How to Make Mobile Ad Tech Leaner
Mobile ad tech is the new gold rush. Silicon Valley's entrepreneurs, as well as many people outside those blessed acres, have noticed that more and more of the world's 10 billion consumer connections now come via a smartphone.
They've been joined by all the ad-tech experts from the desktop world, who are now claiming to have added the world of mobile to their cookie-based systems for desktop computers to create a cross-device paradise.
Here are three things worth noting:
- The latest Mobile LumaScape lists 1,240 different companies that could sit between brands and consumers in the mobile ecosystem.
- At the recent Mobile World Congress in Barcelona, there were hundreds of different companies all claiming to offer unique solutions to the challenges facing mobile in areas such as location, analytics and app creation.
- Data from CBI Insights reveals $518 million in venture capital was poured into ad networks and exchanges between 2013 and 2014, representing the most lucrative four-quarter stretch for the sector in five years. And year on year, there was an 89% rise in total investment and a 20% increase in the number of deals closed.
My message, however, is that very few of these companies will make it. The reason is that there simply isn't room in the market for so many players. Not to mention the fact that most of them are "me-toos," competing for the same space.
To take my own company as an example, at the end of last year we did an audit of the mobile ad-tech partners we work with around the world. In total, there were 280 different companies.
My goal this year is to get it down to around 20 trusted partners -- excluding the major media owners such as Facebook, Twitter and Google
We aren't unique in looking to rationalize our partnerships. I expect that our competitors are also taking similar steps or will do so shortly. Across the media agency sector, that process will reduce the potential opportunities for mobile ad-tech companies by at least one order of magnitude.
All of us will still be open to testing new solutions, of course, but the door will soon become just slightly ajar rather than wide open.
So what will determine which companies survive the coming cull of mobile ad tech? Here are three tips for mobile ad-tech players that want to succeed with media agencies:
1. Identify a specialization and do it really well. No one wants to meet suppliers who say "we can do whatever you want."
Celtra, for example, is one company getting this right. It provides rich-media services and massively simplifies the process of creating ads for different handsets, languages and markets. And that's it, but it does it really well.
Be just a "creative platform" or just a "geolocation platform," and as long as you do it well, you could find a willing market. Specialization also provides reassurance that you won't pivot your model in three months and become irrelevant to our sector after we've spent time integrating you into our systems.
2. Be easy to work with. This means more than just being nice people. You need to be able to integrate with different tech stacks easily. Lots of people say they can do this, but we all find out pretty quickly if it's truly possible.
Again, that doesn't mean beta products won't be tested by media agencies, but being easy to work with also means being honest about your state of development.
3. Work with agencies to help them educate their clients. Help agencies explain to advertisers why and how they can make mobile a successful part of their business. Don't tell them what to do, but provide information on why they should do it, with case studies and examples and proven ROI.
Obviously, the major media-agency networks are not the only market in town, and it's possible that some of the mobile ad-tech suppliers will find a vibrant future as self-service offerings or as direct partners for brands or other types of agencies.
The bottom line, however, is that the bulk of ad spend in traditional and digital media comes via the big global media-agency networks. Success with us, or our competitors, is the one clear route to ensuring you remain in business.