Ad Tech Islands In The Stream; MadTechMoney 2023 Announced; And More DSP Sale News
Ad Tech Islands In The Stream; MadTechMoney 2023 Announced; And More DSP Sale News
Ad Tech Islands In The Stream
When two mulleted Bee Gees penned the country classic “Islands In The Stream” for Dolly Parton and Kenny Rogers, who knew they were really writing it about disintermediation in programmatic advertising.
You see readers, SSPs and DSPs are the islands in the stream forever disconnected, and the water between them is SPO (supply path optimisation).
Granted there are a lot of mixed metaphors there, but you can see what the Bee Gees were trying to get at: basically, it’s every man for himself.
The drama around this latest evolution in ad tech is hitting fever pitch. Competing products are coming to market (ClearLine and OpenPath to name just two), as the lines between demand and supply become blurred.
Trade journalists are banging out some wonderfully hyperbolic pieces about this SSP/DSP beef. Agencies are looking for new demand-side partners. And ad tech CEOs are even writing sweetheart notes to Jeff Green.
It’s just wonderful theatre.
But let’s step back and take stock of the current upheaval. What should FirstPartyCapital LPs and public ad tech investors be really thinking about here?
Below is a bunch of hot takes from FPC to help our readers navigate this latest reorg in the ad tech ecosystem.
SPO is really only a thing in CTV: The open web needs the programmatic supply chain. It’s just too big for a DSP like TTD to do direct integrations. In fairness it’s leap-frogged DSPs to access a chunk of inventory via Ozone in the UK - but it still needs SSPs for scale across the mid-to-long tail. CTV is different. Inventory is finite. TTD’s supply team could easily scoop up all the FAST and AVOD offerings. Anyone thinking otherwise is fooling themselves.
Magnite’s ClearLine is a smart (and inevitable) move: Much of ad tech is betting heavily on CTV for future growth. Depending on TTD and other DSPs could be a strategic mistake in the long run. Jeff needs to protect a lofty valuation so he is within his rights to lock down margins and supply. But a lot of campaign execution will be done by PG, which in itself will be built on direct deals. In that instance you don’t need all the bells and whistles a DSP can offer. FPC sees a real battle for CTV demand in 2023.
The real growth opportunity is not in media execution: FPC has not invested in any pure-play media execution solution. We believe the real opportunity is in planning, measurement and targeting. LigthtBoxTV (one of our recent investments), for instance, has built a platform that allows agencies and buyers to activate across the entire fragmented TV landscape (linear, walled gardens, FAST, AVOD, BVOD). We have also invested in companies like Lumen, who are moving the needle around post-cookie measurement. And there will be more to come in 2023.
A counterpoint to that, a contextual play: A caveat to the above point is context. Programmatic ad tech is built on id matching. It effectively ignores contextual signals. Someone needs to build solutions that can buy audiences against context. SDA (Seller Defined Audiences) have been routinely ignored by DSPs and SSPs, a shocking oversight given how much of the open web is now a blind spot for buyers.
Ad nets are back again: Having been labeled a SaaS-hole by a very angry member of the ad tech community, it’s probably counter-intuitive for FPC to be pushing this narrative. With disintermediation there will be greater opportunity for managed service businesses to integrate directly to supply without having a) to compete with a DSP’s managed service business and b) paying bloated gatekeeper fees, which in itself helps increase the ad net’s margins. FPC is making a few bets in the managed service space (more news on that coming). PE likes it. And so do we.
You will be glad to know that this “consolidation” is not the end. Ultimately, it doesn’t really solve for anything significant - except maybe for increased working media and some perceived reduction in the industry’s carbon footprint. As ever, FPC is investing for the bigger picture.
Save the Date: MadTechMoney 2023 To Take Place On Oct 31
Last year’s inaugural MadTechMoney attracted over 200 industry leaders from across the MadTech investor and startup landscape.
The event has a simple thesis: connecting MadTech and money. And we certainly nailed that objective last year. MTM remains an open event, offering a forum for the startup community and investors alike.
Here are some interesting stats from last year’s event:
210 attendees.
95 accredited investors.
74 high growth MadTech startups.
We are moving to a bigger venue this year to facilitate the growth in demand.
Aperiam’s Joe Zawadzki will be speaking at this year’s MadTechMoney. Aperiam Ventures is an important player in the funding ecosystem, investing in a number of high-growth ad tech co’s globally including addressable TV solution, LightBoxTV.
We will also be joined by Arnaud Creput, CEO of Equativ, which did a $300 million+ PE deal earlier this year. Insider’s Lara O'Reilly will again moderate a panel on MadTech M&A.
More detail on speakers to come over the coming weeks and months. MadTechMoney.com has all the details on the 2023 event.
Places will be limited this year so you will need to apply to attend Submit your application here:
https://firstpartycapital.com/register-interest-for-madtech-money/?preview=true
We look forward to hosting MTM in October, and seeing you all there.
A Quick Note On That DSP Sale
As you know FPC was tasked with selling a DSP for one of its portfolio companies. The sale process is coming to a close.
We have had a lot of interest, and have a number of companies in the due diligence stage. Who knew enterprise DSPs were in vogue (cc the first story)?
If you are interested, you have one last chance to get in. Email us directly on contact@firstpartycapital.com.
And on that triumphant note, I will bid you a fine weekend.