Chris Moore is a partner with Silicon Valley-based Redpoint Ventures, a venture capital firm. As his bio states on the Redpoint website, he serves on the board of a variety of ad technology companies including BlueKai, eBureau (owners of TruSignal), Inadco and Intent Media. Moore led Redpoint's past investments in companies such as Right Media (acquired by Yahoo), Efficient Frontier (acquired by Adobe) and Auditude (acquired by Adobe).
AdExchanger spoke to Moore about the investment landscape and ad technology trends recently...
AdExchanger: Is another Right Media possible? -and I mean this not just from a big “exit” perspective but from a transformative business model perspective, too?
CHRIS MOORE: We’re going to see what I'd call “strategic outcomes” for companies that are doing compelling things within the monetization space, broadly defined. I'm not sure where those opportunities will happen, though I have some theses. Mike [Walrath] and Brian [O'Kelley] came to market with a radically different way of thinking about how display ads were bought and sold. If you remember back to that time, it was an ad network dominated world where a network would go to a publisher and say, "Hey, I want 100 million of your impressions and I'm willing to pay a 50 cent CPM."
They would haggle, and then end up at 60 cents. That network - if they were good - would sell that 100 million impression “blob” and lo’ and behold, realize a $1 CPM on a blended basis.
Mike came up with the idea: "Let's hold up [for sale] every impression and the attributes associated with that impression, and do price discovery on an impression by impression basis. Then, we’ll corral all these ad networks running on our ad serving infrastructure to achieve virtual scale to ‘bid’ on that impression."
That was a radically different model than what anybody had seen before. And, when DoubleClick [sold to Google], the alarm bell rang which said, “Search may be over –or, at least, figured out. The next frontier is display.”
I lay that out because somebody who's solving a hard problem and thinking about a space in a new and fundamentally different way [will fit with] a couple of very large companies with very large market caps that have a vision of being the monetization platforms for the Internet and need to provide that full solution.
Buddy Media was acquired by Salesforce and Virtue by Oracle - what's your take on the opportunity with “CRM” and ad tech today?
You're starting to see the early stages of the reinvention of CRM, if you want to call it that. There are two prongs that are driving the reinvention of CRM.
One is the need to better understand and know the audience you’re targeting, your first‑party data asset, and be able to deliver customized experiences to your audience. Companies like BlueKai are enabling that in the web world. The second prong that's emerging is social -- which introduces a whole new set of attributes about your audience as well as a venue for a regular dialogue with your audience. Companies do not have a choice – they must pursue this opportunity.
What Facebook, Twitter and these other social platforms have done is force brands and marketers to have a very direct interaction with their customers - whether they like it or not. As a result these brands need tools, software and capabilities to be able to manage and leverage those interactions in order to drive results. The Buddy’s, the Vitrue’s and the Radian6’s are all starting points for that social component of growth for CRM – but all in all we’re in the very early stages of the innovation around these tools/capabilities and much more innovation is to come.
It's interesting that the incumbents – such as Oracle and Salesforce - are the prototypes for the next‑gen software businesses. For example, even though Salesforce is a SaaS business, it’s starting to view social as an important lens to extend the understanding of the customer.
Another demand we’re beginning to see more of is a way to manage the increasing fragmentation of customer touch-points across mobile, web – including closed and semi-closed social environments. Stitching all of that together, across all those disparate channels, is hard – but important for brands and marketers and thus a critical problem (opportunity) to solve..
You wrote a piece in AllThingsD about the transition from Mad Men to Math Men a few months ago. There's a part in here about storytelling. Do you think that storytelling is possible with programmatic buying?
Yes, and social is the glue.
Let’s start by thinking about advertising or marketing as a giant funnel, there's the top of the funnel, which is generating awareness and interest. And then, there's the bottom of the funnel, which is someone who is about to purchase.
Where Google and search started was the bottom of the funnel. It was wonderful because the customer told them exactly what they were interested in. It worked great on a performance basis because people were close to the bottom of the funnel.
So, looking at the first wave of audience buying or biddable display, it was about trying to make display a more compelling medium for the class of marketer who was trying to figure out how to make display perform more like search. You watch how the BlueKai guys started with Intent data as a way to enhance the performance of display by infusing it with performance data. That's phase one of the biddable world.
Phase two will be focus on how we address the top‑of‑the‑funnel challenges for marketers with “biddable,” broadly defined. Those folks think about reaching the right target audience. Who is the group that they want to create awareness with? Then, what is the frequency and the message with which we address them? What's the context that we want to reach them in? Companies like Tru-Signal are helping marketers address this opportunity.
By no means am I suggesting that context isn't relevant, but it's one element in that equation for delivering an effective awareness campaign. Biddable can help deliver against those sets of needs for brand awareness marketers. It takes longer to appreciate it but that's the efficient or performance‑oriented way to do awareness advertising.
Finally, social feeds in to the biddable world, because social inherently is storytelling.
What is Facebook's core format? It's sponsored stories, which I think is very interesting from a storytelling perspective. As a brand, what are the sponsored stories that I want to promote? What's the message? Then the authenticity from one friend or acquaintance to another is very compelling to marketers from a storytelling perspective.
From your ads/marketing investment thesis point of view, what are the next big themes that you're thinking about?
The themes that we're investing against that we think are disruptive, and could yield strategic outcomes, are three-fold.
One is data -- specifically audience‑based targeting. That theme is still working its way through marketing organizations. Your point about CRM and the digital reincarnation of CRM is going to be very important. We have a number of investments there.
With social, I would argue we're probably in the first or second inning. You've seen the Buddy, and Vitrues, and Wildfires of the world help build out a social presence for marketers - the first compelling campaigns, if you will, on how to engage fans, or advocates, or customers, in the social world.
Secondly, as these platforms evolve, with Open Graph and the like, you're going to see new ways for marketers to engage their customers and advocates, and then analyze and understand those users. Extole, one of our portfolio companies, is doing interesting stuff here.
Third is mobile. The first incarnations of ad models are there, but I don't think it has been figured out, yet - the right formats and methods for marketers to engage with users in that world are still undefined. It's a different medium from the web.
At a high level, the reason that mobile’s different is it's a computer that's in your pocket all the time. It's a very personal device, you don't share it, and it's your touchpoint between your digital and offline worlds. We're just scratching the surface in terms of the potential to realize the possibilities of this new medium.
So, those are the big three, but two other themes are also interesting.
Video is a big established market, and it's slowly migrating to all digital. You will see some new opportunities to better facilitate marketers touching customers in the digital video world.
Also, I hope we see innovation around formats. We're going to see a bit of a renaissance around formats over the next few years. Text links, static banner ads and 15 second pre‑rolls - there has to be more than that. I'm interested in thinking about interactive ad units. I have a company called Inadco that's working on it. I'm really interested in thinking about leveraging the context of a particular user into different ad formats.
Finally, looking ahead for Facebook, what's their opportunity? Is it all about mobile?
That's one tangent that they need to figure out and will. The reality is the “time spent” that Facebook occupies in people's digital life is huge, so they have a huge opportunity.
Do you see Facebook as “plumbing”?
I see Facebook as a communications platform that will primarily be monetized as a giant media property. The reason they have a media business is because it's a great utility. I also think they understand audience pretty well. They know who their users are. While they have to be very careful on how they leverage that knowledge, there’s a ton of value for them to unlock in delivering more relevant messages to their users. That's very unique from any other player out there.
With Facebook Connect, they are able to enhance web experiences with identity and social context for that user. That provides a big and interesting footprint, if and when they decide to export more of their capabilities elsewhere.
Mobile is the near‑term focus for them as well. Figuring out how to monetize their owned and operated mobile traffic better is the primary initiative. Secondly, figuring out how to monetize their web owned-and-operated traffic with Facebook API and the exchange is the second priority. Then, my guess is, after they figure those out, their question becomes how to extend that monetization platform elsewhere.
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