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11 min.
Ctrl+A – Buying local in digital advertising [S02 E01]
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Ctrl+A – Buying local in digital advertising [S02 E01]

  • TECHNICAL LEVEL
Paid Media & SEM Opinions

The second season of the Ctrl+A podcast is up and running! We’re starting out strong with a guest known for his talent as a communicator and presenter: Jean-François Renaud! Today, he and our hosts will be exploring the idea of buying local, as it applies to digital advertising. 

 

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as well as from the series Ctrl+A | Digital Strategy Podcast.

 

This transcript is a translation of the original audio content, available here.

 

JAMES FORBES: Hi everyone! Welcome to Ctrl+A, the digital strategy podcast.

I’m James Forbes.

FRANCIS DEVOY: And I’m Francis Devoy.

Ctrl+A is a podcast for people who love the Internet – people who can talk concretely about all kinds of subjects, who aren’t afraid to have an opinion and who, above all, have a special talent for explaining highly technical concepts in a way that anyone can understand.

JAMES FORBES: One thing’s for sure, together we’re going to learn a whole lot about digital – what’s happening now, and what the future holds, because as you know, in the world of digital, things move fast. Your future is our present.

What does it mean to buy local in digital advertising?

FRANCIS DEVOY: Today on Ctrl+A, buying local – in digital advertising.

Buying local has been a hot topic for years now. Whether it’s in relation to food or retail shopping, it’s a phenomenon that’s taking up more and more space in the news, and something we’re doing more and more often ourselves as consumers. Sometimes without even realizing it.

But what does it mean to buy local? In general, it means that things cost a bit more. In return though, you get a product that’s often higher quality, you do something good for the planet because your ecological footprint is far lower and most of all, you support the local economy by helping to create jobs right here.

Now for digital, in terms of ad buying, what does it mean to buy local? Right now, in digital, we’re pretty much at the opposite end of the spectrum. You could even say we’re doing the complete reverse of buying local. According to a 2016 Carleton University study, of a total Canadian online advertising market representing $5.5 billion, 60% was spent with Google or Facebook. This represents approximately $3.5 billion that is now being sent to these two US giants. The question is, is it even possible to prioritize buying local when it comes to digital marketing? And if so, where do you start? To answer that question, we are lucky to have with us today Jean-François Renaud, co-founder and partner at Adviso.

Hi JF, how are you?

JEAN-FRANÇOIS RENAUD: Good! How about you, my two charming voices of Ctrl+A?

JAMES FORBES: Great, I’m doing great, thanks!

So, the goal here isn’t to give away your age, but you’ve been working in the field of web and digital for nearly 20 years. By way of a brief introduction, you teach a course at HEC Montréal, and you give talks all across Quebec about digital and everything that goes with it. Jean-François, thanks for joining us.

JEAN-FRANÇOIS RENAUD: It’s a genuine pleasure to be here. The topic is one I’m really interested in.

JAMES FORBES: Definitely! Plus, we know you’re someone who tends to say out loud what others will only say in whispers. To start with, before jumping into the technical side of today’s topic, can you give us a quick overview of the difference between a publisher and an advertiser? Just so we know our moms will be able to follow the gist of our conversation today.

JEAN-FRANÇOIS RENAUD: Advertising always works in basically the same way – ad space is made available by a publisher, who has access to a certain audience, that they make available to advertisers via ad space on their media properties. Concretely, this might be… a pre-roll ad before a video, for example. It could also simply be a banner on a site, or even a keyword in paid search results on Google. That’s another type of media buy, purchased by an advertiser on a publisher’s property.

JAMES FORBES: Just to put a name in people’s minds, to help them really understand what an advertiser and publisher are, can you give us a concrete example of two companies that might interact?

JEAN-FRANÇOIS RENAUD: La Presse is a publisher and, I don’t know… Nespresso is an advertiser on La Presse’s property, for example.

JAMES FORBES: And can you give us a concrete example of an advertiser that’s done business with a local publisher? Either for specific marketing campaigns, performance campaigns or branding campaigns.

JEAN-FRANÇOIS RENAUD: There are quite a few, but one that I found really interesting, it’s one we worked on actually, is National Bank and Urbania. It’s a really interesting one because Urbania is a local publisher, but it’s one that’s really on the ball. Seriously, they’re an extremely innovative publisher that does lots of genuinely interesting things, and that really made National Bank want to get involved with them to be able to create a product that’s simultaneously exciting, really aligned from a content perspective and that would have very strong performance from an advertising perspective. You know, National Bank didn’t choose Urbania to be charitable, they chose it because they believed it was an ad buy with the potential to perform well, to meet their highest expectations. I think it’s a really interesting example, it was content created expressly for that advertiser, National Bank. I think that’s a good example.

Why does it seem harder to buy local?

FRANCIS DEVOY: Jean-François, the million dollar question: why aren’t we buying local in digital advertising?

JEAN-FRANÇOIS RENAUD: For years we bought very locally. There were local media brands that were very, very powerful. I’m thinking about Journal de Montréal, La Presse and Le Devoir. Between these three properties, you could cover the biggest daily papers, and reach most of the Quebec population.

Today, the situation is different. Today, we’re in a situation where, over the past several years, the idea of performance has dominated. So, now we’re trying to sell something. We’re not just talking about brands anymore. Advertisers are really looking for their ad placements to have a performance element. And in 2005, Google launched a product that changed things just a bit: a product that you could pay for by the click. Google essentially said, “We’re going to send you clicks, you’re going to pay for clicks, while at the same time more traditional publishers will promise you eyeballs – they’ll talk to you about frequency, about reach, but they can’t guarantee you anything beyond that. Us though, we can guarantee that you’ll have qualified visitors visiting your web properties.”

Advertisers liked this because, for them, it’s always a question of getting the best possible return on their investment dollars, the most sales for the smallest possible media investment. So Google started all this – well, actually it’s Yahoo who originally started it, Google just copied what they were doing, and did it better – but that’s where it all really started, then Facebook arrived on the scene and followed this same model,  and put forward a model that was both a lot closer to the final purchase by the final customer, which advertisers really liked, but also offered such a strong capacity for targeting that it eliminated a lot of waste.

The short answer is: advertisers are looking for the best return on investment, which made buying local a challenge.

JAMES FORBES: There seems to be a common point in terms of technology. Google and Facebook came on the scene with innovative technology, maybe the same, maybe different, which made it so that the market for digital buying is maybe easier, or higher-performance. Why is it that publishers are unable to follow this path today?

JEAN-FRANÇOIS RENAUD: There are several elements. Firstly, it’s more than just technology, it’s also a different way of billing, one that’s different, that’s more closely tied to the results advertisers are trying to get when they buy the ad. So there’s that.

Then, on the technology side, which definitely exists, the thing is that you can do very precise targeting, and create very specific audience segments. In the end, when you think about it, Google and Facebook are companies that essentially sell data. The final product that they sell is ad space, but the reason people buy it, is because it’s supported by data that’s become specific enough, through our use of their technology, to capture our interests and the next item we might be shopping for and so on. They are able to say to advertisers, “We can deliver high performance.” It all comes back to that element of targeting and segmentation.

The other thing that we shouldn’t overlook is that Google and Facebook can take 100% of their budget and invest it into their tech platform. Because they don’t produce any content, while publishers need to provide content – in fact the majority of their cost is producing content. Which means publishers are left with way less money available to invest in technology. So, they produce the content that Google and Facebook use, at the end of the day. So, their costs aren’t the same, and on top of that, they don’t have the same technology. And that gap gets a tiny bit wider every day. That’s more or less the situation we’re in right now.

Creating value in a performance-centric culture

FRANCIS DEVOY: So, Jean-Francois, you’ve been talking about how fixated we are on goals and results. Where should an advertiser draw the line between generating results and prioritizing buying local?

JEAN-FRANÇOIS RENAUD: That’s really up to the advertiser, at the end of the day, and I don’t want people getting the impression that it’s necessarily less effective to advertise with a local advertiser, that’s totally untrue, but I do think that might be the perception that advertisers have right now, from the fact that they are sending a lot of their ad dollars to the big properties (Google and Facebook, not to name names). It’s up to the advertiser to draw the line. It needs to stem from their values, whether they have an interest in doing it, an interest maybe in associating their brand with media brands from here. And there’s no question there are benefits to doing that.

We know it – we say in media buying all the time that “the publisher’s brand plays an important role.” It’s just that our behaviour in relation to media brands has changed a lot. Google and Facebook, particularly. The example I often like to give is that, before, we used to go a media brand. We’d say, “I am going to visit the La Presse website, because I want to see what La Presse has to say today.” Today though, we’re much more likely to visit places that are aggregators like Facebook, that then bring us to other media brands that we might not otherwise consume.

Loyalty to media brands has seriously diminished in recent years. Facebook and Google aren’t just media per se, they are practically channels in and of themselves. They are masters of the art of appropriation by directly using other publishers’ content. I would even go so far as to use the word “parasite.” They are like content parasites. They share others’ content, but they also use it for themselves and reap their own benefits from it; they jump all over other people’s content and use it to create their own traffic, to create their own audiences that they then resell – in competition with publishers.

Because don’t fool yourself – yes, Facebook and Google are partners, most traffic to publishers’ sites is driven by Facebook and Google these days, but when you look at it, you realize, “They’re eating their lunch.” That’s the expression we use. They’re taking their earnings. Revenue that publishers lose, they take up. They are partners, but also competitors.

JAMES FORBES: Can you give more detail about the element of competition? What happens? We know that Google and Facebook are the top two. Do companies look up at them and say, “That’s my competition.” Or are they more likely to look around them for their competition –

JEAN-FRANÇOIS RENAUD: Are you talking about publishers?

JAMES FORBES: Publishers, yes.

JEAN-FRANÇOIS RENAUD: Traditionally, Canadian and Quebec publishers have seen themselves as being in competition. The Gazette sees itself as being in competition with the National Post and La Presse sees itself as being in competition with the Journal de Montréal. It’s still deeply rooted in people’s minds, this spirit of competition.

JAMES FORBES: It’s become a custom.

JEAN-FRANÇOIS RENAUD: Exactly! As I was saying earlier, Facebook is very much a partner that drives lots of traffic to their properties. As a result, I would say that, often, what I see among publishers, is that they have a tendency not to see Google and Facebook as the competition – not enough, at least. They see themselves more as being in competition with local properties that are a bit more their equals, but that’s not where their lost earnings are going! The money is going to Google and Facebook.

The reality of publishers in Quebec

FRANCIS DEVOY: Do you think – when we were talking about the sophistication of data, the ecosystem here in Quebec is pretty particular – unique, even, when you compare us to the rest of North America. Do you think it would be in the best interest of Quebec publishers to band together to be able to create a much more sophisticated offering, rather than the kind of fragmented ad offering we currently have where people have to do business with a multitude of different points of contact to reach every publisher? Essentially, what I want to know is, would we have strength in numbers?

JEAN-FRANÇOIS RENAUD: There’s a lot to address in your question. First, you’re asking,  “Is the Quebec market the same as the North American market?” I don’t think it is. In Quebec, we’re isolated, things are slower to arrive here because of the protections due to bilingualism. What I mean to say is, we are less directly in competition. A property, for example, in English Canada is far more threatened by the United States. Here, in Quebec, there’s France, but it’s not as direct, I’d say. So, we’ve ended up with media brands that are very, very strong, they still face challenges, but they are very strong. So, overall, it’s a phenomenon that’s less prominent in Quebec. It’s an advantage, our publishers have that advantage.

As for the idea of banding together, as I said earlier, they really see themselves as competitors right now, so yes, I really do think we need that to happen at a certain point, there are a few initiatives even now that are starting, that are in their infancy. But if you fundamentally see each other as enemies, it will be very hard to form partnerships. On the other hand, in the online economy, we talk a lot about co-opetition, the idea that you can cooperate with competitors, and that it’s sometimes even very healthy to do so. It’s something I haven’t seen a lot of among publishers though. The landscape looks more like a permanent pissing match, I would say.

JAMES FORBES: Jean-François, can you give any examples of two publishers who teamed up to do a marketing campaign, even though they’re supposed to be competitors in the industry?

JEAN-FRANÇOIS RENAUD: Not really. I mean, we see it all the time, but it’s agencies who make it possible. It’s agencies who create it, who group several publishers, who are sometimes incompatible, at least in the eyes of the publishers themselves, together in a media plan. It’s the agencies’ job to create the right mix like that. I’d say that for publishers, not only are Google and Facebook swooping in to eat their lunch, but there’s also the fact that programmatic has a tendency to lower their revenue because it exposed their inventory. By being more open and transparent, people could see where there was unsold inventory. And when there’s inventory that’s unsold, and people can see where that is, it leaves more room to negotiate. So we’ve seen CPMs, cost per thousand impressions, go from 10 to 20 dollars, down below 5 dollars, sometimes even lower. It’s yet another pressure they’re facing, and my point is that advertisers have been able to benefit from this where before, they had to make a choice.

Continuing with my example from the Gazette and the National Post, they could have made a choice and said, “I’m just going to take the National Post.” But now, with programmatic, they can sometimes go with both, sometimes for the same price. We’re going to see cooperation like that, but not necessarily driven by publishers, it’s possible more through other technology.

FRANCIS DEVOY: What we’ve seen with programmatic, “the rise of programmatic,” as you said, is that not only have CPMs dropped, it’s that it’s caused publishers to open up 100% of their inventory. Of course, it’s often Google in the majority of cases that’s the platform on which these impressions will take place. When we talk about the strength they have in the market, not only are they stealing direct buys, but on top of that, anytime a publisher offers programmatic buys, Google takes a little piece. It’s all very interesting.

JEAN-FRANÇOIS RENAUD: Yes, plus there are new players, too, who are showing up and taking part of these publishers lunches. I call these the Winners of display advertising because they buy up all the unsold inventory, then they resell it and we’ll never know where it came from. When you go to Winners, and you find a Tommy Hilfiger shirt, you never know if it was at The Bay or Simons. You don’t know, and Simons and The Bay don’t want you to know that they sold it to Winners because they has unsold inventory, but all you care about is that you get a cheaper shirt. That’s a bit what’s happening – advertisers have even more choice, which, again, puts pressure on revenue for our friends the publishers.

How can you buy local, intelligently?

JAMES FORBES: What does an advertiser need to do within their company, or at least within their media department, to be able to say, “We are ready to move forward with a local publisher because it will deliver x,y or z result for us?”

JEAN-FRANÇOIS RENAUD: One of the challenges is that at any given time, you can’t manage 28 networks when you’re making a media buy. Unless you’re launching a mega campaign, you might want to manage two, three, four channels, otherwise it’s too complex. Often Google and Facebook are kind of obligatory up to a certain point for many, many types of products anyway, or services. So, there’s space left for one of two publishers. That’s a challenge, too, an extra one.

But the point is that I think an advertiser, if they wanted to try it out, if they wanted to try to focusing on this aspect a little, might say, “I need to see, at the end of the year, that a certain percentage of all my media buys have been reserved for the properties of local brands.” I think that might be the easy way to do it. Maybe not for every campaign. Because, say they said, “I want 20% of my media buys to be done locally.” One campaign could be at 10% and another at 30%, and it doesn’t matter, but at the end of the year, it’s a guideline that’s set and respected, I think that’s something that might make a difference. And we might be surprised by the potential. Once again, it’s possible that if you took the time to sit down with a publisher and create content that is genuinely exciting, if you trusted the publisher who in turn knows their audience really well, you’d have a way to achieve something that might also even perform better than Google and Facebook, and that would also be good for your local footprint.

JAMES FORBES: A good summary of all this would be: meet with publishers directly, ask what they can do for you, look, first of all, at whether their audience lines up with the audience you’re trying to target and then, it’s true you might be surprised.

JEAN-FRANÇOIS RENAUD: There’s always the pressure to perform, you know. Today, we live in a world where results, at the end of the month, the quarter, are so important. To bring in raw sales, there’s no question that remarketing, for example, and without getting too deep into tactics, but you can’t deny that remarketing on Google and Facebook works really well. But you aren’t building new audiences by doing that, you’re just milking your existing audience. But the impulse to do it is always there – the remarketing button is always close at hand because it drives the sales you need to meet monthly quotas.

But the end of the month isn’t what will drive next year’s earnings. I think that’s where you have to think a bit more long term. I think buying local will eventually have an important place in media plans. But another challenge is the very short-term vision we tend to have when it comes to return on investment that, I think, is threatening in many other regards, at least for advertisers.

FRANCIS DEVOY: In your opinion, what’s the greatest threat, or threats, publishers face in the long term? Is it that more and more, advertisers don’t want to buy locally?

JEAN-FRANÇOIS RENAUD: The main threat, as I mentioned, is that prices are going down, competition is going up, their market shares are dropping, content creation costs are going up, and they have the tendency to perceive Google and Facebook as friends rather than seeing how they could pose a threat. There are lots of signs that there’s danger ahead for them, but ultimately what’s the greatest threat? Well, it’s that they will no longer by able to supply the content they need to supply.

The signs are everywhere! Publishers are closing, publishers are selling at discounted rates, publishers are becoming non-profit organizations and starting to ask for donations on their platforms. These are actually elegant examples that demonstrate the pressure that exists in the market right now.

FRANCIS DEVOY: In terms of advertisers, Jean-François, what would the risks be in, for example, really putting all your eggs in one basket – sticking with the duopoly of Google and Facebook?

JEAN-FRANÇOIS RENAUD: In economics, any duopoly creates a price increase. So that’s one. Secondly, it creates a dependence on those two channels and, the moment they decide to give you less for your money tomorrow morning, well, you’ve got a problem.

I was looking at Google, recently, and they often replace the services offered by certain publishers. With movies, for example, if you search for the name of a movie, all of a sudden now you see show times directly in the Google search results page, so you never have to visit the site that makes its money off advertising when people visit it. Google has done the same thing to lots of industries: weather, movies, sports, lots of informational sites, news sites. It’s the type of thing that, when you put your eggs all in the same basket, you depend on. Depending too heavily on any one thing is always a problem. Being in an economy where there isn’t enough supply is always a problem. It’s as simple as that! These are the basic economic rules they’re faced with.

Otherwise, from a performance perspective, because Google and Facebook are where people are, they will, on the other hand, reach their target audiences. It’s more from an economic perspective, I think, that there’s an eventual danger. On top of the economic threat, I think there’s a threat of data dependency. We said it at the beginning, a little earlier, that Google and Facebook were fundamentally data companies that sell ad space, but that the main reason we buy the space is due to the data. Advertisers, we know, have a huge amount of data that belongs to them, and it’s not always easy for them to organize it, structure it and deploy it in their campaigns. Whether it’s for email campaigns, media campaigns, or anything else. But they have to do it! Because as soon as you don’t, you have to depend on data that doesn’t belong to you, like Google’s and Facebook’s. If advertisers have really well structured data, they’ll be able to advertise on local properties with confidence.

Here’s the bottom line: before, when you wanted to reach people for a vacation, for example, to sell a vacation, you would buy space in the “Voyage” section of La Presse. But there was a ton of waste when you did that. Now, we’re able to say, “Let’s target people who are actively looking to book a vacation, and no one else.” Which is obviously interesting for advertisers. It’s like asking people to pretend that Uber doesn’t exist, and go back to taking taxis – they smell, they only take cash… No one wants that. Advertisers won’t go back. They need to be able to get control of their own data, and then they will be far better equipped to go with any publisher and get good results. Their data is their future. It’s their customer data. If they don’t get their data organized, advertisers will be looking at a whole other slew of problems. So yes, I think that’s another facet of the problem, the dependency on data that doesn’t belong to them.

What makes an innovative media brand?

JAMES FORBES: That leads me to a thought I’d like to share with you: we are constantly asking ourselves what publishers should do to improve their offering or increase their earnings. Which is the end goal. We go from conference to conference where we hear endless inspiring pitches, presentations. The important thing is to be customer-centric: listen to your customers, seek out their feedback. I get the impression that this is something that isn’t really done in this industry. Are publishers really listening to advertisers? Do they ever ask agencies or customers what they’re looking for in terms of placements? Formats? Just think about how we’ve lagged behind in terms of ad formats, fees, audience measurement or even just mobile presence. I get the impression that we’ve gotten kind of laissez-faire over the past few years and as a result we’re being pushed out of the way by two American giants who have figured out exactly how to play the game, as they say.

JEAN-FRANÇOIS RENAUD: Yes. Then there’s the notion of sacrifice. A good example is La Presse and La Presse Plus. Criticize them all you want (and God knows I was one of the first to criticize a number of things about La Presse Plus) but one thing you can’t fault them for is having the balls to make a major sacrifice. To take the dollars from paper delivery and invest them into something more sustainable: making a real digital shift. La Presse is probably one of the only publishers on the planet, a local media property, who successfully transferred paper dollars to web dollars, almost entirely. They are just about the only ones on the planet who’ve successfully done it. This idea of sacrifice is something, because we often want to have our cake and eat it, too. We want to keep the revenue we’re earning today, and don’t want to invest in revenue for tomorrow, and it’s actions like these that can make all the difference.

FRANCIS DEVOY: In your opinion, Jean-François, should publishers be revisiting their business models these days?

JEAN-FRANÇOIS RENAUD: Yes. That is to say, we’re moving to a model that’s purely ad-based, and I think the signs are there demonstrating that this is very much at risk. There are several avenues open to publishers. One of the main ones that’s very popular right now, is native, which involves co-creating content with advertisers. Of course, it has it’s own fair share of risks. It’s a strategy that successfully gets around ad blockers, which is interesting. However, there’s a little ethical side that hasn’t been 100% worked out. Rules have been created, but it’s not always completely clear. We’re still doing advertorials, is what it comes down to. Because yes, native can really take the form of an advertorial. There are some that are excellent, that are truly useful to the user, useful to the advertiser, and aligned with the publisher’s editorial policy, which is great. But there are also some that are complete garbage, if we’re being totally honest! I think this is one of the steps though, it’s one of the more interesting models.

There are publishers who have come right out and opened corollary platforms. One example, Newad, publisher of the famous bathroom stall ads in Canada, opened a corollary platform called Campsite, where you can make programmatic buys. They used their experience as a publisher in their category to open a platform where they could bring together publishers who’d been in competition with them! They jumped into co-opetition for everything digital display. It’s initiatives like this, they figured out how to use their expertise to revisit the way they do things.

There’s also paid content, but as we’ve seen, this is not as easy: consumers have a hard time paying for content. The ones that have succeeded are the major international papers – the New York Times and company. At the local level, it hasn’t been shown to work.

Finally, there are these kinds of alternative media companies. There’s one called Beside, have you heard of it? They organize events and experiences that are sponsored by advertisers. So they’re these alternative publishing models that are really interesting and that, I think, should be looked at by our major publishers. They might find some answers there that they can apply to themselves.

JAMES FORBES: In the end, we can’t deny that the opportunity is there today. For sure in 15 years, publishers might be too late in the market, but right now, there’s something to look into. Maybe Google and Facebook? Look at what they do. Maybe don’t try to exactly replicate what they’re doing, but just take the pulse of these giant tech companies, and tell yourself that now is the time to take action, not in 10 or 15 years.

JEAN-FRANÇOIS RENAUD: What it comes down to, is the same thing as we’re seeing with hotels with Airbnb, and real estate agents with DuProprio. It’s the same thing! Publishers are being challenged, their industry, their business model is being challenged. There are companies talking about digital transformation. We have a team doing digital transformation. Well, that’s exactly what digital transformation is, looking at what the impact of digital is on your business model and the future of your industry. To try to ask yourself questions so that instead of being a victim of change, you are proactively attacking it in an in-depth way. It requires you to take a hard, deep look into every sphere of the company. A company’s business model is a deeply entrenched thing, so you really have to want to do it. That’s the first thing. You have to want to change, you have to recognize the necessity of modifying major things, and we spoke earlier of sacrifices: you have to make the necessary investment. If you do all that, yes, you may still be around 15 years from now, and you may even be stronger than you are today. But I guarantee that if you do nothing, you won’t last 15 years, unfortunately. It will be quite a bit less than that, I suspect.

FRANCIS DEVOY: Jean-François, thank you for joining us today for this episode of Ctrl+A. James, always a pleasure!

JAMES FORBES: Always a pleasure, Frank!

JEAN-FRANÇOIS RENAUD: Thanks guys!

FRANCIS DEVOY: Jean-François, for anyone who wants to hear more from you, there are a few options: go to one of your conferences or workshops, or visit the Adviso blog to read your many articles. It’s a bit less time-consuming than signing up for the HEC Masters!

Ctrl+A is presented by Adviso.

Hosts: James Forbes and Francis Devoy.

Producer: Laurence Pressault.

Recording and editing: Studio Makina.

Soundtrack: JD Leblanc de Hey Makers.

Thanks everyone, until next time!

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