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The US Conundrum; Privacy Makes My Eyes Bleed; Another Plug For MadTechMoney
How To Solve The US Conundrum
The US is the biggest ad market in the world. The vast amount of media spend there is astonishing.
Independent agencies that you have never heard of are managing media budgets bigger than the size of the entire French programmatic pot.
Test spend dwarfs ‘big-brand’ campaign budgets allocated in ROW (rest of the world). Random ad nets (pharma, auto et al) with $100m in revenue literally grow on trees in the US.
From the outside looking in, the US looks like the only ad tech game in town. It is a fair assertion.
If you want to scale globally, you cannot ignore the US. But there are caveats. A startup could easily blow through millions of dollars/pounds/euro trying to get a slice of that pie. From employees to brand recognition, the road is long and difficult.
Having seen it all first hand over the years (and very recently), FPC has prepared a checklist for those would-be ROW ad tech contenders looking to take US share.
The question you need to answer: do you want to be an all-conquering iconic US hit machine like U2 or a mildly entertaining sub-scale college-radio after-thought like Oasis? When it comes to the States, you always want to be more like Bono and the Edge.
Here’s our checklist for attacking the US opportunity:
Move founder/founders to the US: The best advocates of your business are invariably its founders. The most successful non-US ad tech businesses are often the ones that move a founder to New York. It is probably the most cost-effective thing you can do. Hiring sales people is a huge risk, as the market is littered with really bad ones. If a senior hire doesn’t work out it can be a costly mistake. You cannot win in the US unless you have a founder on the ground (the unsustainable exception being the unlucky exec who’s happy to waste a chunk of time on a plane).
Careful hiring is critical: This obviously applies in every part of the world - but if you get this wrong in the US, it can be a costly mistake. This should really follow the first point. Having a founder on the ground overseeing sales operations means numbers are less likely to be missed and sloppy processes are cut out early.
Adopt the MiQ strategy, go local first: MiQ is arguably the greatest ad tech company of all time (a post for another time). Its success is built not only on world-class trading capabilities, but also on smart/canny business practices. The one that stands out for FPC is its ‘go local’ strategy. When it first launched, MiQ was having some issues breaking the lucrative London agency market. Instead of wasting time, it went after the regional indies - building a strong commercial base that helped build the business. When it arrived in the US, it adopted a similar strategy - wisely avoiding a notoriously difficult-to-break New York agency world. This proved to be lucrative.
Local budgets can be key to growth: Why did MiQ do so well in the US? There are gobs of media cash outside the US. A small indie media-buying outfit in Alabama could easily be managing as much spend as Portugal. Taking time to hit the road should be a requisite for any founder looking to grow revenue in the US. You could easily burn through millions trying to make an impact in New York. Go regional first. Build the base. Then attack the holdcos in New York.
Don’t underestimate the importance of name recognition: Scrappy ad tech cos from Europe and elsewhere will always find it difficult to attract talent. At some stage you are going to have to do some marketing to position the business. The alternative to that is making a splashy local hire (like Captify did this week). It’s not that Americans distrust foreigners. Unknown quantities are difficult to bet your career on - especially if it’s some quirky startup from Europe. Once the base is built, establish the name recognition fast.
Stop. Your Privacy Content Is Making My Eyes Bleed.
Eric Seufert, everyone’s favourite mobile analyst, posted an interesting comment on Twitter this week about privacy-related content:
Eric tells us that despite its overall huge importance, privacy is a massive “ratings loser”, garnering very low engagement rates with his readers. Why is that?
It’s very simple. It’s not an easy problem to fix. And it’s a problem that no individual tech vendor, the IAB, or any other entity has control over. It doesn’t fit a neatly compartmentalised box.
Other macro problems like ‘sustainability’ have a convenient tick box. Privacy does not.
FPC has debated this very issue in a previous newsletter edition, https://newsletter.firstpartycapital.com/p/privacy-is-the-existential-crisis. Our position continues to be that privacy - despite its critical function in digital marketing and advertising - is not getting the attention or business focus it deserves.
The cookie countdown clock is ticking. By September 2024, the third-party cookie will be a thing of the past.
Do you have a back-up plan for targeting and measurement? And while we are discussing this important point, do you know or understand how your vendor/media partners are managing, processing and activating data? The answer to both questions for the majority is a resounding “NO”.
Our industry has its head in the sand - as Eric’s poor privacy content engagement is bearing out.
More to come on this in future editions.
Another Plug For MadTechMoney. Sign Up. Now.
MadTechMoney London is returning on October 31 to the Conway Hall in Holborn.
It is the only conference in the world that brings together ad tech/martech founders and the investment community (private equity, venture capital, corporate development and strategic investors).
Last year we had over 200 attendees, and we are expecting an even bigger crowd this year.
Why attend MadTechMoney?
From seed to series A to growth rounds to exit, MadTechMoney examines the opportunities for start-ups to scale tech solutions in the soon-to-be $5-trillion-dollar marketing sector.
Learn from the industry’s smartest and most influential capital allocators as they share their insights on the current investment landscape.
Who attends MadTechMoney?
Ad tech/martech founders
We will be announcing speakers and a detailed agenda over the coming weeks.
MadTechMoney is very much an ecosystem event for the industry: it is open to all investors and startup companies in ad tech and martech (even companies that haven’t taken investment from FirstPartyCapital).
You do need to be invited to come along - so sign up using the link below to get on our invite list.
And on that self-promotional note, FPC bids you all a cracking weekend.