What’s next for ad tech in an evolving landscape?
According to venture capital and private equity data company PitchBook, U.S. venture capital firms invested around $860 million in ad tech firms last year, the lowest amount since 2010 and down considerably from more than $2.7 billion in 2011. So far in 2016, only $446 million has been pledged to ad tech technology, on pace for the lowest funding level since 2005.
In contrast, the data suggests that U.S. investment for marketing technology companies has been steadier, reaching over $1.2 billion last year. Investment this year was already close to $1 billion by Aug. 23 on pace to surpass last year. The noticeable shift in investments is not merely a semantic reclassification, rather it represents a fundamental shift in the ideologies and capabilities of emerging “ad” technologies.
As the venture capitalist market continues to see a year-over-year decrease in funding of new “ad tech” ventures and an increase in funding martech, ad tech companies are doing what they do best by adapting and evolving with the new landscape. Ad tech companies realize that in order to stay relevant in an evolving landscape – they must innovate.
Generally speaking, martech has historically been focused on existing customer management and relationships, while ad tech has been focused on efficient, automated ways of reaching new customers. However, these lines are quickly blurring as brands are asking more difficult questions about both new and existing customers. On a parallel path, brands are looking to their technology partners for solutions that utilize their internal data and provide solutions to challenges around customer mapping and engagement across devices, maximizing lifetime value of customers and understanding customer journey and competitive skew.
For example, let’s take a look at a standard mobile ad campaign for a leading pizza brand. The goal of the campaign is to reach new customers and ultimately have them order online. Media metrics will take a look at viewability, cost per order, click through rate and delivery. This is essentially an ad tech wonderland – leveraging online automated bidding optimally in order to find the most efficient CPO and new customer. Moreover, the data that is passed back to the marketer about their customer from a single ad campaign is arguably a key reason for the demand of “transparency” from brands. The type of impact this data has on other marketing strategies like email marketing is huge.
To adapt to these changing ideologies, ad tech companies that have historically been viewed as a “progressive” have realized they need to provide software and services that leverage digital ad tech to look beyond media metrics in order to solve business problems. Both ad tech and martech are facing the problem of too much data in the ecosystem, and the status quo systems are no longer sufficient. At Media iQ, we have built AiQ, our proprietary analytics platform to collect, unify and enrich data from multiple sources. It can then convert this data into actionable insights which can then be activated across multiple disciplines within a client’s business.
The solutions offered need to surpass traditional “ad tech media executions and reporting,” while leveraging the core competencies inherent in ad tech such as advanced connectivity, data analysis, and real time decision-making. The insight that can be gleaned from this advanced ad tech model surpasses any market research that has been previously available and ultimately impact the bottom line: revenue.
This is an exciting time for CMO’s – with more data than ever and the technology landscape at an all-time high. Brands such as Kohl’s, Unilever and Netflix are now taking programmatic media buying in-house due to the advancement of self-service DSP technology. Companies now realize that technology is reshaping the advertising and media landscapes which demands revolutionary change in order to meet the demands of the new consumer.