Would You Pay For A Billboard That Faces Away From The Freeway?
Everyone has heard the age old adage “half the money I spend on advertising is wasted, the trouble is I don’t know which half” and it still holds very true today. In today’s digital world, media quality is an even greater determinant in advertisers’ spend decisions and the ultimate success of their campaigns. The ability to quantify the quality of media for advertisers is therefore crucial, and one company has figured it out. That is why we are very excited to announce our investment in Integral Ad Science, a next-gen provider of media quality assessment software and data to protect brand safety, combat fraud and measure viewability.
This will be Sapphire Ventures’ 6th investment in the digital advertising category, more commonly referred to as AdTech. I have to thank my partner Jai for raising my interest in this space and I have come to greatly enjoy doing what I can to help our companies make their way through a very fragmented, dynamic and, at times, confusing landscape.
AdTech has certainly seen its highs and lows, and we’ve experienced many of them through our three public (Criteo, Marin Software & Tremor Video) and two private (Krux & OpenX) AdTech companies.
But we continue to be excited by the space for a host of reasons:
- Size and growth of the industry — global digital ad spend is projected to grow to $253B in 2018.
- Real-time big data in action — we are geeks and this is super cool stuff: low latency and big data. Integral sees over 5B impressions/day, has over a petabyte of stored data and aids in real-time programmatic ad placement decisions.
- Sustainable and attractive business model — we’ve learned to differentiate between the different business models in the space and are focusing on true technology providers & enablers (vs. those that sell media).
- Convergence of marketing and AdTech is happening in a big way — this has brought new buyers from the enterprise space into the category (Adobe — Omniture & Efficient Frontier, Oracle — Datalogix, BlueKai & Vitrue) and more recently Telco’s (AOL — Adap.tv) are again dipping their toes into it. Sounds like the party’s about to start!
- Fragmentation & consolidation — on top of buyers from the outside, a much needed consolidation phase has begun in AdTech. We believe our companies are well capitalized and we stand ready to support them to be one of the consolidators.
Integral is utilizing these macro tailwinds to address one of the biggest problems in the industry — paying for impressions that are either not viewable, fraudulent or on a page you certainly wouldn’t want associated with your brand. Integral cites that only 53% of publisher and 42% of networks/exchanges display ads were viewable for greater than 1 second in Q1’15. This does not even account for whether the ad is prominent on a page or part of a cluttered display with 30 other ads vying for one’s attention.
Moreover, the focus in the industry has swung so much to valuing audience over environment (quality of media and contextual relevance) — particularly in the programmatic arena — that there is real loss to publishers and lack of ability on part of marketers to take into account the quality of the media in which the ad is displayed.
Finally, Integral not only quantifies quality, it uses data to address the challenge that I began with: “Did my ad work or was it wasted?” Countless solutions are trying to accurately attribute value to marketing spend, but there is still a great deal of uncertainty on what works and what doesn’t. Integral has addressed that problem by layering causality into the measurement across a platform of quality enhancing products.
We are thrilled to join Integral in their endeavor to ensure your brand’s voice is heard.
The information set forth herein is not intended to constitute investment advice and under no circumstances should any information provided herein be used or considered as an offer to sell or a solicitation of an offer to buy an interest in any investment fund managed by Sapphire Ventures. Sapphire Ventures does not solicit or make its services available to the public and none of the funds are currently open to new investors. Past performance is not indicative of future performance.
The portfolio companies referred to above do not necessarily represent all of the investments made or recommended by Sapphire Ventures, and were not selected based on the return on Sapphire Ventures’ investment in them. It should not be assumed that the specific investments identified and discussed herein were or will be profitable. Not all investments made by Sapphire Ventures will be profitable or will equal the performance of the companies identified above.