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Why Venture Capitalists Are Betting on Marketing Tech Over Ad Tech

Aug. 26, 2016

The distinction between the two sectors is increasingly blurring, but investors say a predictable revenue model is key.
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Advertising technology took off on the promise to automate the buying and targeting of ads across the web. Such companies have typically relied on “media-based” business models, whereby they collect revenue based on the volume of advertising they purchase and place on behalf of clients. They often sell to third parties in the ad ecosystem like marketers’ ad agencies, as opposed to the marketers themselves.
By contrast, many marketing tech companies have instead focused on selling software on a subscription basis, often directly to marketers. The recurring and relatively predictable software-as-a-service revenue model is often more attractive to investors because it’s less exposed to fluctuations in ad spending and other market dynamics.
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“Software is just a better business,” said Jerry Neumann, an early-stage venture capitalist who has invested in advertising and marketing technology companies including Percolate, the Trade Desk and Yieldbot. “In ad tech you’re often an intermediary. Buyers use 20 different suppliers and test them all, which is why nobody could really get a foothold.”
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Terry Kawaja, chief executive of LUMA Partners, which has offered strategic advice to numerous advertising and marketing-related technology companies, said there’s a wider pool of potential buyers for marketing technology companies than for advertising technology ones. That makes them more attractive to venture capitalists.
http://www.wsj.com/articles/why-venture-capitalists-are-betting-on-marketing-tech-over-ad-tech-1472202000

Music Industry’s Latest Piracy Threat: Stream Ripping

According to new data from the International Federation of the Phonographic Industry, 49% of internet users between the ages of 16 and 24 reported stream ripping within the six months ended in April, up from 41% in the same period a year prior. Meanwhile, 30% of internet users of all ages reported stream ripping this year, a 10% increase over last year.
The trend is particularly troubling because the music industry—which has lost 60% of its value since its peak in 2000 and has barely expanded over the past five years—is banking on paid streaming services to fuel its growth.
http://www.wsj.com/articles/music-industrys-latest-piracy-threat-stream-ripping-1473718919

Fantasy-Sports Sites Curtail Ad Spending

Flush with cash from media-company investors FanDuel and DraftKings together spent an estimated $500 million on advertising last year, according to analysts Eilers & Krejcik Gaming. (FanDuel is backed by Comcast Corp. DraftKings is backed by 21st Century Fox Inc.,.

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The advertising boom increased brand recognition and the number of users enormously. FanDuel’s revenue nearly doubled to about $100 million in 2015, from $57 million 2014, according to the company. But the cost of the ads was enormous—an estimated $174 per new user at DraftKings and $123 per new user at FanDuel, according to Eilers & Krejcik. —which meant operating losses at both companies last year.

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Daily fantasy-sports sites generally allow users to create virtual sports teams using real athletes from a given league. The make-believe team’s standing rises and falls based on the real-life performance of its individual members. The site operator makes money from entry fees, often amounting to about 10%, and doles out cash to users whose teams do well.  

http://www.wsj.com/articles/fantasy-sports-rivals-slice-ad-spending-1470052800

The Short List of Jobs With High and Rising Pay

Over the past decade, only a small slice of working-age Americans have landed in jobs offering a mix of good pay and healthy wage gains.
That’s the conclusion of a new study by job-search site Indeed, one that underscores a broad sense of economic discontent among many Americans.

http://blogs.wsj.com/economics/2016/07/26/the-short-list-of-jobs-with-high-and-rising-pay/?mod=e2tw

Google Looks to Amp Up Mobile Ads

AMP for Ads is essentially the advertising counterpart to Google AMP--the Accelerated Mobile Pages Project, which is Google’s initiative aimed at speeding up the loading of publishers’ content on mobile devices.

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So far, Google says its research shows that AMP Web pages load four times faster and use 10 times less data than non-AMP pages.

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Google says that based on its research, mobile ads take a whopping 19 seconds to fully render, on average.

Some of this slowness is driven by device limitations and bandwidth. But often, mobile ads are loaded with flashy visuals or multiple tracking mechanisms that slow things down.
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But there may be compromises. For starters, AMP for Ads isn’t built for video--yet. And Mr. Taylor acknowledged that in this early stage, Google had yet to figure out how the AMP for Ads standards might impact advertisers’ use of various third party tracking devices and services, such as the vendors many brands employ to track things like ad viewability and suspect traffic. 
http://www.wsj.com/articles/google-looks-to-amp-up-mobile-ads-1468943100

The Danger of Automating Social Influencer Marketing

June 16, 2016 

The list of influencer tech firms is long and growing, with names like Influential, ReadPulse, TapInfluence, Social Bluebook, Cirqle, NextBee and FindYourInfluence.com.

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Ted Murphy, CEO of the social influencer firm IZEA, estimates that there are over 200 companies in this social influencer tech platform sector. His company has been exploring potential acquisitions, but has found few firms with any real ability to execute on what they promise.

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“Few of these startups have anything real under the hood. A lot of these places are just scraping data [and listing all the same influencers] and haven’t actually signed anybody up.”

http://www.wsj.com/articles/the-danger-of-automating-social-influencer-marketing-1466071200 

 

Washington Post Pushes Into Ad Tech With New High-Speed Ad Product

You’ve heard of Facebook Instant Articles. Think of this as Washington Post instant advertising.

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The new “Fuse” ads are designed to render instantly when clicked on, without requiring people to leave the Washington Post’s desktop site, mobile site or app. Like many Web ads, the Fuse units are placed within content, such as in between paragraphs of an article. But when people click or tap these ads, they render across the majority of a person’s screen and allow for further interaction without sending users to another site or app.
These custom ads are “pre-cached” and hosted by the Washington Post, meaning they are designed to significantly reduce the latency common with most digital ads that are clicked on, said Jarrod Dicker, the company’s head of ad product and engineering.
http://www.wsj.com/articles/washington-post-pushes-into-ad-tech-with-new-high-speed-ad-product-1463738400

Tubular Labs Wants to Be the Nielsen For Branded Web Video

Tubular is touting a metric it calls the “ER30,” which stands for “engagement rate of a video during its first 30 days.” To calculate the ER30, Tubular collects data from Facebook, YouTube and other platforms, specifically engagement data such as how many people like, comment on and share videos.
http://www.wsj.com/articles/tubular-labs-wants-to-be-the-nielsen-for-branded-web-video-1461751202

Online ‘Influencers’ Become Hot Assets

Michelle Phan, a 28-year-old former art-and-design student in Florida amassed over eight million subscribers on YouTube since 2007 by showing how to apply makeup. Last fall, Ipsy Open Studios, a beauty subscription company she co-founded, raised $100 million from TPG Growth and Sherpa Capital.

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China’s social-media celebrities wield particular clout because they fill a void of influence in a country where all established media are controlled by the government and viewed as irrelevant by most young people.

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One of the main platforms for social-media influencers is a Twitter -like service called Weibo.

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Some of China’s online influencers are leveraging China’s role as a manufacturing hub. They follow a similar pattern: Develop a Weibo following and open a fashion shop on Alibaba Group Holding ’s Taobao Marketplace, where they sell clothing and accessories that they get made in the country’s factories. The influencers use their interaction with followers to narrow the list of items and drum up preorders. In China’s biggest online-shopping festival, last November, 11 out of 20 top-selling women’s fashion shops on Taobao were owned by social-media influencers, according to Alibaba, which is a strategic investor in Weibo.

http://www.wsj.com/articles/online-influencers-become-hot-assets-1459366202?shareToken=st02bedcc4bdb54986b2182006c1243291