Vallhalla Partners’ Kiran Hebbar Says Multi-Medium Marketing Shift Has Begun

Valhalla PartnersKiran Hebbar is a General Partner at Valhalla Partners. As part of his responsibilities pertaining to his venture firms investments, he serves as a director on the boards of Adaptly, display ad marketplace Legolas Media and PlaceIQ among others.

AdExchanger followed up on our conversation with Hebbar last year to get his views on industry trends and the investment focus of Valhalla today.

AdExchanger: What’s surprising you in online ads these days?

KIRAN HEBBAR: I am surprised by the persistence of privacy as an issue – I think most consumers do not really care about privacy the way it is presented in the popular press. I think privacy concerns will disappear but for the occasional, headline grabbing story on a privacy breach.

Surprisingly, online display is alive and kicking. Search and social were supposed to kill display but there are no signs of that happening any time soon.

Last year, you told AdExchanger, “the killer capability in online advertising is going to be online/offline and multi-medium marketing.” Are we any closer to this Holy Grail?

Multi-medium marketing is becoming a reality and many companies are capitalizing on this opportunity. Consumers are consuming content across these digital devices and formats in a fluid manner, which is erasing the silo-ed nature of past consumption. Just look at how the Olympic Games are being watched. Many viewers are accessing the Games across smartphones, tablets, TVs and PCs, in tape delayed fashion on TV, in on-demand, time-shifted or live mode on They are also reading text coverage mixed with video reports. And of course, Twitter and Facebook are an integral part of the mix. I have done all of it in a day of following the Olympics.

As brand advertisers increase spending in online channels, be it social, video, mobile or display, online-offline measurement is seen as key because sales is the ultimate metric for most brand advertisers, and since most sales still occur offline, tying sales impact to online campaigns is so important. We are still a few years away, but there are companies that are advancing the ball in this area.

In regards to new investments you’re considering at Valhalla, is ad tech still part of the plan?

We continue to actively seek ad tech opportunities, although the space is pretty crowded, and we have a fair amount of investment in the area. But, that said, the transition from offline to online advertising is still in its very early days, and there are still dozens of potential Facebooks, Twitters, Pinterests and other online properties which can draw and keep huge audiences. Technology convergence, particularly the increasing demand for technology platform solutions that can work across all formats and devices, is an important thesis that we are pursuing. One of the key requirements there is to solve cross-device consumer authentication, or the convergence allowed by following a consumer across his/her entire media journey, regardless of digital device, in a non-personally identifiable way.

Mobile continues to be an interesting area. Themes in mobile include leveraging consumer data from new channels, finding highly engaging new ad formats, and creating next generation privacy-friendly targeting technologies, such as those that our portfolio companies JumpTap and PlaceIQ are offering. In social, the development of this sector could be compared to the first innings of a baseball game, and venture capitalists have already seen lucrative returns with the likes of Buddy Media, Yammer and Vitrue. An interesting area in social is the convergence of paid-owned-earned (POE) media and helping brands to truly engage with their customers with their organic content, beyond acquiring likes and fans on Facebook.

In online display, RTB will continue to grow but this will come from direct marketers as opposed to brand advertisers. The real budgets are with brand advertisers and there is an opportunity for startups to offer effective ways for brand advertisers to achieve their goals. And finally, the M&A market has heated up in recent months and Yahoo could re-enter the M&A game. What’s not to like about ad tech?

Will the JOBS act change things for ad-related startups? -or the advertising ecosystem at large?

We haven’t been following the JOBS act in any depth. It seems like a well-intentioned government effort which will expand funding options for young startups and that is a great way to foster entrepreneurship. That being said, there are some risks to crowd-funding especially in the advertising ecosystem. It may inadvertently spawn a lot of me-too companies in an already crowded market and ultimately starve capital to the really good ones. I think another way to jumpstart job creation is to reform our immigration policy so that talented people from around the globe choose to contribute their brain power for the betterment of US companies and entrepreneurs from outside the US relocate and launch their companies in the US. Well, I am digressing now.

Facebook has launched its Exchange. The long-awaited Facebook ad network is rumbling (Zynga placements, for example). What do you expect to happen with Facebook?

I think it is a sign that Facebook is maturing. They will continue to evolve their thinking on marketing and adapt to marketers’ ways as opposed to the other way around. FBX and allowing attribution tags on FB campaigns are examples of steps in that direction. However, it is still early days to know where FBX will be used and whether it will be successful. It seems direct marketers have the most utility there, but a more interesting area is what Facebook will do for brand marketers. I think they will offer a whole suite of solutions to brand marketers’ needs across all stages of the funnel, from awareness to acquisition to retention to upsell and beyond. They will continue to innovate on ad formats and engagement models that blend owned media with paid and earned. The $100bn question (or $47bn as of Friday) will be whether they will crack the code on mobile monetization. It won’t be easy but Facebook is an exceptional company.

One thing that struck me was the Facebook acquisition of Instagram. I was at a loss to explain the price they paid for Instagram except for one thing: it was cool and consumers love cool. Then it struck me: could it be that Facebook is worried it wasn’t cool anymore? They were overpaying for cool. I hear stories of kids who grew up on Facebook, now leaving in droves. It seems overrun with aging Boomers and X-ers. Facebook’s challenge will be to find a balance between keeping their users engaged while finding natural monetization models that don’t reduce the coolness factor and drive users away.

Facebook will have a worthy challenger in Twitter. Twitter is just about scaling their advertising solutions. I think their battle will start in the mobile arena which will be very interesting to watch.

What’s going to be the key to unlocking more video ad inventory – other than people watching more video online?

I believe there are a few factors. First it is relatively easy and inexpensive to create good looking video these days (my nine year old daughter can create a professional looking video for her age segment!) – that in itself will continue to add more to the supply side. The first wave of video was UGC, but these were of questionable quality, so brands hesitated to advertise in this medium. We are now seeing a new crop of original and professionally produced episodic videos which will ease the availability of monetizable, brand-safe online video content. Many digital newspapers are now educating their journalists to create video story lines, as we saw with the launch of WSJ’s Worldstream. I think this will be a significant factor in adding to quality inventory.

Second, exploding consumption of video on smartphones, tablets and Internet-connected devices, and increasing availability of over-the-top video from MSOs will add more monetizable videos on the supply side.

Beyond these, agreement on ad formats and a standard way of measuring engagement will tip the scale in this regard. Finally all of the above developments will result in a more equalized distribution of supply beyond YouTube and Hulu. I don’t know if we are months or a few years away from removing supply as the bottleneck.

Let’s go out of the box- if you were interested in starting an agency, what would be some key tactics?

That’s a tough one. I have not worked in or funded companies that are predominantly services-based businesses. However, as someone who has built and launched scalable software products, here are the requirements I would specify: 1) hire people who are skilled in the technologies that can help them draw deep insights into the lifestyle, preferences and purchase habits of consumers by stitching together clues from a consumer’s media consumption, social interactions, and other behavioral data 2) break down the silos between online display, social, video, mobile and TV and structure teams that can serve integrated multi-medium campaigns to deliver the highest ROI for clients 3) deliver cross-platform analytics, which is the ability to draw actionable insights from large amounts of cross-platform data 4) create a technology and big data team to deliver on the requirements outlined above, thereby insourcing some of the work that startups do today 5) offer a pricing model that is more aligned with customer success 6) be a friend of the startup community and work well with their teams and products 7) create a customer-centric culture where innovation, risk-taking and being nimble is rewarded at all levels of the organization. Whew! That’s a long list – am I dreaming?!

Finally, is your venture capital world as competitive as ever? How do you differentiate?

Venture capital is very competitive, maybe more than ever. Valhalla has differentiated on 1) our pledge to work hard for our entrepreneurs, particularly in the areas of product, go-to-market and recruiting strategy, and 2) our depth in the two sectors – digital media and next-generation infrastructure – where we have chosen to focus. The two things work together: we can find better talent and help cook better strategy because of our sector experience and depth. And our two sectors are synergistic in many cases – several ad tech companies in our digital media sector use storage, compute and big data infrastructure that we pursue in our next-generation infrastructure sector.

Follow Kiran Hebbar (@hebbark), Valhalla Partners (@ValhallaPrtnrs) and (@adexchanger) on Twitter.

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1 Comment

  1. “Search and social were supposed to kill display but there are no signs of that happening any time soon.” – I couldn’t agree more with this statement from Kiran. Search and social have not displaced display ads, in fact display ads continue to be the dominant advertising channel. Evolving from untargeted static banners ads, display is now moving towards audience targeted content, dynamic personalized recommendations, and interactive polls. While marketers do spend a significant amount of their budget on social and search, display ad spend is not going away anytime soon given the huge strategic opportunities it continues to offer marketers. Display advertising offers brands the opportunity to capture the attention of a potential customer and move them directly onto their site, bypassing search and preempting the opportunity for competitors to appear alongside them in a search result. While display advertising is the leading marketing channel, marketers should not overlook the capabilities of search and social advertising completely- just as Kiran talks about “killer capability” of multi-medium marketing, marketers should embrace multiple marketing channels to achieve the best reach.