Ad tech company Ad/Fin ceased business operations on Friday after a tumultuous few years of existence.
Launched in 2012 as a tool to benchmark pricing data in programmatic media, Ad/Fin made enemies of the agency holding companies when it teamed up with the Association of National Advertisers (ANA) and Ebiquity on a 2016 report uncovering fees in the programmatic supply chain.
After pivoting its product toward data integration and trying to get back in the good graces of agencies, Ad/Fin had burned through its cash. The company let go of all 16 of its employees and notified half a dozen to a dozen clients last week that it would no longer be in business. Ad/Fin is considering selling its technology.
“We didn’t have the resources or the ability to continue,” said Ravi Patel, Ad/Fin’s COO. “The burn rate caught up to us.”
Ad/Fin initially turned off agency holding companies in 2016, when it requested log-file data at the behest of the ANA to calculate the ad tech tax for clients. The request alienated agencies at a time when Ad/Fin had a solid product, but just a handful of clients and little revenue.
While Ad/Fin had been able to reinitiate conversations with major holding company agencies in Q1 2019, by Q2 those agencies started pushing back and dragging their feet on data sharing agreements, and brands lost interest in the product.
Clients Ad/Fin signed as early as April 2019 were still waiting on data-sharing agreements from agencies six months later. Some received agreements stipulated by limitations on how brands could use the data and how long they could keep it before deleting it.
After the ANA study, brands saw Ad/Fin as a media auditing tool. The platform couldn’t get out of a cycle of one-off project-based work that didn’t provide enough recurring revenue to keep the business going. By the fall of 2019, Ad/Fin had run out of cash, and its investors, who were extremely patient with the company during the ANA saga, eventually pulled out.
“Ad/Fin has been around for a long time, millions of dollars had been raised and it was difficult to sustain an increase in revenue,” Patel said. “We’re a tech company. Investors like to see hockey stick growth.”
Lessons learned
While burning relationships with holding companies was the main reason for Ad/Fin’s downfall, market factors also contributed to its ultimate demise.
While Ad/Fin was pivoting toward data integration, Datorama and Domo had already made inroads at agencies with competitive products. These companies went straight to the agencies to pitch their tools, avoiding the baggage that Ad/Fin still carried from the ANA study. A small company like Ad/Fin just couldn’t keep up with these well-resourced players.
At the same time, agencies began ramping up investments in their own data platforms in a bid to provide analytics as a sticky service to clients. They’ve also become more transparent around their fees, making Ad/Fin’s media pricing tool less relevant.
Ad/Fin was trying to raise more money to stay afloat in a difficult market for ad tech. In addition to in-housing and slimming down their agency rosters, brands are becoming more selective about which vendors they work with to save costs and reduce complexities.
“Everyone is consolidating their supply chain, working with specific vendors and trying to make it more efficient,” Patel said.
But at the end of the day, there is a trail back to the ANA study through all of Ad/Fin’s foibles. For Patel, the biggest lesson is that no matter how good a product is, startups should lead with sales first and listen to market demands.
