Startup, Meet Agency: How Silicon Alley and Madison Avenue Are Finally Working Together

NYC Tech Entrepreneurs Find Increasing Resources for Navigating Marketing World

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Nikhil Sethi knew he needed Madison Avenue. After graduating from Northwestern, the co-founder of Adaptly, a bulk ad-buying platform for social media that he founded as a senior, headed east and spent six months blanketing New York ad agencies. He often set up six to eight meetings a day, starting with junior media buyers. The demands of networking were a shock to him and his co-founder, who had both studied engineering in college.

"Our training is , if you increase the efficiency of something by a certain amount, it should be easily seen and rewarded," Mr. Sethi said. But "the ad world -- it's not a true meritocracy."

DMR Partners teaches startups the language of Madison Avenue.
DMR Partners teaches startups the language of Madison Avenue.

In early 2011 the effort paid off. Adaptly signed on Rupert Murdoch's tablet newspaper, The Daily, in a deal brokered by KBS&P's The Media Kitchen . Within a few months, Adaptly had locked in $2.7 million in funding.

Adaptly, whose partners range from Diageo to Ogilvy, is a Cinderella story, though one becoming more common as agencies pay closer attention to the startups in their backyard.

To a greater extent than that of Silicon Valley, New York's tech startup scene revolves around the "ad tech" sector -- data, targeting and ad-optimization businesses. Still, it also has its fair share of consumer-facing tech startups, such as Tumblr and Foursquare.

While entrepreneurs have increasing resources for cracking Madison Avenue, challenges remain. For example, there's still a widespread perception in the tech community that agency "demo days," where startups are invited to present to brands, are more for the hosts to pose as savvy and relevant in front of clients than to discuss real business opportunities.

But agencies are also developing relationships with incubator programs and sometimes launching their own. OMD, New York, for example, partnered with General Electric to run a 10-week incubator for college and graduate students last summer.

David Tisch, managing director at TechStars NYC, a startup incubator, said that when he was gearing up for its first class in late 2010, getting agencies involved was a high priority. He met with a few and got nowhere. For the second class last summer, JWT agreed to be a sponsor and made executives available to mentor six companies, offering them advice such as the finer points of responding to a request for proposal.

"We've seen a lot of agencies flirt with us but not get all the way there, but we'll see a lot of them get there in the next couple of years," said Mr. Tisch.

Mr. Tisch noted that TechStars alumni such as Immersive Labs, which is developing a technology to customize advertising based on facial recognition, have already profited from agency connections made during the program. Chad Stoller, a managing partner at IPG Media Lab, saw Immersive Labs at TechStars' first demo day last April and now its technology is being installed in the 5,000-square-foot IPG Media Lab in New York. There, CEOs and CMOs can explore new technologies from startups and tech giants alike.

There's also an emerging business in brokering introductions between startups and marketers. HearMyPitch.com was co-founded by a digital strategist and a private-equity investor. Startups submit pitches, with the most promising sent to agencies and marketers who've signed up for a weekly email blast.

Six-month-old DMR Partners picks five startups to present for five minutes at a monthly webinar attended by about 160 ad executives. The group votes startups up or down and DMR takes some on as clients, representing them to agencies and brands for a retainer fee. Huw Griffiths, Universal McCann's lead of global performance, signed one of the December presenters, Second Screen Networks -- a social-TV startup -- for a test with a Super Bowl advertiser after being impressed by its measurement methodology. It was notable because many startups don't include business results in their pitch.

"A lot of these companies ... are not very good at telling a story. They don't do a very good job of the five-minute elevator pitch," Mr. Griffiths said.

Part of DMR's value proposition is teaching startups the language of Madison Avenue and how to lead with points such as return-upon-investment metrics, service levels and competitive benchmarking.

Brett Martin, founder of Sonar.
Brett Martin, founder of Sonar.

"A lot of it has to do with positioning," said Alec Andronikov, a DMR partner and former CEO and co-founder of MoVoxx, a mobile-ad company. "We see folks from Silicon Valley come in with a technology deck and we say, "Guys, it's a great presentation for [people] you want to connect to your APIs.'"

The weak economy gave agencies added incentive to find ad-tech wizards who could save clients money. Shiv Singh, global head of digital for PepsiCo Beverages, said that often the smaller startups are the ones developing the algorithms that help advertisers make ad buys more efficient.

Some brands like to take startup discovery into their own hands. Jeff Hennion, GNC's exec VP-CMO and head of e-commerce, said his team prefers to handle it themselves, relying on their connections to the VC community. Seth Greenberg, Intuit's VP-global media and digital marketing, prefers a hybrid approach, letting agencies filter some of the startups vying for his attention, but also asking his team to scout companies at 500 Startups events.

Mr. Greenberg is taking a look at social-TV analytics provider Bluefin Labs, which he heard about directly from the founder, Intuit's media agency, Initiative , and his emerging-media team.

"It's good when you hear multiple sources as references for folks," he said.

For startups with plenty of ink in the tech press, the problem is figuring out which meetings are worthwhile, and adapating to the glacially slow pace at which some agencies and brands move.

Brett Martin, founder of location-based app Sonar, said that since launching last spring, he's passed on some opportunities to work with brands that weren't beneficial to product development at a stage when growing a user base -- not ad support -- is a priority.

"As a startup, [meeting with agencies] is a great way to hone your business model," said Mr. Martin, who has not yet announced revenue plans for Sonar. "That's how I view agency conversations ... I get to learn what people are paying for."

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