Ad tech seems to have hit a metaphorical wall: funding wise, VC firms are turning away from ad tech startups; users are increasingly frustrated with click-bait type ads cluttering their beloved social media pages; and with automation, companies are finding themselves to be the “Official [insert product]” of offensive hate groups. Does this mean that this is the end of days for ad tech startups looking for clients and funding? Or, should ad tech startups be inclined to believe quotes such as “The best minds of my generation are thinking about how to make people click ads,” (Jeff Hammerbacher, co-founder of data analysis start-up Cloudera in 2011).
The answer seems to be a mix of the two extremes. It is undeniable that users are looking to interact with creative ads. It is also undeniable that the two biggest players in the tech industry, Facebook and Google, have the resources and extensive user-base to maintain an ironclad grip on components such as user analytics and access to its users.
Creativity is Key
Ad tech startups are still obtaining VC funding, but the duplicity of ad tech startups has kept investors at an arm’s length. The ad tech startups that are receiving funding are focusing on creative, unique solutions to the problems mentioned above. For example, Canada-based startup Pressboard recently received $2M in VC funding to continue to create a “marketplace” for the native ad creation process.
Opportunities also exist in creating alternatives for brands to scale their ads in an automated manner while maintaining control over its reach (see: Mediamath, a startup that received funding from Goldman Sachs and Santander).
Of course, it is impossible to have a discussion about ad tech without mentioning the elephant in the room: mobile platforms. As advertising firms and brands struggle to translate their ad strategy to mobile platforms (from both a design UX and content perspective), the number of users interacting with ads on mobile devices continues to increase. Spending on mobile ad is continuing to increase as well, but companies are looking for returns on their spending. In addition, ad spending on Internet is set to surpass television in 2017. An opportunity exists for ad tech startups that can take advantage of increased spending to deliver value-added tools for companies that are spending, but not seeing increased user engagement or sales.
In an industry that is oversaturated with copycats and unoriginal ideas, if your ad tech startup has a distinctive take on advertising, you may want to consider applying for a patent for your idea. As major players such as Facebook adopt patent filing as part of their ad tech strategy, you’ll want to make sure that you’re ahead of the curve.
Patents should be considered as an integrated part of your startup strategy, particularly in the case of ad tech, where the potential for copycats is exponentially higher than other industries.