On one side there are hundreds of cutting edge adtechs: the CEOs have an insatiable business drive, the technology is MIT-brain powered and this is a $540 billion staid and broken market ripe for transformation. On the other, tens of recalcitrant investors who dismiss the term with a rolled eye.
Potential is rife so why is there such universal rejection? In the buzzword heavy land of investment it may be as simple as saying ICOs, cyber security and regtech have stolen adtechs enticing sheen. But the cause may be more deeply rooted. Should all adtechs give up, pivot entirely & abandon their advertising industry utopian dream? Is their relevance ever-diminishing in what has been claimed as the dawn of the “adpocalypse”?
The truth behind investor disenchantment is far more nuanced, of course. Here are some of the reasons I regularly hear from investors when it comes to adtech:
- Burnt by tech that just isn’t cutting it: customers want more and so do investors. Having a 360-degree view and understanding of the consumer is essential, unifying a customer's experience and messaging cross-channel while tailoring it to their needs and expectations is the new foundation. Any technology that does not that help prevent consumer lapse while also increasing loyalty is already falling behind. Having seen many who don’t meet this new standard, VCs are losing interest in distinguishing between promise & substance.
- Unicorns are extinct: there is a feeling that the playing field has become so heavily weighted by Facebook and Google, and that all the consolidation and eye-catching M&A has been done there is no need for more of the same. The potential for growth has been seized & now it is easier to find great returns elsewhere
- The Appian way of the adtech world: There are very few adtechs that have achieved traction, size and sustainability, and the path to success is strewn with the corpses of overhyped technologies (e.g. Rocket Fuel) and corrupt agencies (Dentsu).
- Disintermediation and changing interactions: most adverts are visibly pervasive in the step between our search and finding results. However, with the rapidity of technological development in IoT and increase in AI voice command, leading to sharper AI, this intermediary step will become extinct. There is uncertainty where and how advertising will manifest further.
However, whilst cynicism is rife and new technologies find it difficult to gain critical traction, there is enormous opportunity:
- Focus on new opportunities: Regulation, for example, is an area ripe to be leveraged: Jannat Shah of Axa Strategic Ventures identifies GDPR as an area of interest. “Solutions that can make GDPR compliance easier are also going to be of interest to investors”.
- Cut the hype and don’t allow yourself to be put in a box: VCs, like magpies, are drawn to all things shiny and adtech is looking distinctly tarnished so think about how you can reposition yourself. If the adtech box already has cross through it, the trick is to avoid being forced into it. Position your business around the impact it makes and the problem it solves & why, rather than what it does and getting lost in features & benefits.
- A CTA for a change in methodology: Jon Lerner of Smedvig Capital predicts: “Adtech has a longer list of things that make it complicated than many. But, I think the world of TV will move into the world of adtech. TV is increasingly becoming a digital medium meaning that the old paradigm of linear advertising delivery won't be true because people aren't interested in the same thing. This is the new frontier and agencies are not helping themselves at all - they should move to a consulting model - more open relationship with their clients - needs more transparency. Loss of trust & transparency amongst agencies & the mutating of the industry model provides a fertile opportunity on which adtech can now capitalise.”
So yes the adtech terminology has become poisonous and investors have become numbed to its many opportunities. However, this does not mean give up. It demands relentless drive to fight back, taking on board the above points to stir up dissatisfaction with the status quo, shift the approach and focus accordingly. The path to traction may be obstacle-laden but the opportunity is there to be exploited, the poison there to be remedied.
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