Warner Bros. partnership shows ‘a sea change’ in media advertising, VideoAmp CEO says

VideoAmp Founder and CEO Ross McCray joins Yahoo Finance Live to discuss VideoAmp's partnership with Warner Bros. Discovery on an ad deal.

Video Transcript

SEANA SMITH: Warner Brothers Discovery shares moving to the upside today after announcing a new audience measurement deal with Nielsen rival VideoAmp. Let's talk to Ross McCray. He's VideoAmp founder and CEO joining us now to weigh in. Ross, great to see you here. So I guess, what can you tell us about this contract? Because certainly, I would think a huge deal, given the size of Warner Brothers Discovery for your business.

ROSS MCCRAY: Thanks for having me. Yeah, it is a big deal for Warner Discovery, for VideoAmp, and for the whole ecosystem. This is showing a sea change in how advertising and media is being measured and valued. Legacy in historical ways have been using a small panel, about 40,000 people, in the United States. And whatever that small panel is watching, we assume everyone else in the United States watch that.

VideoAmp takes more of big data and privacy safe approach where we're auditing the actual streaming and log-in information and without ever having to even see the consumer information. So the level of accuracy of actually counting every individual streaming and looking at it as a digital record is much more accurate than estimating. And that changes the entire value of ecosystem.

There's more viewership in certain places that was undercounted. And if you're more accurate on measurement, then the advertisers can better optimize because they're actually knowing what's happening versus on false information. And it increases the sales for advertisers, and it's going to increase the value of the entire portfolio of the original thesis that Warner and Discovery merger had.

DAVE BRIGGS: Good to see you, Ross. So just to be clear, what is it that Nielsen fails to do that accurately-- that would accurately measure today's audiences?

ROSS MCCRAY: Sure. I think in general, it's just a different approach of taking a small panel and extrapolating and saying, I'm a male living in Los Angeles, and everyone else who's a male living in Los Angeles watches the same thing. It's just a night and day versus counting every individual record on streaming. So we've seen a lot of undercounting on media representation. And so when there's more audience being there, then Warner Brothers Discovery can prove that there's more audience being counted.

And what then happens is that the advertisers can optimize in a better way and see the actual impact towards sales, which is the next thing that we do. We go beyond just eyeballs, but can give advertisers an actual bridge towards is it driving sales or not. And with that extra visibility, that increases the value for both the buyer and the seller.

SEANA SMITH: So Ross, you have all the data right there. So tell us because we talked about the changing landscape when it comes to media, what are viewers preferring right now? And I guess, what engagement trends are you noticing at VideoAmp?

ROSS MCCRAY: Yeah, look, there's no doubt that there's trends to digital and streaming and having the choice of having that. I mean, there's just no doubt about it. But I think the question is how fast is it really moving? Is it moving at this speed, or is it moving at that speed? And we're seeing that's moving faster than what people are seeing and what people will believe.

DAVE BRIGGS: And so when it comes to Amazon getting in the game and Apple getting in the game, will you be able to accurately measure those types of audiences as they jump into things like live sports?

ROSS MCCRAY: Yeah, we are.

DAVE BRIGGS: How do you do so?

ROSS MCCRAY: Same tactic, right? I mean, imagine this, right? So first of all, the way we work is that we deploy our software into their environment. So not-- no one's sending us all the level of logs and Ross McCray's information, watching all of that. It's not like some Big Brother thing. We're deploying our software and thinking of it as, like, an auditing layer inside of their environment and the logs. So for an Amazon or any of those digital players, when someone's logging in, you're logging on and you're authenticating with the service, right? It's all logged information.

So as a technology provider, you know how many people are logged in at a given time. And that's what we call more of a truth set. So we're processing and validating that and making sure that that's being accurate and being held in the right way and just representing and giving the actual numbers. And there's been large discrepancies. There's been public spouts. I mean, I think with Amazon's football and the Nielsen records, Amazon was saying it's 25% higher or something like that. And Nielsen's saying it's lower.

And so we process the data and we validate the actual records in a way. So we think it's a very large sea change for how this has been going on for 100 years. Nielsen just turned 100 years old, I think, last week.

DAVE BRIGGS: Are you bearish or bullish on the overall media environment? We're talking about $500 billion shed from the global media companies. It has been cord cutting. Those are the trends that are accelerating, fewer eyeballs on traditional television. What's going to be the catalyst to turn that around?

ROSS MCCRAY: Well, look, I-- we're-- I think there's a lot more that's being undercounted and undervalued is a little bit of the thesis. Now there's no doubt that consumer trends are happening. But when we look at our data, which we think is more accurate and a lot of the advertisers in the ecosystem is looking at, we see a different story. Audiences are still happening on traditional linear television. And that's not even being properly represented, let alone the shift to streaming.

So you're looking at-- when the industry is so used to looking at a truth set that is impressions and how trends are going, if it's just dramatically wrong, then I think the markets are using that in some sort of way to show the value of these media companies. So I think with more accurate light being shed on what's happening with consumers, then you can have the ability to capture more of that value.

And if the advertisers ultimately are seeing their sales go up, which we do see with-- we have hundreds of advertisers that have our customers. And they're coming back to us because they're seeing their sales increase. With more accuracy, they're figuring out where to put their money. And if you're putting your money where you think it's actually working and you see that return back, then you see sales go up. So it's this positive feedback loop.

So the more that advertisers are increasing their money, especially in this economy-- you have to do a lot more with less-- they're getting more value from the media partners. And if the media partners are helping them drive their sales, then we believe the value of their portfolio will go up. And therefore, the value of their companies will also go up.

DAVE BRIGGS: I get it. VideoAmp founder and CEO Ross McCray, good to have you, my man. Happy new year.