When your lawn needs mowing, sometimes you buy a lawn mower, and sometimes you hire someone to mow it for you.
In the media agency world, Pathlabs is that hired hand, according to Mario Schulzke, COO of Pathlabs.
Just as some people prefer to farm out their lawn care, many agencies want someone to execute their media for them, he said.
Pathlabs, which refers to itself as a “media execution partner,” takes care of the mundane tasks and daily minutiae an agency shouldn’t be worrying about, like vetting the tools it’s using or overseeing its DSP or DMP partners.
Instead of getting lost in those details, agencies can focus on strategy, launching campaigns they previously didn’t have the resources for and offering a more differentiated set of services, said Pathlabs CEO Will Lapointe.
Agency employees “are worth so much more” to their clients than their ability to traffic ads, place tags on a site or send an RFP email, he said.
Human media
Much of the rhetoric Pathlabs uses to describe its services – increasing efficiency and freeing up people’s time for higher-order tasks but not threatening their jobs – is reminiscent of the language people use to talk about the benefits of generative AI.
Pathlabs does deploy generative AI for a number of tasks, such as bid optimization, customer call analysis, note-taking during meetings and coming up with ideas and outlines. But as with any technology, a person always has to make the final decision, Lapointe said.
And even as the explosion of generative AI tools over the past year have some wondering about the long-term viability of agencies, Pathlabs is betting that human beings will continue to play a big role in digital media execution, Schulzke said.
“We’re not at the point where every ad campaign is managed entirely by artificial intelligence,” he said. Real human beings are still managing, orchestrating and executing digital media campaigns. They’re just relying a lot more on technology to do their jobs faster and better, he said.
Programmatic panorama
Pathlabs has a programmatic product team and manages a variety of executions for clients, including CTV campaigns, dynamic optimization, in-store digital screens, in-game and in-app ads, digital out-of-home, display and retail media. It also handles direct-to-SSP relationships.
The company recently teamed up with a midsize agency to run the first in-game mobile ads in US football video game Madden, which it did via The Trade Desk.
It also collaborated with a Utah-based agency to run a retail media campaign for a CPG brand in Walmart’s DSP via The Trade Desk. And it served as a media execution partner for a restaurant’s DOOH campaign, using cross-device graphs to measure walk-in attribution.
Moreover, since taking over media execution for a health-care-related campaign for another client in April, Pathlabs has helped the company drive a more than 242% increase in membership while lowering its cost per acquisition by nearly 33%.
Agencies only
Pathlabs works solely with agencies and not brands to avoid potential conflicts, Schulzke said. Agencies are wary of potential competitors that could pitch directly to their clients and poach their business.
Pathlabs charges its customers on a CPM basis so agencies can hire it for individual jobs rather than locking themselves into a long-term contract and paying a large sum upfront.
Currently, Pathlabs has around 50 agency clients, including full-service agency Cayenne Creative, communications advertising agency CCF, boutique strategic consultancy The Blossom Project and marketing agency Simantel.
Pathlabs works mostly with midsize agencies that have a media component and at least one employee in the media department. Roughly 60% are full-service agencies, and the remaining is a mix of pure media agencies and those with more of a creative focus.
Zigzag
But it’s taken some time for Pathlabs to refine its business model.
Back when it was founded in 2015, the Missoula, Montana-based company started out as Lumenad, a managed services provider that worked with tiny brands, like local coffee shops or small airports.
In 2018, Lumenad launched a SaaS reporting tool product, but, from the jump, prospective clients found the dual offerings of software and managed services confusing.
That’s what led Pathlabs to spin off in 2021 as a new brand. A year later, when competitors such as Domo, Tableau and NinjaCat made Lumenad’s SaaS business unsustainable, the team shuttered its software side and went all in on Pathlabs.
Since then, Pathlabs has more than tripled its revenue. Lapointe estimates the company will hit $100 million in gross revenue in the next 12 months.
Pathlabs has roughly 120 employees, around half of whom are based in Missoula, and it plans to hire 20 more account managers, traders, salespeople and marketing folks in the near future.
