Good day to you, FPC Newsletter reader. In this edition, we’ll discuss scaling ad tech in EMEA. Nigel Gilbert, former frontman for AppNexus Europe, wrote a LinkedIn post this week about a common mistake US companies make: treating EMEA as one homogeneous market. Nigel, who disappeared into the Accenture vortex for a number of years (but has re-emerged refreshed and energised), put together a thoughtful, nuanced thesis that “one size does not fit all” for a scaled European business.
It is difficult for US companies to conceive of this ridiculous fragmentation. It’s really hard. Much harder than setting up a sales operation in Alabama and accessing big localised media budgets. But there is a path to scale in Europe - albeit tricky, not impossible. Below is the FPC (rough) guide to scaling in Europe, ME and Africa.
Local Is The Go-To Strategy
London is not the gateway to EMEA. Every market acts autonomously in Europe and beyond. Global trading deals are only as good as the paper they are printed on. So you need to invest in local talent with the right connections - Germans buy from Germans, French from French, etc. Holdcos act as fiefdoms within a larger collective organisation. We see it all the time with our portfolio companies. It might start as a global MSA, but activation across individual markets requires more persuading and selling. It’s back-breaking work. Individual markets are dwarfed by the sheer size of the US hegemon. The aggregate EMEA market is worth it in the end.
Lead With An Omnichannel Product
You can build a business purely on the open internet. But it is difficult (nay, foolish) to ignore the walled gardens. They are even more entrenched in EMEA than in the US. YouTube is CTV in Europe, especially at scale. Agencies keep chucking huge sums of money into it. Likewise, Meta, TikTok and Amazon. YouTube alone is enough, but having all four will open up a lot more opportunities. FPC isn’t saying the open internet isn't worth the effort in Europe; it just takes longer to make it work (integrations, people, fragmented measurement, etc.). The omnichannel strategy is definitely a good fit for new entrants.
ID Graph/Onboarding
Building an ID graph for EMEA isn’t easy - but if you can, it can be hugely beneficial to the company’s commercial success. LiveRamp (acquired by Publicis) succeeded in the US, but failed in Europe. Few have managed it. Only two companies have had a proper go at it: Lotame (acquired by Publicis) and Eyeota (acquired by Dun & Bradstreet Company). We also need to add a third to that list: digitalAudience. The FPC portfolio company has been quietly building a scaled European ID graph and onboarding business for years. This becomes even more important as you push the omnichannel narrative to prospective and disparate EMEA agencies and brands.
Buy FPC portfolio companies
We might be talking up our own book here, but this is so obvious and logical: why plough money into an unknown fragmented market when you can strategically buy your way in? Here is the FPC shopping list of great companies that will undoubtedly help you scale:
Lumen: The leading attention signal in the market - offering a potential acquirer a way to build first-party attention into their non-US offering. It has omnichannel applications and is used by the biggest brands, measurement companies and walled gardens.
digitalAudience (DA): We have already mentioned digitalAudience above, which, in the PLA (Post-LiveRamp Age), makes DA a must-have.
Evorra: The other heavyweight onboarding and ID graph company. It is powering scaled SSPs, media platforms, agencies and media companies globally - another in the crosshairs of the PLA.
Audiences: The third company in this FPC data tech cohort (along with DA & Evorra) is Audiences. It specialises in scaled first-party onboarding. After recently signing Experian as a customer, it now offers something LiveRamp does not: autonomy over first-party ownership and activation.
Picnic: It offers scaled omnichannel (open web and CTV) quality scoring - arguably a better version of Sincera.
FPC could list more portfolio companies to help that EMEA business development. The point is: M&A can be the smartest strategy for growth outside the US, shortcutting a long and arduous organic growth strategy.
Patience With A Defined Objective
This might seem obvious, but there is no US-speed scale here. These are calculated moves you need to make. EMEA is a complex, highly relationship-driven, multi-market region. It takes time to navigate. Executing without a defined objective often wastes resources. Are you here because it will look good for an acquirer (an unnecessary tick box in some cases)? Or are you committed to building a serious business, as Nigel noted in his post, in a hugely complex multi-market? This is why ad tech strategics are investing in FPC. How do I get into this market or that market? Sometimes, it pays to have people who have spent decades working the ROW beat. Local knowledge is key to scaling in non-US markets.
On that note, we will sign off there for this edition. If you have any questions or queries about the above, reach out to us at contact@firstpartycapital.com.