Venture capital – are you a write off?

/ Author / Leave a comment

Over the last few months I have been spending more time talking with Venture Capital firms as we start to launch VivaKi Ventures in EMEA and I have to say it has been fascinating. On top of that I have been talking with individuals who have working in multiple start ups. If I am honest I am struck by the combination of instinct, nous, luck, crowd mentality and incredible returns and losses the VCs work off.

Information is extremely varied and disparate but overall it appears that the funds do a number of things, they are looking to make sure they have some ‘skin in the game’ in different sectors – we must be in mobile, we must be in video etc, sometimes buying into companies that from the outside appears misguided – Groupon to the punter on the street just appeared crazy but that did not stop anyone investing. Then we have this emotional crowd mentality where people in the investment community get excited and invests illogically based on sentiment, not dissimilar to the city swings we see on share prices.

In times of financial ups and downs investment firms are then trying to recoup the best returns, again, perhaps not always thinking straight in IPO situations, one of the views on Facebook was that the institutional investment firms had cash, it was making no returns through any conventional financial methods whether the stock market or banks and so the money was burning a hole in their pocket. An IPO like Facebook and others was a great opportunity to hit those return goals.

After all that there is the general rule of thumb that anywhere between 30 and 50% of companies will be complete write offs. I got thinking about that, and in discussions on that subject it struck me how blase they were about it. It is not working, cut it. You may be an owner, founder, an employee in these companies working hard and caring very much whilst backing you is a company that may one day wake up and say – lets pull the plug. It feels like that is an easy thing for them to do, when they are balancing that decision with high returns of 30x somewhere else. It is very matter of fact and shows just how hard it is to be a successful start up, especially in such difficult times.

I know for sure that there are good VC firms and less good in terms of caring for their investments but they all for sure know that they can walk away from companies easily as it is all built into the maths.  Good luck to everyone who starts their own business or joins a start up. It is a brave world.

‘The Motorola Dynatac 800x – The whole was far greater than the sum of its parts

/ Author / Leave a comment

An excellent guest blog from Danny Hopwood – Director of Product AOD UK on Exchangewire mobile evolution

In 2011, mobile saw spend reach $3.9 billion globally and 2012 is expected to hit $6.2 billion. “This is the year of mobile,” most will say. It is here – and I think everyone may have felt a little underwhelmed by it.

There hasn’t been a massive parade, no free USB sticks shaped like an iPhone, and certainly no trophy taking the shape of a gold encrusted Motorola Dynatac 8000x (made famous by Gordon Gekko) engraved with “we did it”. Furthermore, mobile spend didn’t overtake TV spend.

However we have seen HTML5 become more important and we have seen businesses built around mobile, ad networks open up mobile inventory, DSP’s for mobile specifically come into existence, such as Strike Ad, and VC investors say, “I need a mobile start-up – stat!” CB Insights confirmed that it has reported on 102 mobile VC deals in 2011, and within those, any company with a photo or video-focus saw up to 30% of those deals.

It’s been a pretty exciting few months. Technology continues to develop and proliferate, with the likes of NFC (Near Field Communication) and 5G testing. Adfonic’s second quarter AdMetrics report shows that iOS saw its market SOV decrease from 45% in Q1 to 34% in Q2, whilst Android’s share increased from 38% to 46% over the same period. UDID’s are no more on iOS, and it looks as though Apple will roll out their own tracking tool. Cookies probably won’t come to mobile in the way we imagine for Android, or other devices for that matter. Fingerprinting scares me, as there still seems to be no regulatory authority behind it and no one seems to want to step up to the plate. There have been a number of articles highlighting both the benefits and the concerns around device fingerprinting. If you’re not familiar with fingerprinting, it’s a process in which a user’s device settings are collated and then assigned a unique ID – much like a cookie – to use for tracking purposes. These settings can range from brightness settings to browser settings, time zone and fonts. It requires many more data points and therefore is not as easy for the consumer to opt out of. Until we see a regulatory company behind device fingerprinting I don’t believe it will get the seal of approval from the wider industry.

I feel mobile has a lot of potential, and I don’t think we have even scratched the surface yet. Currently mobile is simple, it’s certainly the way I speak about mobile within AOD. We keep it simple because it is.

I hear all sorts of industry “fixes” to solve areas of retargeting. For example, one solution making the rounds at the moment is to merge various different tracking systems like UDID and cookies (on available devices), fingerprinting, ad server log files and campaign data to give a nearly accurate view of a user across devices. This is an example of great innovation, but also potentially another layer of danger to privacy and it’s not reliable enough. What if UDID is removed from the rest of the platforms and cookies follow suit? The fixes don’t have enough longevity to provide reliability.

This highlights my qualms with mobile. Despite achieving a sustainable mobile market in terms of spend; we haven’t quite achieved what mobile is really capable of achieving. I say we, because I think it’s important everyone realises no one tech provider, or genius in a basement, is going to solve this for us.

Mobile, though, can be activated at scale, delivering performance and acting as extensions to your campaigns. We do have to be honest on its capabilities presently and stop trying to complicate it. If someone were to be dedicated enough to read five articles on mobile, it would become apparent very quickly that mobile is simple.
AOD was the first agency trading desk to launch mobile, and we see it working incredibly well, but I can see what else it could do if it had the component parts. I think there are four ways to solve these issues:

Formats
Formats are still pretty limited on RTB mobile for now (300×250, 320×50, 468×60, 728×90). Some vendors have more, but if you want scale you have to go for the lowest common denominator. They do the job, but I think they need to be able to do more. HTML5 will help to answer this, but I still see creative agencies sending over flash files hindering the adoption of HTML5.

Digital Creative Houses
On the topic of HTML5, I hope we see more companies like SOMO (Gareth Davies of SOMO recently wrote a piece on mobile), Sencha’s HTML5 tools, the IAB’s ORMMA and MRAID projects and Celtra. These companies will speed up HTML5 adoption and clients’ mobile understanding.

I can’t help but think that if a creative agency wanted to revolutionise themselves and start with a great initial footing in the market they would opt for HTML5 only; ensuring they spread the message to all clients, agencies and publishers of the benefits. It might be hard initially, but you could see the long-term benefits in being the first creative outfit to do it and commit to it.

Client/Advertiser Adoption
A more powerful and easier route of HTML5 adoption would be if it came from the clients themselves. They need to take the plunge, it’s not even a plunge it’s a big fluffy mattress of improved creative output, design flexibility, richer executions and easier implementation. You can still back it up with Flash, but a mobile creative in HTML5 is going to start to make this industry push the boundaries and innovate on what we have already done. I have seen this start to happen, and quite recently helped a client to holistically adopt HTML5 for all their online activity.

We Are Going to Have to Make This Market
Mobile advertising was supposed to provide a connection to that constant consumer companion. Many will say it does and that their technology can pin-point users to five metres away. I believe the only ones that can do this are the carriers within their respective countries. I’m not aware of carriers that have been doing this, but I hope they do. This is the “we” part of my earlier point. There are many stakeholders in this industry who all hold very important parts to the mobile market. These stakeholders take shape in advertisers, agencies, publishers, carriers and technology companies.

Each one of these stakeholders is trying to carve out their own piece of the pie. They have a right to as they got to the solution more quickly than others, but they only have the solution for their specialism. I don’t expect O2/Vodafone/T-Mobile to come up with a DSP. I expect them to find a solution to allow their carrier GPS signals to be used for geo-targeting, within another DSP in real time.

I also don’t expect publishers to make mobile inventory available at cheap prices through RTB. I expect them to make it a profitable revenue stream for themselves, but also to help rectify the issues with targeting that mobile currently has. They are in an advantageous position to help; they just need to start focusing on it. I am in no way belittling what innovation has already been accomplished by many publishers; I just know there is much more to be done.

On the tech side of industry, I think it’s a bit cloak and dagger. Platforms are everywhere and everyone can do everything – but we all know what is possible and what is achievable with the current state of technology and infrastructure. We need to demystify the market and start to talk honestly about what is and isn’t possible. My favourite example at the moment is geo-fencing. geo-fencing is only possible with a Wi-Fi connection, and even then, accuracy diminishes the further the device is from the Wi-Fi spot. To my knowledge, latest figures pinned Wi-Fi penetration at 73% of all UK households. Fantastic! It’s growing and it’s in the household, but what use is a Wi-Fi connection for local targeting to the mobile advertising market if someone is sitting at home on the internet? So when a vendor is asked if they can geo-fence, they will say “yes”, but they need to be honest that is based on Wi-Fi coverage that is household-based and not carrier networks.

We need this level of penetration on a street level while users are outside of their homes. Admittedly, the Olympics forced the UK’s hand, and the resultant underground Wi-Fi project at least begins to bring this to stations, but it’s still not street level.

Companies within our industry, and probably more outside of it, have these answers and these capabilities. We just need to start working together to join them up. O2/T-Mobile/Vodafone could open up their GPS signals to a DSP, publishers could pass more information on registration data or location in the bid request. We could remove the need for the cookie and fingerprinting all together on mobile!

It might be too much to expect from the mobile market, and I’ll admit I’m glossing over a few big questions around businesses, allowing their specialisms to become part of something else.

I am not ignoring areas like privacy or consumer consent, far from it; it’s only with agreement on what the potential of this market is, when all the components come together, that we can answer this subject.

The Motorola Dynatac 8000x had many components to it, but the whole was far greater than the sum of its parts. I think we could learn a lot from this logic. Motorola did, and launched the first commercial mobile. I believe that if we got our collective heads, and our businesses, together we could do the same for mobile, and have a gold encrusted Motorola Dynatac 8000x with “we did it” engraved on it.

Agencies and publishers are polarising structures based on the perfect storm

/ Author / Leave a comment

Technology killed the admin star.

One of just many debates raging around the new world of programmatic buying and exchanges. Are we seeing the death of the buyer? The death of the seller? Has the world of computers stripped advertising of all its creativity? Lots of big questions and debates but over the last six months, one common thread has become apparent; there is no value in execution in the long term.

Two or three big themes have converged in the last year, they have been around for longer of course but they have been lit up by the tech debate. The first is that in my view too many businesses sold their value on execution and delivery. These are necessities and you can’t not have them but is that where the value is? Is that what you charge more for? I don’t think so, the agency world in particular suffers from focusing a lot on service and delivery and execution over real value add strategy and quality creative thinking.

In itself that is not the end of the world, many advertisers want perfect execution of course, but what it ends up being then is an easily quantifiable, discountable service that becomes very commoditised – tell me the difference between two media agency TV departments? Secondly lets combine that with the fact that the world of Paid, Earned and Owned means that clients are now not only trying to squeeze costs and fees they are starting to see these new approaches as a gateway to spending less. I have just finished doing preliminary judging and of about 40 entrants at least 37 boasted / moaned (not in so many words) that they had little or no budget to make their campaign work.

So we have smaller budgets based on the social buzz doing the heavy lifting for us and we have fees for service and execution being cut – that leaves us with only one alternative – start to charge for ideas and creativity, for strategic guidance so that the execution is less crucial to the revenues. This works more now than ever as to make the social buzz work for you, good ideas and strategy are needed to do it..it is no coincidence that the non traditional media planning and buying teams in agencies are the fastest growing divisions. Big sponsorships, events, social strategy, performance strategy, content, these are where the future lies backed up with technically led brilliant basics.

To gain traction strategically you need to invest in good people. You also need more of them. Investment  in the current climate is not straight forward so you need to rebalance the organisation. The investment in time and people from a strategic perspective needs to increase and at the same time you need to make execution more efficient allowing you to free up people and resources to focus on intellectual capital. So Enter the third factor  – programmatic buying.

Ask a customer if they want to pay for a load of people bogged down in admin, or people actively thinking about how best to run their business and make it a success, the answer will invariably be the latter, but that’s what we all do in the main at the moment. Clients pay for people and hours spent on too much Admin and not enough thought, this situation needs to change. Technology and programmatic buying/selling is now allowing all companies to achieve efficiencies. Whether it is publishers like the Guardian or agencies through trading desks technology is freeing resource to focus on value rather admin.

Publishers are moving fast now, after a stuttering start, they are moving rapidly, trying to find ways to move more and more into programmatic sales, now with words like premium and brand being attached. They are opening parts of the site, previously sacrosanct such as home pages to the evils of tech. Trading and execution is taking a back seat as Partnerships, strategy, event type words come to the fore – BIG ticket sales are now the focus.

Some recent people decisions are a reflection on that with people like Vevo choosing Partnerships people over sales people and Yahoo re-evaluating structures and there are many more. I am sure The Guardian will be looking to Tim Gentry to help them achieve better margins and a more efficient approach to the market, the signs are there..

So for me the message is clear – we all need to find a way to make money from clients and customers who want to pay less for service and execution and spend less on advertising. Armies of people pushing excel around is not going to be the answer.

AOD Summit – 2012

/ Author / 1 Comment

The two days ended with a great talk from one of the godfathers of digital – Scott Ferber. Founder of ad.com the worlds most successful ad net and now founder of Videology. The guy is both crazy and unbelievably bright, engaging and down to earth.

20120714-201018.jpg

Two tough days of Audience On Demand and VivaKi bonding, I probably did not plan it brilliantly by accepting an invite from Google to take all 28 of us to the IAA Summer ball! There were some tired faces on day two but it was the right thing to do. The team had a great time.

20120715-063733.jpg

20120715-063911.jpg

We had people from UK, France, Italy, Dubai, Spain, Germany, Belgium, Netherlands, Sweden and Poland. Too many teams claim to have resource and capabilities in different markets but that means clicking the geo buttons on their DSPs. We have established teams now driving markets forward and it’s exciting to see in action.

There are an amazing amount of similarities between markets, there is a curve of adoption that I believe is reflected in most markets but only where companies are pushing the market. It looks very different if you are a follower. Our teams in Dubai for instance are not pushing they are creating it, I highlight it as the entrepreneurial spirit that makes the people in The Vivaki Nerve Center different.

The two days ended with a panel with Stewart Easterbrook, CEO SMG UK, Matt Roche of Weborama, Ryan Jamboretz of Videology, Jon Slade at the FT and Jason Bigler of Google painted a picture for the markets to take back of a world in which programmatic buying and RTB was going to be fundamental to all their businesses.

This Monday sees a new home for us all. We have enjoyed being part of the SMG team at Whitfield street but very excited about having our own office. It has been two years and 4 months of hard work that has taken us to this point and it feels like the time is right for expansion. I do need to get rid of the curtains though!

20120717-104512.jpg

The market is still moving fast with acquisitions and evolutions and indeed people moves. Interesting to see Damian Blackden move to Adnologies this week, showing that data and exchanges are still pulling the talent to them and we continue to meet with a myriad of tech companies all trying to carve out their space.

Business photography

/ Author / Leave a comment

A few photos from the last few weeks on the road! Instead of my usual stuff I thought I would let the pictures tell the story!

20120622-165714.jpg

20120622-165735.jpg

Damian Burns doing his usual top class client service, another Damian in the background being less professional.

20120622-165750.jpg

Mark Ronson at the Microsoft Party in Cannes – a very cool session

20120622-165811.jpg

Neal Mohan of Google setting the scene at the start of the Client Advisory Board Meeting in LA

20120622-165839.jpg

An amazing view of the beach at Dana Point, a beautiful jog first thing

20120622-165907.jpg

Tracey Scheppach of SMGx and VNC fame on the water in Chicago with HQ just behind

20120622-165917.jpg

Beatriz and Sara from Spain and Italy talking RTB (Not)

20120622-165934.jpg

20120622-165951.jpg

20120622-170003.jpg

20120622-170026.jpg

Google Client Advisory Board – frictionless web

/ Author / 1 Comment

20120606-145233.jpg

Take a look at the opening keynote from Neal here

The best analogy of the two days was from Neal Mohan who likened the web to the old style stack we would have at home in music and TV. We would layer on more and more pieces of tech, with music systems, game consoles, and more recently the likes of Apple TV and Google TV.

We work hard to make it all appear seamless and sometimes it all works but often it involves getting on your knees and digging around behind the TV to swap plugs and find wires, we all know that experience. The web has been like this generally with a constant stream of extra tech layers to integrate and ad serve and ultimately try and track.

Google have been guilty of this within their own ecosystem with Dart Search, DFA, google Analytics and more recently Invite and Terracent. They have been on quite a journey, the first part of that has been improving the individual products. Dart Search had a 50% dissatisfaction rate which is now down to sub 10% and you can see why. The system improvements have been significant.

20120606-150158.jpg

The next stage has been how they work together and this is the real win and the approach that feels like Google are tightening the noose on the competition. The fully integrated stack is something genuinely powerful and will be a big sales point. The inter connections between exchange trading, search, remarketing Ad creation and analytics are going to revolutionise how we buy in both search and exchanges. We are seeing a world where you still have ten devices on your Tv table and yet only one wire and it all just works.

These two days have shown a frictionless web, a world where one tag, one consumer is all we are working with avoiding the dedup issues and discrepancy issues and allowing us to build comms strategies around a true single view. Google have been challenged by the industry to improve and to some it may have come a little too slowly but I believe they have learned their lessons. The Invite 2.0 releases are an example of where they did not want to repeat a Doubleclick scenario.

The chance to discuss with the Product Managers all the new developments both in the sessions and in the bar make this a pretty unique session. Thanks to Google for the Invite.(excuse the pun)

Google Zeitgeist 2012 – my highlights

/ Author / Leave a comment

OK for those who clicked on the link looking for content here it is!

I genuinely don’t know where to start. Google Zeitgeist is simply the premier event on the Calendar bar none. It is a collection of amazing brains and characters (me excluded of course) and hugely influential businessmen, politicians and this year revolutionists!

We started with Politics and Niall Ferguson who painted very eloquently and fluently a view of the economic crisis we are in. He basically highlighted a few key issues about our current financial issues in the Eurozone. Click Here to watch

1. We have complete financial inter-dependencies but very few political

2. The politicians have chosen procrastination as a strategy

3. None of the major financial leaders have learnt from the crashes of the past

4. The Germans work the least of everyone in the Eurozone and are always on holiday

As an aside he was an amazing speaker and everyone in the crowd was raptured by what he had to say, but the end result of it was that we are in some trouble but at a point where we could move towards recovery but not without some decisive action and he fears that not enough of that is actually occurring.

Greece – George Papandreu – Ex Prime Minister of Greece

See the whole video here

http://www.youtube.com/watch?v=SW99H1uYP88&feature=relmfu

George was both positive about what Greece held and yet concerned about the mis-management of the country. I believe that he was overly positive about the mindset of the population when it comes to work, claiming Greece is the hardest working country in the Eurozone – ummm not so sure. I have Cypriot inlaws and they dont describe a country being run with sweat, blood and tears!

Sir Martin Sorrell had us all reconsidering everything we had just heard by saying that everything in life was cyclical and that we should basically ‘get over it and move on!’ He explained that the world had changed and that growth was no longer from the usual suspects and we had to look to RApple Russia and China with the example that Apple was selling 20% of its products to China.

 

 

 

 

 

 

 

Enough about politics – lets talk about the fact that 100 thick people working together is better than 100 clever people not working together! The afternoon was an amazing demonstration of clever people talking and inspiring you to think. Matt Ridley explained that to make a mouse we have thousand of people working together from the oil to the plastic to the factory and yet no one knows how to make a mouse, they know only their bit.

Dan Ariely talked about cheating and the complex inter relations between how we act and our moral code. They noted that people who had been asked to remember the ten commandments and then given a cheating experiment, almost no one did! Click here for the whole video however he explains that the world has a few big cheaters, many many little cheaters. He discovered that when people were given the opportunity to cheat for something one step removed from cash ie for a token you then change for a dollar, people were a lot more comfortable lying. He used the analogy of taking a pencil from work – you would take a pencil but would you take 50cents from the petty cash? Fascinating examples based around how we justify actions.

He was such a truly inspiring speaker – definitely watch the video on this one. The final suggestion is that we should confess regularly as it resets our moral compass!

An Inspiring speaker

My favourite presentation of the whole event was Ranulph Fiennes, truly brilliant presentation that showed what a legend the man is, how he has overcome so many problems, health challenges and pushing his body to the extreme. Watch his video here, it is worth 20 minutes of your life. Click here to watch it. He showed incredible courage and tenacity and that age should not slow us down, he was about to head off on another expedition and deliver yet another record ( and beat the Norwegians!). The class line of the presentation was when he described them listening to the radio one minute a day and they heard that Britain had gone to war. When he asked his colleague with who – ‘Charlie replied – Oh I did not catch that – he goes on to say that in the following week when the radio refused to work they argued about who we could have gone to war with..’of course we assumed it was the French!’

This is what I love about Zeitgeist the variety of thoughts and personalities. Steve Redgrave and his achievements or the man who ran 350 miles in one go or 50 marathons across 50 states, these people simply inspire.

That evening we all mingled and discussed the days events. Music from Paloma Faith, Maria Aragon and Ed Sheeran created a spectacular show for us all that evening.

The night ended with a small group in a back room at The Grove. It reminded me of The Breakfast Club as it became a very open and revealing emotional roller coaster of a conversation, I think we all felt that it was a very particular evening and I felt like I got to know a few people that much better than usual. That said it kept us up until 4am which was not ideal although par for the course!

The second day started with a run along the canal, a beautiful and peaceful 30 minutes of sweating, dying and swearing not to drink again! The day contained some seriously interesting tech presentations, my favourite was from Boston technologies and their Big Dog. You want to see something pretty scary then watch this video. One of the lead scientists talked us through the work they are doing on robotic intelligence. Watch here.

The incredible power of robots was a theme that afternoon with the leap forwards in medical robotic surgery being highlighted alongside the above. It does leave you wondering where this all leads, the Google self drive car, robots etc show us a society that is moving towards a world of cyber beings and I believe sooner than anyone thinks. As if we did not need more evidence then Google demonstrated their new Google Glasses where basically a simple device worn like glasses becomes your entire technical needs for photos, email, maps, etc. Larry kindly presented those for us!

Take a look at this video here.

Larry talked about how he sees the world with Eric Schmidt and took questions from the audience. He is a hugely smart guy if not the all round entertainer when it comes to these stage events and so although very interesting I think we were really by now all waiting for the final act. Bill Clinton.

Bill came on and the first thing that struck me was how much older he was in the flesh or perhaps than I remember him, still tall and big but nt quite the force you might imagine. He started slowly, talking about his work and foundation in a very measured and thoughtful way but he started to wind up in the last ten minutes or so. You started to get glimpses of that steal and energy he was famous for and a passion that clearly is still there. It was an incredible stage, to have watched this man on television and then have him just a few feet away was a privilege and one only Google is able to deliver in this special annual event.

The whole event was as ever slick, well organised and inspiring. I thought this year it was more serious but it had depth and made you think hard about the world we live in, that is what made this one of the most interesting I have been to. The event is unsurpassed by anything else around and I am grateful to have been invited.