The commerce media market is aboil with competitors right now, from the largest cloud and software companies to newfound startups.
And one way for the newcomers to strengthen their hand is to stick together.
That’s the rationale behind news on Thursday that the retail media company Moloco has invested in Topsort, another retail media startup. Topsort can lean into Moloco’s algorithmic personalization, while Moloco benefits from Topsort’s footprint with local retailers in the US and in Latin America.
With the deal, Moloco gains a new business funnel. Rather than build a sales and marketing team and competing with Topsort in those different markets, said Henry Senger, Moloco’s head of retail media product and engineering.
Topsort can become an onboarding system of sorts, since its customers can be prompted to turn on the Moloco tech. Moloco’s machine learning doesn’t come free or by default. But with the native Topsort integration, brand clients don’t have separate vendor contracts and cloud storage costs to move data between the two. This alleviates a typical issue when multiple vendors collaborate with a brand.
Terms of the investment were not disclosed, though the news comes after Topsort’s recent Series A round.
How the deal came together
The investment came together in the past few months, growing out of standard commercial partnership work, Topsort Founder and CEO Regina Ye told AdExchanger.
Topsort was already raising money, so it was a natural conversation starter and time to invest, she said.
There doesn’t need to be a pure business motivation, either.
“I think the teams like each other, which is what ultimately led to the expanded partnership here,” said Senger.
The companies were also being brought together by requests by brands and retailers for more nuanced products, which sometimes fell into the other vendor’s sphere of specialization.
Moloco, for instance, brings greater machine learning and algorithmic optimization tech, Ye said. And that will now be available as a built-in part of the Topsort platform for customers that request the integration.
Why invest in a rival?
Moloco and Topsort are direct competitors. To the point that they currently have no customer overlap, Senger said.
So why are they giving each other a hand?
Well, for one thing, Senger said the notion of “direct competitors” can be misleading.
“Who we’re competing against is companies that are deciding whether they want to go with a platform like ourselves or Topsort versus build an in-house solution,” he said. “Especially at the upper end of the market, that’s often the decision folks are faced with.”
Retailers and brands are getting much more sophisticated, Ye said. Their asks of vendors are more complicated, with more demands on engineering.
“We see a fatigue among major retailers getting tired of the legacy platforms,” she added.
That means there’s an opportunity for new third-party vendors to step in and fill the void, she said. But if innovative startups are busy hamstringing each other rather than meeting higher client demands, then the entire category of retailers and CPGs could move on without them.
