Welcome to this edition of the FPC newsletter. What a week in ad tech. This newsletter is literally bursting at the seams with epoch-defining takes on the key events of the week. Let’s get on with it, shall we?
The Ten Things Reshaping Our Industry Right Now
Ad tech can be a confusing game sometimes. The tonnage of sub-optimal intellectual goop mucking up the LinkedIn feed is genuinely overwhelming.
It is (almost) impossible to synthesise any semblance of a coherent take of what the actual f*** is going on. Almost.
Instead of shoehorning a stream of derivative ad tech consciousness into this newsletter edition, FPC has listed its own 10 snackable hot takes on the issues we believe are reshaping the industry.
These also currently underpin a lot of our investment thesis.
So here’s what you need to know right now in ad tech (from a very biased FPC lens of course):
- Sell-side, buy-side convergence: This is one of the most overlooked ad tech investment trends. It’s a shift of buying power from buy-side to sell-side. A whole new infrastructure layer is being built around the sell-side. And margin is at the heart of it. Despite being a commodity, programmatic execution is still taking too much. Curation will eventually collapse the platform take rate from 50%+ to single digits. This will go to the “ad tech middle” in terms of value. Economics ultimately drives innovation in this industry. There is no buy-side. There is no sell-side. It’s all upside. Check out our portfolio company, Bedrock Platform, which empowers the “ad tech middle” to build for this.
- The rise of the SSA (Super Signal Aggregator): FPC is building an investment strategy around this. Four or five big SSAs (DV, IAS, Experian, and Scope3) aggregate signals to activate on the buy-side and sell-side, all optimising towards “outcomes.” More are coming, and they need to buy more data (read on).
- SSAs need proprietary data: Some SSAs have proprietary data - brand safety, sustainability, etc - but mostly fish in the same data pool. Ultimately, they need more proprietary data to train their algorithms. Companies like Lumen (attention) and Wult (compliance) are must-buys now, and SSAs are on the hunt.
- Retail media needs scale: Outside of Walmart and Amazon, retail media remains a sub-scale game. We really need the aggregation of tier 1, tier 2 and tier 3 retailers and commerce media sites. You will see that this year. Again we are investing for this eventuality - and our portfolio companies are ready to make this happen.
- A new ad business is born every minute: It’s hard to fathom why so many are down on ad tech. Every day a new ad business is spun up. Whether it’s some RMN play or just data activation to push into the programmatic ecosystem, they all need ad tech. Cha-ching.
- TV fragmentation: When it comes to watching content on the big rectangular box hanging on your wall, TV is ultimately TV. Much of the TV world is now fragmented into walled gardens (linear, YouTube, Amazon Prime, BVOD, AVOD, FAST). TV has a big fragmentation opportunity in terms of planning and activation. It also has a measurement and targeting problem to solve.
- Loving OOH: It is hard not to see opportunities in OOH. It is a massive channel for media spending and a go-to for brands. However, there has been very little innovation, particularly around programmatic. M&A is hot in the space. T-Mobile, for instance, is on an OOH shopping spree, having spent nearly a billion dollars on ad tech assets. We are investing out of fund 2 in an innovative OOH play.
- Vertical ad nets: We love VANs at FPC. So much so that we have earmarked a bunch of money to invest in them. We will back office finance, media optimisation, account management, marketing and more - operating just a sales function at the VAN level to reduce costs and juice EBITDA. We are looking at a bunch of verticals, including property, travel, and finance. More on this in the next few weeks, as we announce new VANs. Aggregated VAN revenue will be big enough to attract strategic private equity.
- Ad tech is everything: There is acute myopia regarding the bigger opp for ad tech beyond the obvious zeitgeisty trends (see below). We have identified 2 or 3 very sizeable green field areas (nobody thinks about) where ad tech can solve big problems for marketers and agencies.
- Agentic and AI hype cycle is here: It’s hard not to get sucked into hype vortex of ad tech AI. Important to note here that we are not AI deniers. We have used ML in this industry for as long as FPC can remember. We also have portfolio companies using AI daily to power areas of their offerings. It’s a transformational technology, but the hype cycle in ad tech is reaching fever pitch. Agentic AI is the term du jour that will be trotted out like a show pony at all the big conferences and shows this year. Beyond the apparent efficiency gains in creative, ops, planning and optimisation, it feels like frothy marketing chat. AI may replace websites with a Q&A prompt at the consumer level, and chatbots could do your every bidding. Maybe not. If that pans out, advertising will be required to underwrite it all. We can do that if we need to slap an ad on it, target, optimise or measure - ad tech 101.
Pure Ad Tech Blis
T-Mobile announced yesterday that it bought location-focused DSP Blis for $175 million.
Congratulations to Greg Isbister (an LP in the FPC fund) and the Blis team on their exit to T-Mobile
There are a lot of reasons why this deal matters to FPC and the European ad tech eco-system:
- It’s again vindication of the world-class ad tech built in Europe - all the more reason to invest in FPC fund 1 or soon-to-be-launched FPC fund 2.
- Despite the competitive set (TTD, DV360, Yahoo DSP et al), Blis successfully carved out a lucrative niche built on their location signal.
- It was an all-cash deal from one of the most interesting strategic buyers in ad tech.
- The Blis executive team will likely invest in FPC, recycling their cash into the European ad tech ecosystem. Calls are imminent.
- The PE firm, LDC, which featured prominently in the last funding round, did (really) well out of this deal - so more PE money in European ad tech is inevitable.
- An all-round feel-good European ad tech deal.
The FPC Podcast: Q&A With Keith Petri, CEO of Lockr (Acquired By Viant)
On this week's edition of The FPC Podcast, we speak with Keith Petri, CEO of Lockr. Lockr was acquired by Viant this week, so it was great to have him on at such short notice. Keith is now on his sixth exit. We discuss ad tech M&A, the rise of the SSA, the Lockr story and privacy regulation in ad tech.
The PFC Podcast timeline:
03:00 IPO Trends in Ad Tech
06:09 Mountain's IPO Plans and Market Dynamics
08:59 DoubleVerify's Acquisition of Rockerbox
11:56 The Evolution of Ad Tech and Signal Aggregation
14:50 Keith's Journey with Lockr
17:59 Navigating Privacy Regulations in Ad Tech
20:56 The Role of Investors and The Importance of Good Communication
23:50 Lockr's Product Evolution
27:01 Closing Thoughts and Future Outlook
Curation Breakfast
FPC is reminding you about our upcoming breakfast event, Spotlight. Details are available here: https://lu.ma/4mq9b7l2.
We will host a panel on curation with Austin Scot, co-founder of Bedrock Platform, Pierce Cook-Anderson of Experian, and James Leaver from Multilocal. The panel will be followed by networking.
MEGA: Make Epsilon Great Again
Just as we were about to press the “publish” button, news broke that Publicis was buying Lotame for a respectable exit (ask FPC over a pint).
First, FPC wants to congratulate Andy Monfried, Chris Hogg (FirstPartyCapital LP), and their team on their exit.
This one completely blindsided FPC. Did not see this coming.
A quick rationale on the deal:
- Epsilon has always had issues with markets outside the US. It just did not work.
- Lotame gives them the necessary data infrastructure to scale outside the US.
- Publicis' recent success has been built around the Epsilon “data spine” story. Lotame now gives them a global story. The other holding groups will find it challenging to spin against this.
Here are some additional data points and hot takes that probably made this deal possible (courtesy of of our GP Kevin Flood):
- Lotame’s 1.6B IDs, in 109 countries, will massively expand Epsilon’s existing data reach, especially in EMEA & APAC.
- Publicis will now have access to 3-4B unique profiles, covering c. 90% of adult internet users globally.
- In the era of AI fever (and acknowledging many genuinely transformative applications), unique data is the moat.
- Big asset to help Publicis’ CoreAI platform to scale planning, audiences, personalization, measurement etc.
On that note, we will sign off on this bumper edition of the FPC newsletter. Have an excellent ad tech day.
Global Technology, Public Policy & Regulatory Affairs Specialist | Helping to navigate the complex digital policy & regulatory landscape ?? | Ex-Mobile Games Intelligence ?? | Ex-TAG ?? | Ex-IAB UK ???? | Ex-Orange ??
5 天前I would add privacy / changing regulatory landscape to the ten things. If it's not reshaping the industry, it should be...