Why Our "Signal" Investment Narrative Remains Strong - But Needs An Omnichannel Upgrade
It’s been a mixed week, readers. The positive news first: everyone under 30 is now into Aphex Twin. The bearded Cornish minimalist techno genius is more popular than Taylor Swift. The kids are alright.
On the negative front, the geo-economic landscape remains ugly, with ever-increasing brinkmanship over tariffs and the continued balkanisation of the global economy.
The America-first doctrine is now being aped and aggressively pushed in other large economies. China-first. Europe-first. India-first. Data sovereignty and regional “tech native” strategies are now top of mind for big global brands.
FPC is flagging this because it will have a profound effect on our industry, blindsiding the majority (not FPC, obviously) - more on this in a future issue.
Today, we are going super micro, not macro, getting back in the ops weeds. We have built an investment thesis around first-party data and the underlying infrastructure that segments and activates. We continue to believe strongly in that narrative.
But with a new caveat: if you want to scale this type of business, the signal needs to be omnichannel.
Feature Ad Tech Under Strain
We are currently in a race to the bottom for ad tech middleware. AI is effectively democratising the software layer in ad tech. Claude and vibing are very much in vogue.
The pile of moatless AI ad tech grows by the day. And the hype kindled by ad tech influencers and builders appears highly speculative.
Everyone is joining the ad tech AI party. A billion-dollar run rate with three lads and a laptop is the ultimate flex.
Economic fundamentals still apply, though. Whoever has the demand wins. The problem for ad tech: agencies are not sitting this one out. Most are building their own platforms, making many 3rd-party solutions redundant.
Paul Silver, an ad tech show-business friend and FPC LP, articulates this very challenge for vertical AI in a recent LinkedIn post.
Banking, Supply & Signal
As Paul points out, this will not be an absolute rule. There will be exceptions with a small handful of big winners.
Of course, this is a very subjective take on the post. Buyers will always want access to a unique supply. And the scaled bank-like services (extended payment terms on huge chunks of media spend) offered by big ad tech - that very few can offer.
It’s worth noting that this is a big trend at holdcos - much of the independent agency landscape is still open for business.
You might also (rightly) say ideas are ten a penny and execution is everything. The problem is that the execution part is getting easier.
If this is a tad hyperbolic, then look at the strategies of the holdcos and some of the big indies. All are investing heavily in their own data assets/infrastructure to support models that build customised algorithms and optimise media. All want proprietary signals and O&O supply from 3rd-party ad tech partners.
Signal, The Real Differentiator - But Omnichannel Ready
FPC has been investing heavily in signal since we started the fund. We asserted that buyers would want more signal, not less. And that is panning out now.
Publicis, WPP and Omnicom have made huge bets on AI - and they are hungry for first-party data assets and ID graphs. Going forward, it will be less about the pipes and more about the signal.
Here’s how FPC thinks about the future ad tech/agency media execution relationship (sidestepped the creative piece here):
Signal alone will not be enough. Vendors will need to offer omnichannel capabilities to gain meaningful traction with large buyers. You can read the PBT (Platform-Based Technology) issue for a deeper dive.
TLDR: Walled gardens dominate the media plan; you have to build for buyers who allocate the majority of media budgets to YouTube, Meta, TikTok and Amazon. It’s not anything you don’t already know. For partners and potential acquirers, though, mono-channel won’t cut it - especially if the signal is over-indexed to the open web.
It is an evolution of our SSA narrative from last year; it needed a timely update.
And that’s it from us. Have a great ad tech day.