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Welcome New Subscribers; $85 Billion Dollar Market That Ad Tech Forgot; Sheryl Sandberg Heads For The Exit
This is the FirstPartyCapital weekly newsletter. It covers news and updates about the FirstPartyCapital fund and its portfolio companies.
A Big Welcome To Our New FPC Newsletter Subscribers
This week’s newsletter is a little truncated due to the 4-day weekend in the UK thanks to the queen sitting on the throne for 70 years - a long time to be sitting anywhere.
Anyway, we would like to welcome our new subscribers. We now have over 1700 subscribing to our weekly newsletter.
Our aim is to make every one of our subscribers a FirstPartyCapital syndicate member in the coming 6 months. Remember, there is no commitment to join our syndicate. You invest in the deals you like.
We’ll be in touch in due course.
In the meantime, enjoy our irreverent - and sometimes informative - take on the world of ad tech, martech and digital media.
The $85 Billion Dollar Market That Ad Tech Forgot
To say that ad tech is obsessed with CTV would be an understatement. CTV-focused M&A has been frenzied over the past three years. It’s even propelled a DSP to a tens-of-billions valuation - based on the hope that one day all TV inventory will be transacted via an open RTB protocol.
The problem here is that a CTV-enabled world is very much a US-centric view of the TV market. In Europe, APAC and LATAM, CTV is basically YouTube. There will be long tail opportunities also, but much of the $85 billion TV ad market isn’t going to OMPs or RTB-enabled buys.
Ad tech is dismissing an eighty-five billion dollar ROW market, preferring instead to focus on selling the RTB-enabled dream to US buyers and sellers.
Conform or die appears to be the mantra. Why does ad tech have to be so binary?
TV advertising is a mature market, and requires a more nuanced approach. We believe automation in TV is a natural evolution. But our industry seems to be conflating automation with impression-level buying.
Below are some reasons why the industry needs a reality check on CTV’s limitations:
Supply is constrained; it’s not like the infinite supply in online display. Yield is not an issue for broadcasters or content owners.
Walled gardens and fragmentation will continue to be a feature of the TV market. The biggest players, like Disney, ITV and - soon - Netflix, will all operate closed systems.
Most inventory is direct-sold. Why do you need to pay for expensive ad tech when a server-to-server integration would suffice?
The take rates are insanely high in ad tech. Can you imagine handing 50% of your $50 CPM to ad tech? That’s a non-starter.
Automation does not require a) an RTB protocol or b) exchange-based buying.
CTV is heavily reliant on IP-targeting. Privacy advocates, platforms and legislation will be shining a light on this practice. First party data will sit on the publisher side - with data buys executed via a clean room integration. In that instance, the bid stream becomes less enriched.
We are not saying CTV won’t play a role in the data-driven TV world. Of course it will - but as a smaller part of a bigger pie.
The majority of TV buying/selling will be a hybrid of workflow and ad server execution.
LAT (Legacy Ad Tech) continues to graft a programmatic display model onto an established TV market. What we really need is better aggregation of fragmented supply sources, including CTV. We need better measurement. And targeting needs to evolve beyond the IP address.
With all that in mind, FirstPartyCapital will be announcing another TV-focused investment in the coming weeks. Our new portfolio company provides buyers with aggregating, targeting and measurement capabilities in the $85 billion ROW TV market.
This is an exciting time for the automated TV space. It’s just not the CTV wonderland everyone in ad tech is currently subscribed to.
Sheryl Sandberg Heads For The Exit
Some called her the “adult in the room” during her 14 year tenure at Facebook/Meta. Others (FPC specifically) called her the chief enabler of a dysfunctional man child CEO.
Sandberg’s legacy at Facebook/Meta will ultimately be viewed as a tainted reign.
Sure, she was instrumental in scaling Facebook/Meta into a $100 billion dollar business - but she also presided over an incalculable amount of disasters at the company. The litany of shit-storms is too long to list here.
Facebook/Meta looms large over the advertising landscape, bringing hyper-personalised advertising to hungry data-driven buyers. Digiday’s Kristina Monllos got the viewpoint of ad land on the Sandberg departure. As you can imagine it’s a mixed bag - summed up nicely here by Matt Prohaska in the Digiday piece:
Matt Prohaska, CEO of Prohaska Consulting, said her efforts at “two of the best mousetraps ever built in media” are worthy of credit, but she must also be held accountable for the lowlights that happened on her watch.
“Zuckerberg has always been put out as the face of the franchise but she clearly has been the brains of the entire operation,” he said. “Every decision that was central to monetization regarding its use of data, both use and abuse, have been under her control.”
Have a great weekend, readers.