Reasons To Be Strategic: Part 1, The Global Strategic
Hello, dear readers - and a special welcome to our first-time subscribers. It’s been a while since we pushed out some world-class insights on ad tech, martech and the $5 trillion marketing sector. FPC hopes you are having a gangbuster Q4. Let’s get into it.
The Global Strategics & FirstPartyCapital
This edition is part of a three-part series focused on the types of strategic investors looking to invest in the FirstPartyCapital fund. Index Exchange and DV are just two of the growing number of corporate investors investing in FPC.
We see three specific types looking to partner with FPC: 1) the global strategic; 2) the platform strategic; and 3) the ad tech strategic.
In the first part of the series, we will take a deep dive into why global corporate investors (number 1 on the list above) are looking to bet on FPC.
America Versus ROW
Nobody should kid themselves into thinking that the US isn’t the centre of marketing spend globally. As a standalone, you have to be there. And that is NOT going to change anytime soon.
The non-US (including China) market is a headache to navigate and scale. It’s a fragmented mess - technologically, economically, politically and culturally. But in aggregate, it’s a huge prize (significantly bigger than the US).
If you are serious about being global, you cannot ignore it. Demographics and socio-economic shifts demand it. TTT (Trump, tariffs, and technology) is only exacerbating this economic necessity.
The partners at FPC and their portfolio companies have spent their working lives building and selling into this maelstrom - and have evolved a multi-decade strategy to knit this chaos together.
A Stack Built For The Non-US Market
US companies often struggle to bring their ad tech solutions to Europe and elsewhere. Stringent privacy regulation is the primary reason.
The legal risks often outweigh the rewards. However, this inevitably has significant revenue implications for partners, particularly for any company sitting on a proprietary first-party data asset that can’t be activated globally.
What ad tech can they use without transgressing local privacy legislation? And what solutions can work at scale in a privacy-first way outside the US? Not apparent to most, but very much front-of-mind for FPC.
Sure, there are some household-name ad tech options (the usual DSPs and onboarders), but they invariably fail to scale data across Europe and other large non-US markets effectively. It’s the reason why Publicis acquired Lotame to help build its global spine - a strategy that’s winning.
Industry “experts” threw shade on the “data sausage factory” Lotame built globally. The company put in the gruesome hard yards to do local data deals for the better part of a decade, creating arguably the best data meshing platform in the business.
These are the dirty realities of global ad trading. And privacy is really only the start of it.
There is significant upside in aggregating these markets - but you need a smart ad tech stack to navigate it all. Luckily for our current and future corporate investors, FPC has invested in the best tech solutions in the business.
As a handy overview, we have created a visual guide on how “global strategics” can increase non-US revenue via the FPC stack of companies.
Understanding Non-US Industry Economics
It is essential to understand that US ad tech doesn’t travel very well. The tech chat on LinkedIn and the myopic ad ops spats are very much localised to the NYC boroughs - and do not represent the realities of trading outside the US.
Economics plays a huge role in the day-to-day business outside of the homogeneous US market. From rebates to taxation to take rates, the non-uniform process can send vendors into a tail spin.
There is no vertical fund in this industry (or any industry) that understands these intricacies as well as FirstPartyCapital.
For instance, ask yourself how you would trade in Brazil? It’s a sizeable ad market, and one that any ambitious global player cannot ignore. The simple answer is that it’s difficult to operate in Brazil without incurring huge tax liabilities. But through our reseller team (a portfolio company) and global infrastructure, we can make it market work.
Also, how do you negotiate regional trading deals and understand localised trading processes? Again, there is no plug-and-play solution - and it’s a problem that only compounds when you introduce ad tech that is not built for these specific economic realities.
Our portfolio companies understand these market quirks instinctively. They productise and build features in their tech solutions so that these unique dynamics become less of a problem and more of an opportunity.
We have seen wave after wave of US ad tech try to push models that are not suited to other markets.
FPC collaborates with leading corporate investors to develop strategies and products with its portfolio companies. The objective is to help these strategics maximise revenue-generating opportunities in local markets, optimising for the fun problems that everyone seems to hate - except us.
Fund 2 is well and truly up and running. Big conversations are ongoing. If you would like to discuss a corporate investment opportunity with the FPC team, please do not hesitate to get in touch. You can contact us here: contact@firstpartycapital.com.
Next week, we will discuss “the platform strategic” and how FPC is helping to build the technology moat for their business to survive and thrive.
Until then, readers, have a great ad tech day/weekend.