Chicken Little-rs, A Creamy Pint Of Guinness & The Great Ad Tech Opportunity Ahead
Welcome to this week’s edition of the FirstPartyCapital newsletter, especially to those new subscribers. Before we get into it, let’s do some housekeeping, specifically around the Cannes Social and the live syndicate deals.
The Cannes Social: The Gathering Of The Great & Good Of Ad Tech
We now have over 1200 RSVPs to attend The Cannes Social, which we are hosting with ExchangeWire.
It has become the “Cannes thing” for the good people of ad tech - the refreshing flip side of the inflated rosé-excess on the Croissete.
There is still time to sign up: https://www.eventbrite.co.uk/e/the-cannes-social-by-firstpartycapital-exchangewire-tickets-879552945537?aff=oddtdtcreator.
A big shout out to our Cannes Social partners, who will be there in force.
We look forward to hosting.
Syndicate Alert: Invest In Contxt Media & Pixels
As you know, we are running two deals on our angel syndicate platform. Most readers have seen the long-from detail, so I have synthesised both deals into a bite-sized form of ad tech verbal goodness.
Contxt Media is a sell-side contextual platform for VOD. It is gaining traction in the $3.3 billion direct-sold YouTube ad market. The tech strips out visual and audio, building contextual segmentation that then can be pushed to GAM to help pubs make more money on YT. It makes YouTube categorisation look like an existential hazard regarding brand safety and targeting. It makes publishers money on TV, i.e., YouTube. It’s a lean business. It’s contextually Vee-Oh-Dee. It’ll be profitable by the end of the year. And it’s covering a market ad tech doesn’t care about. Bingo.
Pixels.ai is a full-stack vertical video platform with real-time production capabilities and a fully licensed library of premium content in sports and entertainment. V-Roll (vertical roll) is the tiktok-ification of the premium web. Pixels can beat the walled social gardens in terms of performance and content quality. It gets money back to agencies. It makes publishers new revenue. And it’ll be doing £1 million by the end of the year - snackable content for the rest of us.
A Pint Of Porter And The Chicken Little-rs
The Devonshire is a storied pub in Soho, London, fuelling a renaissance in a lost art.
Since changing ownership late last year, it has garnered a reputation for serving the best pint of Guinness outside of Ireland. It is now Diageo's biggest pub customer in the world.
The kids are flocking to the place to sample its world-class pint of porter. The bar on any night of the week is like something from the Celtic Tiger era - with umpteen pints settling on the bar. It's magic.
How did this happen? And what’s this got to do with ad tech? Great questions.
Devonshire did not conjure up some modern-day alkami. It did very little except serve a pint of Guinness the way it should. A slight tweak has unleashed value in a great product: evolution, not revolution.
FPC's clumsy point is that the more things change, the more they stay the same.
The chicken little-rs dominating the “everything is dead” narrative should be reminded of that, particularly regarding ad tech.
FPC is not here to s*** on journalists, but there is a serious disconnect between what they perceive as truth and what is real.
As a helpful guide, here are a bunch of core ad tech fundamentals that are eternal
Ad tech is everything: This pervasive misconception of ad tech being a cookie-based activation layer is getting tired now. Ad tech powers measurement, targeting, and activation across the one trillion ad business. Whether it is running on a walled garden or not is immaterial. You still need ad tech to do the plumbing for all marketing activity.
The economics of ad tech: This is probably the biggest blind spot for trade journalists, analysts, and amateur commentators. Agencies DO NOT make money from Google, Amazon, and all the other walled gardens. They typically don’t pay rebates. Brands pay low fees or no fees at all. Agencies need to make money. And brands are ok with it. It is the great media Faustian bargain. If ad tech or ad networks deliver performance with a kicker, they will be on the plan. This is why the 20 percent rule applies. No matter what happens, the walled gardens will not get 100% of spend. There are two key reasons: one, there would be no need for agencies; and two, brands would fear excessive concentration of buying power.
Open web dead, walled gardens win, blah, blah: Media is always evolving. New media players and new channels are always emerging. Ad tech remains the infrastructure for monetisation. Who cares if it is open web, in-app, or multi-channel? Disruption and change have always been the par for the course in this game. If you don't like it, get a job covering the insurance industry.
FPC is building a future-proof portfolio: Privacy underpins everything in this industry. You will be in trouble if you build off the back of IP, 3PC, and other soon-to-be deprecated IDs. FPC has invested in tech that is ready for this new reality. From context to attention to performance outcomes measurement, our startups are ready to dominate and build the new ad tech world from the ground up. Fragmentation is also an issue we all now must contend with. Look at TV, for instance. It’s a series of walled gardens with some open access. Curation will be the biggest thing in ad tech as open market buying dies a death. FPC has invested in startups like LightBoxTV (meta TV planning and activation) and Bedrock Platform (next-gen demand-side infrastructure). The opportunity has never been bigger.
The message here, readers: ad tech and Guinness are staples. Ad tech underpins a trillion-dollar sector, and a nice pint of porter is the perfect accompaniment for an afternoon in the London sunshine.
And on that note, we will sign off on this edition. As always, ad tech FTW.