Category Archives: Advertising & Marketing

YCombinator Ad Innovation Conference Keynote Breakdown

Today’s opening keynote was given by Paul Graham, at the YCombinator Ad Innovation Conference in Mountain View.  I attended along with @tdavidson and @barryl530 to see the early stage innovation that’s happening in the ad tech space.  We were certainly impressed not just with the innovation but with the amount of great agencies in attendance such as AKQA, Goodby, Sapient, Omnicom, Cadreon, VivaKi, and Jess3 amongst others.  We were in good company, to say the least.

Paul admitted he wasn’t an advertising guy, but knows technology enough to understand how tech will influence advertising in the next few years.  The data he used to back his claims were based on the thousands of applications YCombinator receives and is able to forecast and see trends in where innovation is happening.

Here is a summation of the 9 trends that’s pushing advertising, per Paul, but I tend to agree as well.

1. Tablets are important and might call for their own unique advertising platforms to take advantage of the user interface.  Apple and Android will dominate the market and Apple will dictate the ad formats.   Tablets are genuinely a big deal and we aint seen nothing yet.  My take:  Yes, he’s spot on.  Tablets penetrate and are both a content consumption device but increasingly, a content creation device, as long as we can innovate and create good input devices.

2.  All data lives in the cloud. All data about a consumer, transaction, records, etc will live in the cloud and ostensibly, be located in one database that can be used.  What will hold this back will not be technology, but will be government and policy.  My take:  Totally.  We’re seeing this today.  I’m all about data.

3.  More stuff happens peer 2 peer.  Paul used an analogy that I don’t know if I agree with, but he claims that hotels exist because consumers couldn’t find any other way of staying in a remote city or town, so hotels were built to meet this demand.  Now with services like airbnb, hotels could cease to exist as we know them.  My take:  I like what he’s trying to say, but don’t know if I buy the entire analogy.  Not everyone wants to stay in someone else’s home.

4.  There are going to be a lot more startups.   I liked where Paul went with this.  He basically said that engineers had 2 choices after college:  go to graduate school or join a big company.  Now, they have 3.  The third oppty is to create a startup.  Paul threw out the 1% number which was how many developers/engineers start companies… and if this increases 10%, then that’s 10x the amount of startups in the ecosystem.  Again, we aint seen nothing yet with the volume of startups out there… there are going to be many.

5.  Facebook is already a big deal.   Paul said that the $1.6bln from Facebook is quick and simple money and they haven’t really began monetizing yet.  They are focused on growth and even have a Facebook Growth Group, which is one of the most powerful groups in Facebook.  He thinks that when they start monetizing, they can seriously move into markets and kill competitors such as PayPal or Wepay.  My take:  I agree with Paul, but they have to be careful in how they approach this as to not alienate developers and users.  I don’t want Facebook to be 100% of the services I use as a consumer.

6.  Software eating the world.  Don’t be an advertising company that does software.  Be a software company that does ads.  Having this mentality is obviously valley-driven, but allows you to scale a business and think more product focused, which theoretically, should have better outcomes.

7. Target Ads Precisely.  Google could target their ads much more precise but they don’t have to yet, as the market isn’t necessarily requiring it or does it make economic sense for Google to do it until they must.  Paul said a great quote:  “Assume you can read someone’s mind, what ad would you give them.”  My take:  This is one of our investment thesis at kbs+p Ventures – application of data to drive advertising decisioning.

8.  More things will be done by numbers.  If an investor had to place a bet on quantitative measurement/analytics of creative, bets should be placed on measurement.  Numbers will/can/do drive decisioning and with ROI driven world, we need to quantify it.  My take:  Spot on, another investment thesis of kbs+p Ventures as well as what we apply at VMM and The Media Kitchen.  Couldn’t agree more.  I even treat my fantasy football teams this way.. and I want 2-1 this past weekend!

9.  Creative.  Creative will begin to become “generated.”  Paul essentially argued that the best creative in the “future” world will have to be generated because of all the varieties that are needed.  My take:  I think he’s onto something if we’re able to deliver the right creative to the right person at the right time.

I loved Paul’s opening.  This wasn’t 100% of everything, but was a lot of it.  My friend Roger of IA Venturesc also talks about similar trends on his blog, in a post titled, changing polarity in advertising, if you want to continue being inspired…

Enhanced by Zemanta

An Ad Tech Roll Up

I’ve been noodling the opportunity around an ad tech dream I had.  Yes, I really do dream about these things.

We all know the positions that Yahoo! and AOL are in.  I won’t go into that here, other than they will need to make some short term decisions rather quickly.

As a proactive entrepreneur, what if you could acquire the assets of Right Media (including client contracts) from Yahoo! and Platform-A (whatever is left of it) from AOL, roll them up, put on top of a 2.0 infrastructure such as AppNexus and scale the business?


  • Client contracts lead to instant revenue
  • RMX has a name for itself in the industry
  • Could probably get it for fire-sale pricing


  • Contacts/clients might not transfer
  • Yahoo! inventory is not guaranteed if moved away from Yahoo!, so that would need to be written into the agreements
  • Implementation of both platforms might be more hassle then they are worth
  • Much of Yahoo! RMX talent has already left, but not all

There is an opportunity here, at least at first glance.  It’s less about the technology and more about the contracts to advertisers.  The hypothesis that the acquisition of these both would lead to a faster time to market and revenue out of the gate.  There are probably quite a few other ad tech companies that you could bundle in here at the same time.  Might be worth investigating?  I’m sure a few people probably are…

kbspVC Portfolio Company, Crowdtwist is Hiring

One of kbs+p Ventures portfolio companies, Crowdtwist, is looking to attract and hire sales folks to join their team.  For those who aren’t familiar with Crowdtwist, it’s a social loyalty platform that bridges the paid-owned-earned media ecosystem.  I’m extremely bullish on them because they bridge the evolving media ecosystem and bring social data into our CRM and data-driven programs.

Mashable has a nice article titled, “Why Social Accountability Will Be the New Currency on the Web” and it highlights Crowdtwist amongst others.  You can start to see why their platform is so powerful.  And if that doesn’t convince you, they are on the Top 25 Startups to Watch list by Business Insider.

I was their lead mentor coming out of TechStars NYC and have been involved with them ever since.  So of course I’m biased about them.

The type of candidates we are looking for:

1.  Must have background in selling platforms and solutions, not just IAB compliant banners.  You must be able to demonstrate that you’ve sold platforms and can handle getting to consensus with multiple parties including IT, social media teams, and media teams.

2.  Must have at least 4+ years in sales background, preferably within a venture backed or publicly traded digital media or information technology company.

3.  Entrepreneurial passion and fire a must.  We want to find hustlers who like being out of the office more than in it.  By being out of the office, we mean knocking on doors of Fortune 500 clients and their respective agencies.

If you know of someone who is interested, or you might be, please don’t hesitate to reach out to me.  I have to be strict on filtering out per the above 3 filters, and will only pass along candidates who have demonstrated this.  You can reach out to me here.


The Bloomberg Advertising Terminal

(originally posted on Google Plus and then picked up on PaidContent)

I’ve been spending a lot of time thinking about data recently and it’s become the central investment thesis for kbs+p Ventures, our go to market approaches for The Media Kitchen, and how kbs+p communicates vision. My friend and entrepreneur extraordinaire +Jon Steinberg says it extremely well, advertising is becoming “guided by math, but moved by art.” For many folks in direct mail or other quantitatively driven marketing disciplines, this has been the norm, but I’m loving how this new norm is playing out across all of marketing.

Data isn’t new. Data allowed ancient salt traders to make important investment decisions in Egypt. Data allowed Christopher Columbus to accidently find the Americas. Data allowed Babe Ruth to know which pitches to throw to which batters. It’s been around.

Why it’s become a central thesis to us now is because it’s more actionable than ever because it’s become almost tangible and tools allow it to be ever more moldable. As a focus group of one, I use data to optimize my fantasy football teams thru +Nik Bonaddio‘s Numberfire platform, I use data through our Trading Desk, Varick Media Management, to optimize our biddable media campaigns, and I use data to help me understand where to invest my personal capital to help drive returns that can pay for my kids college tuition and my wife & I’s retirement.

As above, “data” can be used for many different uses.

One area of use that I’d love to see built out (and maybe I’ll pursue it) is legitimately, The Bloomberg Terminal for Advertising Data. If you are in the advertising technology ecosystem, then you’ve probably heard a million pitches with the words, “Bloomberg Terminal” but I think this is a huge opportunity around a very structured product. Let me explain.

Fact: hundreds of millions of dollars (if not billions) are being invested in media impressions thru biddable media sources

Fact: brands and agencies are building RTB advertising technologies to take advantage of market opportunities

Fact: publishers are going through an evolutionary period in which they transact their “wares”

Fact: agencies are in an evolutionary period in which they structure their buying decisions and put data front and center

In my theoretical world that I like to play out in my head every now and again, and run past trusted sources, I play out a scenario in which Advertising Traders have multiple screens on their desk, similar to a Bloomberg Terminal in which software is running showing the market dynamics and pricing. This Bloomberg For Advertising will show specific marketplace pricing (AdX, RMX, Rubicon, etc) indexes, demand volume, specific data asset pricing & demand (3rd party data), and the like.

To create this and carry out the vision, I believe as of now, but could be convinced, that this needs to be executed by a unbiased 3rd party company who isn’t tied to media or data volume. They purely are (profitably) motivated thru licensing of their Bloomberg for Advertiser software.

Why is this important?

1. Data assets as simply described above are going to become increasingly important for investment decisions in the near and mid-term.

2. Publishers need access to this information the exact same as advertisers to help drive their businesses forward.

3. Regulation of markets is a commonplace in the USA and the advertising marketplace is heading in this direction, at least at a preliminary level, especially as we increase our usage of spot and forward markets.

I believe there is a very large opportunity to be this for marketing and advertising. If you are out there building this or have a viewpoint similar or dissimilar, I’d absolutely love to hear from you.

Google+, Social Networks, and Operating Systems

I receive @jason‘s letters which he sends out fairly frequently.  If you are into digital media and want @jason’s opinion on the latest topics, then I recommend subscribing.

This week’s topic is: Why Google+ Will Take Half of the Social Networking Market from Facebook (or “There Calacanis Goes Again”)

As you might know from my last post about switching from Apple to Android, I’m obviously a Google fan this week.  In the past two weeks, Google launched +1 and Google+.  Jason spoke at length in his letter about Google+ and covered it nicely (though not sure how bullish I am) but there is one tidbit I wanted to pull out and highlight below because I think he’s dead on:

5. Android integration
Let’s do some deep, deep analysis shall we?

a) Apple has a mobile operating system but no social network.
b) Facebook has a social network, but no mobile OS.
c) Microsoft has a mobile OS but no social network (arguably, Skype is a dormant one [ ]).
d) Google has a social network and an operating system.

Who’s going to have the best mobile social user experience?

If you answered D, you are correct.

I’m not sure how this nets out over time, but Jason is right about how Google has a social network and has an Operating System.  Assuming Google+ can catch on, Google might be undervalued at $167bln.

Don't Come to the Buy Side without Sell Side Experience

The title of the post is a bit of an exaggeration, but after reading below, you’ll see why.  Note, this mostly pertains to technology/digital opportunities.

I had a conversation with an industry colleague the other day and we both came from the sell side (publisher/content distributor) before we ended up on the buy side (agency/client).  We ended up chatting about agency talent and how beneficial it is to spend time on the sell side.

These are some points that we discussed:

  • If you are coming from an ad network, exchange, or other media technology capability, you generally have a better working knowledge of technologies and understand the constraints and opportunities they provide.  It’s also a lot easier to call “BS” on vendors when you’ve participated on their side of the fence.
  • Interfacing with many different types of buyers.  Similar to how the buy side gets to interface with many different sellers, by working on the sell side, you get to understand all of the needs of the marketplace and get privy to all of the questions being asked by different clients.  This is important as you can begin to understand which buy side agencies are stronger than others and what the industry wants in terms of execution.

I really think the first point above is the mega-important one.  As more and more technology penetrates advertising agencies, having a background that can discern the technologies and performance is going to become increasingly important.   I highly suggest that people round out their careers by being on both sides of the fence, then of course, pick the side they like best.

On Camera: ThisWeekIn Marketing

A couple of weeks back, I went out to Santa Monica to film a segment for This Week in Marketing.  I’m not sure if any of you watch the This Week In Series, but it’s a great collection of 15-60 minute shows on different topics ranging from startups (with @jason) to venture capital to video games.

We wrote about ThisWeekIn in our Menu, which we released earlier this year.

What I personally like about it is that they can efficiently create niche content that only appeals to a very specific audience.  Using traditional studios and distribution platforms, this would not be economical.  Now it is, or at least it’s starting to be.  The democratization of high end video content is just in it’s earliest forms, but we’re seeing some fantastic results.  The industry thinks so as well, as Google acquired my friends over at Next New Networks, which was a similar company.

I wanted to share the segment I filmed with all of you.  I don’t know why I closed my eyes so much on camera but everything else went well.  We covered everything from the agency, technology, venture capital, twitter, video, and content integration.  I hope you enjoy.

Enhanced by Zemanta

Big Tech vs. Big Advertising – When the Worlds Collide

While much of our days are battling agency against agency for our next client relationship that brings revenue growth, whom we’ve been competing with over the decades is changing.  When David Ogilvy wrote his famous book, I bet he wasn’t envisioning who was going to be his next competitor.  It’s no longer just JWT vs. Ogilvy or kbs+p vs. Arnold.   It’s also Madison Avenue (encompassing many of our agencies) vs. IBM vs. Adobe vs. EMC vs. etc.  You get the idea.

Today’s announcement with Adobe is powerful and did not come out of left field.  Back in March, I blogged about why I’m long on ADBE.

IBM + Adobe + EMC combined have a $266 billion combined market cap.
MDC + Publicis + IPG + WPP + Omnicom have a combined $44.1 billion market cap.

One could certainly argue about multiples and valuation of stocks (tech vs. services) but you get the idea – there is material market cap differentials between the two cohorts.

Over the next decade, as Madison Avenue grows a digital backbone and big tech expands it’s marketing services, our world is going to collide.  I’ve seen both sides in their current form today and there are pockets of brilliance but there is a really long way to go.  I have to assume that the M&A landscape on both sides of the table here are going to be fascinating and corporate development folks are going to be busy.

Note:  It’s not a winner take all game here.  Many partnerships are going to be found between these businesses, however, at what point does cooperation turn into competition?  (I like competition)

The 87.5% Category According to Luma – Lots of Acquisitions

I’ve spent a bunch of time with ad servers in my life.  It all started when I was installing phpAdsNew for my brother‘s website, Exotic Car Network, creating ad zones across in OpenAdStream, a web property that about 7 of us ran in the late 90s, working on the team to create a self-service ad buying platform for eBay, creating a proprietary ad server for the in-game advertising marketplace called Radial, founded MDC‘s trading desk practice using BidManager and TerminalOne, and finally, using DART, Atlas, and MediaMind at the agency that I’m currently at.  Now looking back at it, I’ve centered much of my career around served and tracked media.

So as you can see from above, I spend quite a bit of time with media technologies.

I believe they will play a large role in the future of advertising and I will continue to play in this field over the coming decades.  There’s been an increased amount of coverage in this space which was once reserved for the back floors of the premier industry showcase, AdTech.  Terry Kawaja is bringing some light humor and some fantastic charts, John Ebbert is creating a mini-media empire (well, not an empire), Brian Morrissey is resurging an old newsletter back to the top, and there’s been a handful of acquisitions lately including Admeld (Google) and MediaMind (DG Fast Channel) totaling close to $1 billion.

According to the display Lumascape, the only category with 87.5% of companies acquired, yes, 87.5%,  is the ad server category.  Crazy when you think about it.  Atlas, DART, MediaMind, Pictela, PointRoll, MediaPlex, etc have all been acquired.  There are some independents in the market today such as OpenX and insurgent AdZerk, but the majority have already been acquired.  I predict that the category is still ripe for innovation and will continue to see many new players enter the space.  I was a personal shareholder of MediaMind and it was one of the larger positions I’ve held.

I continue to think that the best 3rd party ad server is exactly that – a 3rd party ad server that is not biased towards any media.  Almost exactly a year ago, I wrote a piece titled, “Insurgent:  How to take down Atlas and DART.”  I continue to dislike Google’s positioning in the marketplace as overnight they theoretically could shut off access to their inventory for non-DART users (could, not should), Microsoft has an ad serving system built in the 1990s and still feels like it, and this left an opening for a major ad serving player to come in with an independent stance, thus MediaMind gained traction.  I love this stance as mentioned above and it needs to continue.

A few days ago, I wrote a post about attribution and the growing advertising operations line-item.  If you haven’t read it, you should.

If I personally was to start a company tomorrow, I’d probably create the next 3rd party ad serving system built for the future of all media (able to serve site-direct placements, social media and RTB) and include the opportunity for biddable, rich media, video, and full reporting & analytics.  I believe no ad serving system delivers superior reporting and analytics so this is an area that I’d specifically make sure I’d nail.

I think this is an area for massive innovation because the vision that the industry hasn’t recognized the full vision for the future… I believe that all media will be served, tracked, and optimized across all channels.  Television, print, radio, and out of home will all in some way or another be served, tracked and optimized.  This obviously cannot happen overnight as there are quite a few barriers and obstacles to go thru, but the opportunity is huge.  There is a reason why 87.5% of the companies in the ad serving segment have been acquired.

Note, I don’t think you need to start from scratch.  If you could raise some money, you can start by acquiring several of the pieces.  There are quite a few DSPs who could use an exit right now.   There are even some large independent ad servers who would be interested.  A roll-up strategy would be interesting and something that could come together nicely.

One of the bigger parts here is that you need to service the advertiser (or marketer).  This needs to be written on all company walls.   Mandated thru corporate handbooks.  This is similar to how SSP’s service the publisher.  You cannot be all things to everyone and when this happens, decisions sometimes become very tough to make as you try to please too many constituents.  Think about all the decisions Google (and Admeld) had to make about where to flow it’s ad dollars – to Google-run sites or it’s 3rd party network of sites.  Stick to one core area of focus and innovate within it.

This area gets continually dinged because there isn’t a ton of money to be made.  $0.04 average CPM and 200 billion monthly impressions net out to about $8MM in monthly ad serving fees (~$100MM/yr).  That’s a nice company but think of how many are larger.  If you create a robust reporting & analytics infrastructure, ad verification, workflow solutions, etc – you can charge a premium.  I believe you can.  Create a premium bundle of services to execute within the Ad Ops space, and sell them as one package.  There are buyers.

The space is only going to heat up further.  Continued innovation, a lot more media technology thinking, and investment will raise the industry forward.  I know I want to be a part of it!

Advertising Operations and The Growing Line Item

One of the big trends I’m seeing within the agency and marketer ecosystem is that a specific line item on our media plans are getting seemingly larger each year.  Year over year growth of the “Ad Ops” line item is starting to catch my attention.  To be fair, it caught my attention back in 2008, but I’ve not written about it in a while.

Way back when, the ad ops budget basically included enough money to pay for our 3rd party ad server of record (Atlas, Dart, OpenX, MediaMind, etc) and that was anywhere from $0.04-0.10 per CPM.  If we wanted to include Rich Media on a campaign, we either had publishers bake their fees into the CPM’s they were charging us (CPM uptick such as PointRoll) or we would pay a separate CPM that got baked into our ad ops budget ($0.60-$2.00 depending).

Now, our Ad Ops budgets are increasing not just due to the volume of display advertising, but because of the media technologies that we deploy for our campaigns.  Here is a limited selection of a few, but there are certainly quite a bit more we can chose from based on the clients needs:

  1. 3rd party ad serving (MediaMind, Atlas, DART, OpenX, AdZerk, etc)
  2. Online advertising verification (DoubleVerify, AdXpose, TrustMetrics, etc)
  3. Compliance (Evidon, DoubleVerify, Truste, etc)
  4. Advanced Analytics & Measurement (VisualIQ, C3Metrics, Marketshare, etc)
  5. Data Management Platforms (Turn, Legolas, Aggregate Knowledge, BlueKai, etc)

We’ve gone from $0.04 CPMs for Ad Ops budgets to now, well, very high.  The Ad Ops budgets are reaching 10-25% of a total campaign.  $20MM in media could equate to $2-5MM in ad ops budget.  Does this Ad Ops budget come out of the media budget or is it separate budget?  Big questions.

One of the areas that I was talking to my friend Jerry about this morning was around attribution (#4 above).  We are seeing an increase of full funnel attribution companies popping up and we’ve both had different experiences.  I’ve been working with some cutting edge attribution companies in the office that are working on assigning dynamic weights to the conversion path based on all different dynamic factors.  While this is great, one could argue that the cost of doing this isn’t worth it unless you are investing enough money in media/advertising to cover the cost (gains in performance outweigh cost of implementation).

IMHO, the role of attribution modeling should sit at the 3rd party ad serving level – so I think folks like MediaMind (one of our ad-servers of record) should get acquisitive and add this to their general offering.  It’s going to become a standard, cost of doing business, and in the next few years, I expect advanced analytics and attribution to be table stakes in the ad server marketplace.

This post was all over the place but I absolutely love the topic.  Would love to participate in the comments. Please leave them.

My next post on this subject should talk about going from tactical to strategic with Ad Ops and the increased importance of the role of media technology in an agency organization.

Disclosure:  I’m a personal investor in MediaMind.

Enhanced by Zemanta