ad:tech Australia just wrapped up in Sydney. The event is part of the ad:tech series of conferences that happen globally throughout the year. The conference brings together the marketing, technology, and media communities to discuss the state of the sector, share experiences and ways of thinking, and build partnerships while defining new strategies to overcome industry challenges.
What is AdTech?
Advertising Technology (AdTech) is a fast-paced and rapidly evolving and transforming sector within the tech industry. Dealing with various methods of advertising, as well as marketing platforms and analytics systems surrounding ads, AdTech is an important component of the communication process between companies and their customers.
The shift to the digital world of web and mobile applications, particularly over the past decade, has transformed the AdTech space significantly. Companies are much more focused on finding new ways to advertise online, slowing down the traditional methods of television and print advertising. Mobile apps have also driven the growth of AdTech, encouraging the development of new methods of advertising that engages the user and enhances their experience instead of interrupting them.
This constant progression in improved delivery systems, coupled with the advancement of technology and how we interact with it, makes AdTech an exciting space full of changes and innovative adaptations.
“We are excited about investing in AdTech. The current values associated with AdTech companies are depressed, but we see huge opportunity there. Where some people might be shying away from it, we would be happy to participate in an AdTech company, because we believe there is good value right now. Ultimately, traditional forms of advertising are being eaten away to the advantage of digital and mobile advertising.” -Owen Matthews, Wesley Clover
Rapid Revenue
AdTech is an industry sector in which revenue can be earned fairly quickly. By testing assumptions and finding what works and what does not work for a particular market, industry, or audience, winning formulas can be discovered and rapidly replicated. Based on results, adjustments can be made and teams are able to assess different variables to find what works best.
“Teams that are excited about dynamic change should be put in the AdTech space. They can test something, see the effects, and refine the process to do it again and again and again.” -Owen Matthews
Alacrity looks at AdTech as a sector with lots of opportunity. One of the foundation’s family companies, Pretio Interactive, is an active contributor to the space. As a performance-based rewards platform, Pretio is able to provide clients with an effective way to elicit user engagement.
“What Pretio does is relatively unique. They offer other AdTech companies a great partnering opportunity that increases customer engagement.” -Rich Egli, the Alacrity Foundation
AdTech and the Death of Traditional Advertising
The critical difference between traditional advertising and the world of AdTech is evident in the numbers.
“It’s difficult to prove the efficacy of a TV ad or newspaper ad. Whereas, in the digital world, you know the clicks and conversions and you know the performance of those ad units down to incredible detail. Brands and advertisers expect a very clear understanding of the performance of where their dollar is going.” -Rich Egli
As AdTech continues to eat away at traditional advertising methods and AdTech companies see more cut-and-dried results based on their economic performance, the potential to capitalize on the industry is huge. However, its success will depend on creating an ecosystem that can rebuild the relationship between disillusioned consumers and brands, wounded by the “Wild West” of digital advertising that ran rampant until recently.
“I don’t think AdTech is any less of an exciting industry. It’s typically measured differently than SaaS, hence the lower values, but I think it’s a great place to be and we can absolutely build great companies and make good money in that market.” -Owen Matthews
We see potential in the space and look forward to having more companies in our portfolio that actively participate in AdTech.
Two Alacrity advisors recently attended the 2016 Startup Grind Global Conference. Each year, this conference is the culmination of a startup community that stretches globally, connecting 215,000 founders in over 185 cities through monthly events. The annual conference brings together founders, innovators, educators, and investors to share lessons they have learned while building their companies.
At any conference, an attendee hopes to hear new ideas, perspectives, or insights and Startup Grind 2016 definitely delivered all of these. Although it is impossible to effectively summarize everything shared, there are some great takeaways from this year’s conference that need repeating.
High-Level Takeaways:
Tim Draper, Draper Associates
The best business ideas come from frustration. When faced with a problem, people naturally seek a solution. The more frustrating the problem for a larger group of people, the more the solutions form great business ideas.
The best solutions are often transformative to an entire industry of companies. Think of how Skype transformed long-distance, Hotmail led the email revolution, and eBay changed retail.
Try something stupid or no innovation will happen.
Vinod Khosla
The relationship between founders and investors needs to be built on trust. Good investors know how to restrain themselves and guide, not manage. Mr. Khosla avoids telling founders what to do, but instead takes the devil’s advocate position and asks the hard questions. Asking hard questions forces everyone to reflect more fully on every option.
This takeaway was especially relevant to our recent case study on pivots.
Marc Andreessen & Clay Christensen (How to Measure your Life)
Capital is everywhere, but easy access creates irrational behaviour and waste.
Always keep the founders involved. Roles may change, but their value is always a positive for the company.
Hunter Walk – Homebrew VC
It is important to differentiate and evaluate both Attitude and Aptitude in founders. Too often, we confuse the two. As part of that evaluation, investors need to determine if the founder is a missionary or a mercenary. Both have value, but if it’s a big idea, the idea should take 10 years to solve and everyone needs to understand where that path leads to. This requires solid thinking and advocating for an idea that is properly and fully thought through.
Startup Grind 2016’s General Theme
Recognize that it will take time for any solid, long-term value to develop. Investors and entrepreneurs often expect success to come too quickly and are not prepared for the highs, lows, and pivots that are required to achieve success.
This creates a sense of impatience in everyone involved. It may even produce internal pressures from a VC that are completely unrelated to the portfolio companies, leading to potentially devastating consequences for the company and the investors.
By sharing these experiences, the tech ecosystem can help entrepreneurs and investors understand how to best navigate the challenges that they are confronted with. Startup Grind offers a great platform for this knowledge sharing and we look forward to seeing what next year has in store!