the Committee for Economic Development. He's all our former chief economist at the Office of Management and Budget. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm Pim Fox. I'm

on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. It's one before the podcast. You can always catch us worldwide on Bloomberg Radio.