Category Archives: Startup & Venture Capital

One Buying Platform for All Media

Back in June 2011, I wrote a post titled, The 87.5% Category According to Luma – Lots of Acquisitions.  The purpose of the article was to highlight that ad serving systems for online/digital media had a high propensity to be acquired or realize a significant exit.  87.5% of all ad servers on the chart had gone through an exit.  Not bad.

Over the last week of December, I spent some time at home and caught up on my favorite blogs and online content in between playing with my two kids.  In doing this, I spent time reading a December 20th post on AdExchanger by Google’s VP of Display, Neal Mohan.  While I’ve personally never met Neal, I have a lot of respect for what he’s doing at Google.  He has a great quote that I couldn’t agree with more:

We also know that advertisers and agencies ideally don’t want a separate buying platform for each type of media — they want a way to buy across all formats, and in 2012 I think they’ll get it. Real-time bidding (and by extension audience buying) has proven to be a transformative technology for buying desktop display — on our exchange, it currently accounts for 60 percent of all transactions. In 2012, we’ll start getting into that ballpark for mobile and video as well.

If you recall, when I wrote the 87.5% article, I highlighted an area in particular stands out to me as a killer opportunity:

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.

It looks like Neal and I are thinking the same thing and if any of you entrepreneurs are as well, I’d love to meet you.  This is an area that we are searching to invest in at kbs+ Ventures.  You can contact me here.

2012 Advertising & Media Technology Predictions

Over the years, instead of writing my own forecasts and predictions, I’ve aggregated them on this blog as a source for everyone to turn to for marketing, technology and media.  Here are the lists for 2008, 2009, and 2010.  This year, instead of aggregating them, I wrote 5 predictions that I think will come true for Advertising and Marketing Technology in 2012.

The predictions are below, but you can read more about them here on Advertising Age.

1.  The vGRP metric gets adopted once released and AdXpose/Comscore finally makes sense to most people

2.  Trading Desks are no longer the bright shiny object for Madison Avenue as they begin to mature and become growth businesses for holding companies.  Holding companies need to make a strategic decision whether or not they are going to continue to support them and if so, they must acknowledge and realize they are building technology organizations.  If not, we’ll start to see some trading desks spinning down (or out) of holding companies in 2012.

3.  Agencies who are not agencies will challenge the agencies.  I like the title on this one:  tomorrow’s madison avenue will look different than todays.  Read more about it in-depth over at Ad Age.

4.  Attribution drives dollars to currently undervalued assets.  By using engagement mapping, TrueCPA, or other fun names for understanding conversion attribution, media buyers will actually be able to purchase sites that aren’t part of the lower purchase funnel.

5.  And of course, what marketing technology trend and prediction list would not include Consolidation and Investment as a headline?  Mine certainly will.

I’m super excited about the above 5.  There are quite a few more but these are my starting five going into 2012.

Marketing Technology behind $35 billion in holiday 2011 ecommerce sales

Ever wonder who is the marketing technology behind the $35 billion dollars in e-commerce sales this holiday season? If you are an agency, wall street analyst, marketer, optimizer or any other player in the digital media ecosystem, you probably want to read below.

I always tell my team at The Media Kitchen that you can learn a lot from what other companies are doing; the good, the bad, and the ugly… so study them.  On the web, it’s relatively easy to study companies and their respective infrastructure as the source code of competitors is only 1 click away.

I teamed up with my friends over at Evidon who own the Ghostery product and had them send me a data dump of 3rd party tags that were placed on 20 e-commerce sites (list below).  Note, the data I have is fairly reliable but not perfect, so I may have missed a partner here or there.  However, I do have over 150+ partners who had tags down on these 20 e-commerce destinations, so I feel I have a directionally accurate view of who was part of the marketing technology ecosystem for Holiday 2011.

Sites I tracked were Best Buy, CouponCabin, Sports Authority, LL Bean, Gap, Dicks Sporting Goods, Bed Bath & Beyond, SVPPLY, DSW.com, Modells, Zappos, Old Navy, Disney, Target, Walmart, Gilt, Sears, Amazon, NewEgg, and Piperlime.

I counted a total of 413 partner tags/pixels placed across these 20 sites (note, I only went to 1-2 pages per site and assumed tags would be similar across most pages).

Executive Summary (full report can be downloaded here)

  • Best Buy, CouponCabin, and Sports Authority properties contained 43% of all tags placed.  The top 10 of the 20 sites accounted for 85% of all tags placed.  I am actually surprised that Amazon didn’t fall into the top 3, but again, Ghostery told me they only had 3 tags down on their pages (Turn, DoubleClick, Google Analytics).
  • The top 3 tags placed across all 20 sites were Google Analytics, Omniture, and DoubleClick.  No real surprise here.
  • The biggest surprise IMHO is that Google+1 outranks Facebook and Twitter as social plug-ins that are embedded across these ecommerce publishers.
  • The DSPs are in-line with the recent Forrestor report so I didn’t find anything crazy in those numbers.
  • Google Analytics has 70% coverage across these 20 e-commerce sites.  Imagine the data that Google could/is collecting.  Just saying.

In order to digest this 1000+ cell data dump, I created a schematic whereas I broke down the product (such as Tag Management) and took the top companies and their % composition the 20 e-commerce destinations.  The link to the excel sheet is at the bottom of this post.

Web Analytics software:  Google Analytics (70%), Omniture (60%), Foresee (40%), Webtrends (15%), Yahoo Analytics (15%), Coremetrics (10%)

3rd Party Ad Serving:  DoubleClick (55%), Microsoft Atlas (25%), ValueClick MediaPlex (35%), MediaMind (5%)

Tag Management:  BrightTag (20%), TagMan (5%)

DSP:  AppNexus AdNexus (30%), Turn (25%), MediaMath (20%), Invite Media (20%),  AdNetik (10%), X+1 (10%), Lucid (5%), DataXu (5%), Rocket Fuel (5%)

Exchange:  Right Media (35%), AdBrite (15%), OpenX (10%)

SSP:  PubMatic (50%), Rubicon (25%), Admeld (10%)

Social Plug-Ins:  Google +1 (45%), Facebook (40%), Twitter (15%), AddThis (15%)

Site Optimization:  Omniture (60%), Monetate (20%), RichRelevance (20%), Visual Website Optimizer (15%)

I believe the Omniture & DoubleClick tag data above is a bit misleading because those are grandiose tags that can do many different things and without the right context, they could be categorized incorrectly.  I tried my best.

Conclusion

Google dominates pretty much up and down the marketing technology stack. I still think they should buy Adobe to become the monopolistic dominant player (to get Omniture), but I don’t believe the government will ever allow that.

I was actually surprised that Omniture didn’t have even higher composition of the 20 ecommerce players.

I couldn’t tease out DoubleClick AdX from their other tags so that’s why they weren’t included in the Exchange part.

And of course, since I work, play, and invest in the marketing technology ecosystem, I’m conflicted up the wazoo with many of the companies mentioned in this post as well, as, the data in the chart linked below.  I have done my best to tease out bias.  Please proceed with caution but honestly, I don’t think you need to.  Contact me if you are interested in discussing.

Thought you might find all of this data interesting.  I have included my chart here in case you want to download it and play with it.  The full report I put together is located herePlease remember to give proper attribution if you use it.

I’m curious to look at this data in 2012 and compare it to 2011 (I don’t have historicals).  I’m sure we’ll see some interesting changes.

Happy holidays.

Darren Herman is the Chief Digital Media Officer of The Media Kitchen (part of kbs+) and is President of kbs+ Ventures which is an early stage marketing technology institutional investment arm of the agency.  His tweets can be found at @dherman76 and blogging here at http://www.darrenherman.com

YOUniverse & Personalization

An area I have been studying for a while is personalization, especially under a macro trend that is termed the YOUniverse.  While I did not create the term, Renier did, it’s an area that has been of increasing interest to me.  Personally & professionally, I have been involved in personalization over the years: content recommendations (Knowabout.it), mens shirts (Second Button), and ad optimization (Varick Media Management).  In 2001, I had a business plan to essentially create what become Second Life, but it never got anywhere.  It was all about personalization.

Ninety years ago, pretty much everything was personalized.  We went to the butcher, he chopped meat to our liking.  We went to the tailor and came away with a perfectly fitted suit.  We needed pencils, so we sharpened them ourselves to match what we needed.

We moved away from this customized business world because we optimized our processes to create cost efficiencies that were passed to the consumer as well, as, created additional margin that was kept for the business.  It was a win/win.  The Gap emerged, created a lower cost pair of basic jeans, and was able to sell at a lower price point because they created 1,000,000 items of the same thing in mass factories.  If someone wanted a very specifically tailored pair of the jeans from the Gap, they had to purchase the jeans and then take them to a tailor and the tailor would alter them.  Inefficient, but this is how it works today.

In a world where technology (and software) is penetrating every industry imaginable, processes are going to evolve.  It was cost inefficient to create custom/personalized items back then, but will not be tomorrow.  The world of personalization is starting to unfold at a price point that is palatable for consumers.

What is a key attribute of personalization is that the consumer is part of the creative process.  Every one of us, consumes, have at least 1 bone of creativity in our body and the more we can exercise it, the more we are satisfied and inspired.  Union Square Ventures & Index Ventures both invested in a 3D printing company, Shapeways, which celebrates personalization, but it’s certainly not for the masses, yet.

A recent example of personalization: The Apple iPhone.  The iPhone is a platform which every owner can customize their own experience.  Unlike a feature phone, there is a real relationship with the iPhone because of all of the customization that goes into it on a consumer/app level.

I am very inspired and excited about the opportunities in the YOUniverse.  If you are too, I’d love for you to leave some comments around areas that you are innovating in.

Your Daily Game Plan

If you play a sport, you don’t take the field, court, pitch or ice without a specific plan of action.

If you sit on the board of a company, then your board meetings are time to evaluate plans.

Each day when you wake up, do you create a (daily) game plan?

For someone who has a lot on their plate, this is something you should seriously consider.

Pick 1-4 things to accomplish each day and do it.  That’s your game plan.

Use whatever tools you need to keep you on plan: Google Docs, Teux Deux, or something else.

You’ll start (or continue) winning.

This post was inspired by Seth Godin.

We've Seen It Before

I walked into the office this morning and my colleague at kbs+ Ventures, Taylor, greeted me with excitement around some of the latest mobile marketing studies that were released.  TechCrunch has an article titled, In Mobile Advertising, Does Size Matter? and Forbes has an article titled, What if Mary Meeker is Wrong and Mobile Ads Never Really Take Off?

Thru our clients at the agency, I’ve deployed many mobile campaigns.  I also oversee a tablet/mobile client of ours, so I’ve spent quite a bit of time within the mobile space.  Additionally, we’ve invested in a few companies that participate directly with the mobile space.

Mobile engagement rates are higher to what we saw with the early days of the web, but it’s a false positive.  Let me explain (and I’m certainly not the first to do so).  If you’ve heard me talk and heard the line, “it’s the same cupcake, just with different sprinkles,” then this is exactly a use case for the line.

#1:  Screens are smaller, thumbs are wild
Our thumbs (and fingers) tend to touch ads by accident.  It happens and we’ve all done it.  You’d be shocked at how many people touch ads and then immediate click away.  We ran a click-to-call campaign for a client and it drove significant response, but most callers didn’t actually mean to call.

#2:  Bigger drives higher engagement, but more disruption
It doesn’t take a rocket scientist to calculate higher engagement with bigger units.  We saw it on the web.  We could have immensely huge units on the web that drive the same engagement, but do we really want it?  How many desktop web publishers adopted the OPA-sized ad units?  Didn’t we do away with pop-overs and unders?  Do we really need bigger units on the mobile device?  Just because we can, does that mean we should?

#3:  Newness drives engagement
It’s true.  Look at any new platform (or even app) and the engagement rates with the entire platform is higher than when looked at over a period of time.  This is my thoughts and I don’t have data to back this up, but I know from my own experience that I’m more excited on a platform early on than over time.

Net/net, we’ve seen this all before.  CTR’s and engagement rates for email and desktop display were high in the 90s; multiples higher than they are today.  Marketers should certainly take advantage of these high engagement rates if they can as they won’t last forever, I hypothesize, as they come down over time.

I don’t believe that today’s mobile banners are the best use for mobile advertising.  I think there is a better way to monetize the mobile web.  I don’t know what the perfect state of mobile advertising is, but it will involve location based data.  I do believe however that marketing with mobile data will be huge, in whatever form it takes.

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kbs+ Ventures Portfolio News: Awe.sm, Momentum, Hiring, and Tumblr

We’ve been busy in the office which has been why I’ve posted very little over the past few weeks.  However, below are some of the reasons why I’ve been radio silent.  I’m super stoked about all of this and hope that you are too.  See below.

Awe.sm
kbs+ Ventures recently announced our investment in a social analytics (plumbing) company called Awe.sm.  We are super excited about this opportunity as social is going to become increasingly more important into the fabric of everything we do and having the right infrastructure to manage and measure is of extreme importance to brand marketers and agencies.   There has been a ton of articles written up about the launch of Awe.sm so do not hesitate to check them out.

Adaptly Momentum
Today, one of our portfolio companies, Adaptly, launched a service/product called Momentum.  Nikhil Sethi, the founder/CEO of the company said it best in his blog post this morning:  If we continue to base our paid media buys on only the paid media metrics, we are only measuring 1/3 of the value generated. These results leave so much value on the table and we believe there should be a better KPI suited specifically for social. I’m super bullish on companies who cross the paid/owned/earned media landscape and Momentum is a tool in which can measure this for a brand.

Hiring
There is no shortage of hiring in our portfolio companies.  Most of the companies are hiring talent here in New York City.  If you are a product manager, developer, front end designer, or business development exec and are looking to join well funded private companies that are in the marketing technology space, do not hesitate to reach out.

kbs+ Ventures Tumblr
We officially launched the kbs+ Ventures tumblog.  Lara has been updating the blog for us and it’s chock full of kbs+ Ventures information and pictures (including our 2011 Holiday Salon).

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Helping Demand Find Supply

about advertising and operating systems. There are not enough advertising dollars in
the ecosystem to be the only revenue model for digital media companies so we must
look elsewhere.
Mobile impacts our future in ways many do not realize yet. When you are in the middle
of the early part of the Gartner Hype Curve, you do not know how large an opportunity
can become and often times, it is underestimated. Being hyperbolic on purpose, I feel
we are underestimating the importance of location, which is brought to use by mobile
data.
The key essence of the line, “Help demand find supply, not supply find demand” is all
about enabling a process, interface or system to help consumers consume, at its purest
form. Let consumers pull information, not just have it pushed down to them.
Mobile affords the opportunity for an interesting ratio (balanced maybe) of push vs.
pull marketing. The majority of marketing is push – supply finding demand. We buy
banners, magazine pages, television spots, billboards and the like so marketers
can reach customers. With location data as now part of the marketing optimization
mix, consumes can now request and pull information. Early current forms of this are
platforms like Groupon or FourSquare.
However, what happens when customers can reach us? What happens when push
budgets are down 80% and that money is invested to marketing around pulling? Could
this happen? It is happening, but Madison Avenue needs to retool and rejigger for this.
There is a famous quote by Henry Ford which says, “If I asked consumers what they
would of wanted, they would have said a faster horse.” This of course, refers to the
automotive empire he ignited. Steve Jobs has similar quotes. And of course, Mark
Zuckerberg does too. In a world where consumes can pull messages or find supply, do
we (as consumer) know what we want or need?
(open question, start thinking….. now)

The above quote stuck out from a recent conference I went to when we were talking about advertising and operating systems.  There are not enough advertising dollars in the ecosystem to be the only revenue model for digital media companies so we must look elsewhere.

Mobile impacts our future in ways many do not realize yet.  When you are in the middle of the early part of the Gartner Hype Curve, you do not know how large an opportunity can become and often times, it is underestimated.  Being hyperbolic on purpose, I feel we are underestimating the importance of location, which is brought to use by mobile data.

The key essence of the line, “Help demand find supply, not supply find demand” is all about enabling a process, interface or system to help consumers consume, at its purest form.  Let consumers pull information, not just have it pushed down to them.

Mobile affords the opportunity for an interesting ratio (balanced maybe) of push vs. pull marketing.  The majority of marketing is push – supply finding demand.  We buy banners, magazine pages, television spots, billboards and the like so marketers can reach customers.  With location data as now part of the marketing optimization mix, consumes can now request and pull information.  Early current forms of this are platforms like Groupon or FourSquare.

However, what happens when customers can reach us?  What happens when push budgets are down 80% and that money is invested to marketing around pulling?  Could this happen?  It is happening, but Madison Avenue needs to retool and rejigger for this.

There is a famous quote by Henry Ford which says, “If I asked consumers what they would of wanted, they would have said a faster horse.”   This of course, refers to the automotive empire he ignited.  Steve Jobs has similar quotes.  And of course, Mark Zuckerberg does too.  In a world where consumes can pull messages or find supply, do we (as consumer) know what we want or need?

(open question, start thinking….. now)

2 Key Questions to Ask a Management Team

I went to a conference recently put on by a friend and colleague of mine, Pip Coburn.  He organized about 150 entrepreneurs, investors, analysts and the like to attend and we discussed Monumental Change.  Some of the topics I attended and participated in were around Facebook vs. Google, Operating Systems, Future of Television, Education,  and Decision Making without Enough Data.

During our recap at the end of the day, one of the questions we had to answer was, “If you are going to meet with the management of a company to assess them, what 2 questions would you ask?”   We all had to think and participate with our answers.

While I contributed two, I didn’t feel that mine were best.  Here are the two that I favorited along with most other people which were given to us by a well known CEO of 2 publicly traded companies.

  1. What is holding you back?
  2. What is your business model and how did it and will it change over time?

What is holding you back?

I like this question a lot.  Everyone has wants and needs.  I’m sure that if someone asked you what was holding you back, you can rattle off a list of things.  You can tell a  lot from someone’s list.  The goal here is to weed out what is systematic or foundational vs. temporal tactics which are born out of politics or laziness.  If you can isolate the latter, then you can work with the management team to get thru the easier than say a foundational issue which is much harder to change.

What is your business model?

Seems like a trivial question but to many, its not.  Within the media agency landscape, our model is to sell our time to clients and we make a commission on the respective media we purchase.  Will this have to change in the future?  Maybe… But think about larger corporations (or even mid size), their models aren’t that easy to figure out.  Apple has how many revenue sources?  Google?  Facebook?  Instagram?

While this was a public company CEO who shared this information with us as this is what many investors ask him, I look to leverage these questions with startups we are looking at investing in thru kbsp Ventures.

(btw, this was my 1,000th post.  Woo hoo)

Pet Project – Mobile Phone Wipes

From time to time, I pursue what I call pet projects which keep me fresh.  These projects range from digital thru non-digital and I mostly invest my own capital into them.  Most of the time, the projects fade into oblivion, but the end point is not what I’m seeking, it’s the journey – as I do these projects to learn and prove some very specific things.  By working on early stage products, it keeps you humble, honest, and amazingly resourceful.  I’ve spent some time with Kevin, Cristi, Lee and others over the past decade or so exploring these.

Back in 2007, I blogged (here) about a business idea around Mobile Phone Wipes.  I seriously looked into it, but couldn’t make the numbers work.  I had sourced the wipes, packaging and logistics from Asia and at the end of the day, we could make a little money, but without scale, we couldn’t make enough money to bear the risk and my wife didn’t want a carton load of mobile phone wipes in our basement.  I don’t blame her.

I continued to talk about mobile phone wipes every once in a while and when certain people visited me at my home, I pitched them on the idea of it.  It was a no brainer for them – they got it.  But again, I couldn’t make the financials work.

Until now.

So, with that said, I’m pursuing a pet project around keeping your smart phones and tablets cleaner.  I’m writing about it on here even though it’s the early days (i.e. sourcing the right fabric) but I’ve got a great partner who knows the space and he’s doing much of the logistics.  I’m going to be taking care of the overall product and marketing.

Our test market will be NYC and expect to have product in market in/by February 2012.

Why do we think we can make this “wipe” idea work now?  Because we were thinking about the product all wrong.  Totally wrong.  No one wants to buy wipes – they are a commodity. You don’t yearn to buy wipes.  They are unsexy.  They are ugly.  They are a utility.

We’re taking this from utility to something else.  Get excited.  I know I am.  And we’re not calling them “wipes.”

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