Category Archives: Advertising & Marketing

Some Thoughts on SocialFlow, Our Latest Partnership

It was announced yesterday that SocialFlow raised $10MM in Series B funding and our kbs+ Ventures participated along with Fairhaven Capital (lead), Softbank, RRE, AOL Ventures, Betaworks, and Rand Capital.  We blogged about our perspective on why we participated on our corporate blog but I wanted to add a few notes here.

I have been tracking SocialFlow ever since I was introduced to Frank Speiser at an event at Nihal Mehta‘s apartment in January 2010.  After learning about what he was building and why, I quickly saw the opportunity to leverage the technology for marketers.  Later that year, Frank give a talk at The Media Kitchen‘s Digital Media Venture Capital Conference and I’ve stayed in touch since.

When we found out that SocialFlow was raising money and was looking for a strategic or two to participate, it was a no brainer for us because of the trends that we are seeing in the space.  I will explain those below.

1.  Evolution of Communications Architecture:  Way back when, the communications architecture generally consisted of Public Relations, Investor Relations and Paid Media.  While those three still exist today and are still going strong, we’ve now re-arranged the construct to be Paid/Owned/Earned media.  What you [as a brand] do and say in paid media can be made exponentially greater when you leverage owned and earned.

2.  Communications Velocity:  The speed in which communications hits the marketplace has increased rapidly.  I don’t know of a “law” such as what we have with transistors (Moore’s Law), but I have to imagine that the speed in which we communicate has increased so significantly that old media cannot keep up.  Within 15 seconds, I can put out 140 characters to my entire follower-base on Twitter, Facebook, Pinterest, Instagram, Vine, or whatever other communications tool.  When it was just print ads, television ads, or even radio, it took months… sometimes a year (inclusive of production)!

3.  Big Big Data:  Almost every digital platform we use exhausts some form of data trail.  This data trail can be collected, mined, and optimized into an opportunity or insight for a marketer (or any company for that matter).  With the explosion of digital communications, there is a ton of data that’s available to optimize from.  Making sense of this data thru frameworks, architectures, and algorithms, will allow marketers a leg up in the communication “wars” for customers.  Note: It’s not about the size of the data set, it’s about the insight that’s gleaned.

4.  The Shift of Dollars:  We have all seen the charts that show time spent with a media channel vs. advertising dollars and the gap that exists in digital is still large.  But it’s getting smaller, which means that ad dollars continue to flow into the digital landscape.

SocialFlow capitalizes on the four points above.  They are smack in the middle of all of this.  Many of the kbs+ Ventures portfolio companies also exhibit these traits (and others).

With our relationship with Frank, the evolved management team, and the market traction the company has, we were super excited to green light this investment.

 

 

Adobe Strategy: On Point for 2013

I am a fan of Adobe ($ADBE).  You certainly know this if you’ve been reading this blog.  Here is an article I wrote in 2011 about Adobe’s strategy that has pretty much held true and something we all should re-read.

ADBE Stock

This morning I read the 2013 Investor Presentation (PDF) by Adobe and wanted to highlight a few things that I found interesting:

On slide 22 of the deck, Adobe mentions “key digital marketing growth drivers:”

  1. Shift of marketing spend to digital
  2. Re-platforming of the Web
  3. Demand for Cloud-based solutions
  4. Multi-channel campaign and social marketing solutions
  5. International growth

#2 (re-platforming) above is really, really interesting.  I had been looking for a term to capture this insight and I think they nailed it.

The 1990s ad-stack is on the way out, or at least has matured.  The new marketing stack is filled with social, mobile, local, and dynamic delivery.  Marketing tomorrow will not look like marketing yesterday.

On slide 26, Adobe talks about their stack (well, cubes):

  1. Adobe Analytics
  2. Adobe Target
  3. Adobe Social
  4. Adobe Experience Manager
  5. Adobe Media Optimizer

I’d have to say that these cubes/stack are pretty much aligned for the future.  Marketers and agencies are demanding ROI for their marketing spend and quantitative validation is key to success.

Read the investor presentation if you get a chance.  It’s a fast read.  If your organization is not aligned with this thinking, rethink where you are headed.

 

 

Facebook, Ad Servers, and $344B in Media

There is $344B in media* market cap that own and operate ad serving systems now.  

Google acquired DoubleClick ($274B mkt cap), AOL acquired AdTech ($2.86B mkt cap), and Facebook acquired Atlas ($65.4B mkt cap).  ValueClick owns MOJO and retained Mediaplex ad-server ($2.05B mkt cap).

When we think about ad servers for Madison Avenue, our guts tell us DART and Atlas**.   Both of these two ad serving solutions are now owned by larger-than-life media platforms.  MediaMind, the challenger of ad serving solutions is making inroads across Madison Avenue and believe it or not, has surpassed Atlas as the number two platform.***

Having heard the speculation turned news recently about Facebook acquiring Atlas and reading Gokul’s post on AdExchanger, I still do not understand why they did this acquisition unless Facebook thinks they can convince Madison Avenue to use them as their 3rd party ad serving tool of record.

My question to Madison Avenue:  Wouldn’t you want an impartial 3rd party to be your ad serving tool?  Why would you rely on a media property who is going to make more money off media than ad serving to deliver you your attribution models?

And with this, I’m not saying Google is any better.  It’s a big reason why the majority of our clients are not on the DART ad server.

In the finance world, there is significant rules around proprietary trading (prop desk) and analyst/research work.  The two basically do not intermingle and in the recent laws, the two might have to split.   This is FINRA rule 5280.

(a) No member shall establish, increase, decrease or liquidate an inventory position in a security or a derivative of such security based on non-public advance knowledge of the content or timing of a research report in that security.
(b) A member must establish, maintain and enforce policies and procedures reasonably designed to restrict or limit the information flow between research department personnel, or other persons with knowledge of the content or timing of a research report, and trading department personnel, so as to prevent trading department personnel from utilizing non-public advance knowledge of the issuance or content of a research report for the benefit of the member or any other person.

I understand that advertising is not finance, but wouldn’t we take clues from a more robust industry?

If you are a marketer or agency and put all your media plan data in a company who is selling you millions of dollars of advertising media, don’t you think that the data will be used against you?

Here is an example, purely from illustrious purposes:
Property A – $6/cpm $3/cpa
Property B – $8/cpm $3.50/cpa
Property C – $7.75/cpm $3.40/cpa

Imagine the three properties above have their data in an ad server controlled by Google, AOL, ValueClick, and now, Facebook.

When you go to purchase media from any of these four properties, they can see what you are currently paying and what the actual performance is.

This gives these media platforms a significant leg up on pricing & performance as they know where they need maintain or beat.

Is it just me that’s skeptical?

On a completely other note, I do not run M&A for Facebook but I would have suspected they would have built their own Ad Server and maybe acquired an attribution company such as Adometry, C3 or VisualIQ (or the many others in that space).

* Companies who own significant media properties.  Google, AOL, Facebook, ValueClick.
** There used to be a trade magazine that showed ads served each month by ad server, but I haven’t seen it in a while.  Purely based by my conversations with other agency heads, Atlas and DART are the primary ad servers that come up in conversation.  MediaMind is coming up more and more.
*** Updated after an email conversation with MediaMind.

Evolving Corporate Strategic Investing

We had a nice piece written about kbs+ Ventures in the WSJ today that spoke about the evolved model we are bringing to market.  I’m glad the WSJ initially reached out because it’s truly a great story to tell.  You can find the article here.

A month or two ago, we also put a short video online to explain kbs+ Ventures within a Made Here series that our agency is releasing.  The video showcases Taylor and myself talking about our investment vehicle as well as how we incorporate Ventures thinking into the larger agency.  You should check out the video if you’ve not already seen it.

I’ve always said that the world does not need another investor.  There is no lack of venture capital available today to startups of all shapes and sizes.  But, what Madison Avenue needs is to get closer to the technologies that have the power to disrupt our business in the future.  Some agencies are going to wake up 5-10 years from now and realize that they do not have a business any longer.  Other agencies such as ours and some of our peers will embrace this change and start investing in the future.

Its been fun and we’ve really only scratched the surface with what the big opportunity is for us.  Thank you for all of your continued support.

On a side note, if you haven’t yet downloaded our kbs+ Ventures book, what are you waiting for?  You can download Creative Entrepreneurship here.

Marketing Technology that Powers $42.3B in E-Commerce

Quick link:  Download report here.
This was our second year releasing the Marketing Technology Holiday E-Commerce report.  It’s no Lumascape, but it’s damn interesting.

It started as a simple project for me to understand which top e-commerce players were using different Marketing Technologies.  This year, we included trending information from last year’s report.

Here is a link to the new 2012 report (PDF), and a link to the old 2011 report (PDF).  The actual data set that it is derived from can be downloaded here for your own analysis.

I owe a big thank you to my friends at Evidon for providing me this information as Ghostery powers much of it.

AdExchanger was kind enough to write up the report late yesterday and hopefully you had a chance to read it.

Here are my takeaways:

1.  Social.  100% of the 20 surveyed sites were using social plug-ins or another form of social connectivity.  While social is the grouping, this shows the power of “earned” media; or at least the potential power of “earned” media.

2.  Audience.  I’ve been harping on this for years now.  We need to understand audiences in marketing.  Not just online, but in store too.  We’re seeing these top e-commerce sites learning about their audiences by deploying different marketing technologies that could help shape audience experiences, products, customer service, etc.

3.  Mixpanel.  I was surprised to see them in the top 10 marketing technologies utilized.  They are an analytics platform for the desktop and mobile web.    Impressive to see them breaking into the top 10.

4.  Slow decline of the ad networks.  Not the death as many folks have predicted but 51% less ad networks year over year.  Google AdWords was the top ad network (no surprise).

Again, the report isn’t perfect due to classification of companies but it’s directionally accurate.  I look forward to hearing your thoughts!

Facebook, Attribution and Cookies

I thought I’d put this out to the community since I would love to engage in conversation around this.

At the agency, we have recently seen significant positive performance on a FBX campaign; performance as measured by an online sale (lets keep it vague).

I have been thinking about this and emailing with a few folks about why we might see such stellar performance.

I think I know the answer but want to run it by all of you, to help me think it through.

Facebook is used by over one billion people.  Many of the users of Facebook keep it open in a browser tab all day but it might not be “in view” most of the time.  However, there are consistently six ads in the right rail, all of which consistently update (and theoretically, drop cookies).   Using Ghostery, I see that DoubleClick has a tag on my Facebook newsfeed as I write this.

Is Facebook the new AOL Instant Messenger or Pop Under where it persistently is refreshing cookies all day long and taking credit for conversions?

Triggit recently ran a study where they converted 36% more re-targeted users than Google Display Network, Rubicon, Admeld or Pubmatic.  Is this because they have 36% more reach (I’m not sure if they do, I’m not logged into comScore at the moment).

In a world that is using last view/click attribution, then this could be a real issue for measurement.  If you are using a more advanced attribution method thru VisualIQ, Adometry or Encore Metrics (amongst others), hopefully it get teased out.

Just thinking out loud- lets discuss.  Leave a comment or email me thru the contact form.

 

Thinking About Google Fiber

I spent some time thinking about Google Fiber and it’s opportunity and threats to the consumer and business ecosystem.  This is not supposed to be a fully thought out piece but rather some raw thinking that I’m putting out to the Interwebs for continuing a conversation that was started by many of you.

Why is Google building out a Fiber Network?

After reading many articles on Seeking Alpha and other arm-chair analyst blogs, I believe the primary motivation to their planned (and current – Kansas City) fiber rollout is to protect their business and to allow for future growth.  What they are creating is stability for themselves and the pipes in which they can deliver whatever they’d like.

Lets think about this.

Google has done pretty well at maximizing paid search thru harvesting intent on the web.  This is a genius business and will continue to do well, even if there is an advertising downturn (lets hope not).  GOOG’s market cap of around $230 billion which is about 6x 2011 GOOG advertising revenue ($37.9b) could use some more growth prospects to satisfy investors.

Video is a big growth area for Google and YouTube will be its delivery mechanism.  YouTube streams over 4 billion videos per day and is looking to increase this (and the quality of videos) thru YouTube’s original programming partnerships.  The top 5 television markets are New York, Los Angeles, Chicago, Philadelphia and Dallas-Fort Worth; these account for roughly 12.5mm households and there is also some serious purchasing power in these markets.

You can bet that Google would like to put Fiber down in these markets as to gain access to distribute YouTube original programming distribution.  Note, they can currently distribute any of their content in market but if the last mile players like $TWC and $VZ utilize metered pricing, then YouTube videos might face consumption challenges.  If Google delivers the last mile, then viewership of YouTube content theoretically would be free as Google would be monetizing it from the other side (or at least Google would control it’s destiny).

Data is abundant and Google wants to learn from as much data exhaust as possible to make themselves better.  Larry and Sergey are engineers.  They are excited about technologies and want to build big systems.  Google Fiber will give them access to a truly big data set that they will then be able to tap into in order to optimize their systems for better content experiences and advertising delivery.  Advertising deliver is extremely important as Google derives much of its revenue from Madison Avenue.  The better the dataset that Google has, the better performance its advertising should yield.

Just thinking outloud about Google Fiber.  Did I miss any major points?

 

Alto Email, The Open Graph, MBA Mondays, and Las Vegas CES

Happy Wednesday.  I thought I’d write another post that points to discussions or products that I’ve been part of recently.   Leave some comments below or reach out directly if you’d like to talk further about any of these.

It’s amazing how much an interface can make or break a product, go Alto!.   In early October, I heard AOL was launching Alto, it’s upgraded mail platform.  I signed up for the limited release and was granted access to the system late last night.  I am impressed so far.  I like the interface a lot.  It’s amazing to see how much of a difference the interface can make.  Font selection, user flow and the overall idea of classifying emails is fairly smart and spot on.   I do not use Sparrow so do not have a point of comparison, but it seems to me like accessing Alto over Gmail (even though Alto is a layer on top of Gmail for me) is the way to go.  What do you think?

The big question for Google, especially if users start accessing Alto as the portal to their Gmail is at what point do they disallow this?  Gmail is a revenue driver for Google in relation to AdWords (ads on the sides and above your emails) and Alto basically gets rid of these.  Will AOL roll out an ads product in Alto?

Get Your MBA On, Advertising Models.  Fred Wilson, a friend, venture capitalist and AVC blogger wrote his latest MBA Mondays post on Advertising Revenue Models.  Being that he and I both know that this is in my wheelhouse, I helped write the piece and linked it back to a presentation I gave in 2011 to the NYC TechStars class (I mentor).  The post was not specifically used to quantify or justify advertising but rather expose the different models within advertising revenue.   I think the post is fairly comprehensive and is a good primer for anyone considering taking advertising dollars.  I’m more than happy to talk more about it which is why I created the short-lived but very specific Marketing Wednesday series.

Fb Open Graph Innovation.   At kbs+ Ventures, we see lots of companies who are innovating around advertising and marketing technology.  This is our core area of the marketplace we invest in and one we’ve considerably doubled down on over time.  An area that we see companies spending lots of time thinking about is the Facebook Open Graph.  FbOG is an underutilized asset/utility for brands and there is a ton of room for brands to engage with it.  We are sniffing around this space to understand the forthcoming players in the FbOG space so if you are someone, know someone or are just genuinely excited about the FbOG, leave a comment and we’ll hook up.

2013 Consumer Electronics Show.  I’ll be heading out to Las Vegas for 2013 CES.  I’ll be there for meetings on Monday/Tuesday so if you’re heading out and want to meet up, certainly reach out and we’ll try to coordinate some time to meet up.  I’m specifically looking to meet entrepreneurs or other folks innovating in/around marketing and advertising technology which actually had solid representation at last year’s (2012) CES.

 

Multi-Platform Measurement, Social Referrals, Frothy Times, and Too Much Supply

Back when I was blogging more often, I used to write posts that provided perspective on other industry conversations around the web.  I did this fairly frequently in the 2000s but have stepped back a bit over the past couple of years mostly because Ive been balancing the family and work  and blogging has been the one activity that I’ve forgotten.  I do miss it.  And I will try to be better at it but Ive said that for the past few years.

Anyway, there are a couple of posts that I’d like to react to or at least point you in the direction of.

Multi-Platform Measurement:  comScore announced a new product in which allows us to measure the audience of desktop and mobile (right now, only in the US).  It’s called Media Metrix Multi Platform.  Fred Wilson, a venture capitalist over at Union Square Ventures points out some insights:

There’s a bunch of interesting stuff in there. Take Google. They have 189mm users in the US on desktop/web. They also have 109mm users in the US on iOS and Android. But the unduplicated total audience is 211mm, meaning only 22mm of Google’s users are mobile only in the US.  Pandora and Twitter stand out as highly mobile user bases. Pandora’s mobile user base is >2x their desktop/web user base. Twitter’s mobile user base is almost equal to their desktop/web user base.

I’m not shocked at all about the Pandora and Twitter data.  As a user of both services, I notice my usage is higher via mobile.

It’s Basic Math That’s Killing Display@jhlava over at Varick Media Management (I co-founded in 2008) posted a piece on AdWeek that looks at a top down approach of supply and demand of display inventory, specifically that of RTB.  He puts together an argument that shows how much money there is in RTB/display and how much supply there is and makes that case that there is not enough dollars today to increase the overall CPM’s of inventory.  The imbalance of supply/demand is hurting the industry overall.

He’s pointing out a 101-issue that is the big elephant in the room.  It’s a big issue.  We’ve never witnessed a medium such as the web which has provided us with infinite supply.  You cannot do that on TV, radio, print, etc without significantly hurting both the user experience and business margins.  But on the web, another banner or video play has marginal cost so creating supply is not an issue.

The creation of supply has led to problems for a few constituents.  The entire Lumascape is affected.  The investors on the Lumascape are affected (me too).  Marketers are affected (so many decisions).  Pretty much all sides of the table are affected.

I have no doubt that over time, more money is going to flow into RTB.  It’s growing.  Adweek posted that over the holiday weekend, RTB prices jumped.  Dollars will come into the space but we need to figure out what we’re doing with inventory.  We just cannot keep creating infinite supply as it’s going to hurt the entire web.

RIP Frothy Times:  There’s a meme going around now about the shakeout of early stage companies and the Series A crunch.  Well known folks have argued both sides of the table on this.  I might as well add my two cents.  The next 24 months are going to shake out many of the companies in the ad & marketing technology space.  I’ve predicted this before and I’ll say it again, getting from $1-10MM in revenue is the easy part but we just don’t see many $10MM+ companies.  Note I said revenue and not billings.  The ad tech space likes to inflate their numbers and talk about revenue but realistically, most of the time is media billings.  The companies with out core differentiated tech will fizzle out and we just don’t need fifty mobile DSP’s or undifferentiated DMP’s (who are now selling media, too).

Social Referrals:  I was reading Jason Goldberg’s blog, founder of Fab.com and he has a post up that talks about the referrals to Fab.com.  For the record, I absolutely love how open he is about their business.  Black Friday to Cyber Monday traffic on Fab.com was 25% social driven.  65% of the social traffic came from Facebook, 20% Pinterest, 5% Twitter and 1% Coolhunting (there are more, click to the post to read it).  That’s pretty powerful.  Jason also states that about 20% of Fab’s revenue from this period came from users who originally joined Fab via Facebook.

Lots of good stuff happening in the industry.  I’m excited to be part of it.  Happy Holidays!

Cookies, The President, and Ad Tech

There is lots of chatter in the government and the digital advertising industry around privacy and cookies.  You can do a simple Google search and get all the details about self regulation vs. government reform.  I even created a Slideshare document on this back in October 2010.

I wanted to write this post to document something:  if the government steps in to intervene in the privacy and cookie war in the digital advertising industry, lets look at what President Obama used to help win his re-election.

Obama has at least 30 providers of marketing & advertising technology working for him.  Romney as of 12:19PM ET today (11/7/12) has 18 trackers.  This Obama screengrab was taken at 11:55pm ET last night on his official homepage.  Ghostery provided the insight on the right of the screenshot and we can see many cookie-enabled technologies.

Next time you hear about the government coming down hard on cookies & privacy, remember this post.

(This post is not supposed to be a political ding in favor of one party over the other.  I’m one of the least vocally political people in the USA.  It is supposed to provide insight into cookie use for political candidates, in this case, the President Obama.)