When the industry talks about startups and technology in the advertising industry, it often receives the shorthand description of “AdTech”. It is a term that I have always struggled with from the perspective of a Brand Marketer. Most brand marketers aren’t hands on when it comes to their media buys. Instead they rely on the expertise of their internal media staff and external media agencies to understand the differences in Automated Performance, Real-Time Bidding, DSP’s, Agency Trading Desks, and all the other odd sounding language of AdTech. They know their budget allocation of their media dollars, but not the details of the buys themselves.
On the other hand, we have seen an increasing number of startups that are calling directly on marketers themselves. The rise makes complete sense when you consider Gartner’s prediction that by 2017 the CMO will Spend More on IT Than the CIO. Or that by 2015, 25% of enterprises will have a Chief Digital Officer. Salesforce for one is capitalzing on this shift as they have spent $3.5 billion to get into the CMO Suite through the acquisitions of Exact Target, Buddy Media, Radian6 & Social.com.
While Salesforce talks of the Marketing Cloud, I lean towards calling this new area of startups “Brand Tech.” Brand Tech is the concept of technology startups that live in the worlds of the CMO and Brand Marketers. Its not about the traditional working dollars of media or CPM’s necessarily, but new channels for marketers to reach consumers. Brand Tech defines companies in Content Marketing, Loyalty, Social Sharing, Gamification, and other emerging channels. These themes are at the heart of many of the companies that graduate from The Brandery in this space including Donde, Ahalogy, and CrowdHall.
Speaking of The Brandery, the rise of Brand Tech could lead to another shift in the startup space when it comes to geography. In particular, it could lead to a shift in the cities where business is done between startups and brand marketers. I was talking with a Brand Tech startup founder who previously spent his days in the AdTech world. Based in New York, he told the story of how his AdTech startup led him to spend every day calling on the likes of media companies such as Mediavest, Carat, and GroupM throughout NYC. But since moving to the world of Brand Tech, it meant being on a plan and heading to Cincinnati, Minneapolis, Detroit, and Chicago to visit the headquarters of the largest brand marketers instead. As he thinks about building out his business development team, this means he is going to be looking at those cities for expansion, instead of just building a sales team on the East Coast.
The rise of Brand Tech is going to have a fundamental change on the both the startup world and the marketing industry. For startups, it means finding the right investors that understand this space and the right geography to capitalize on the business. And for marketers, it is going to mean becoming increasingly focused on external innovation and new channels instead of just the allocation of their media budget. For both, its going to be exciting change ripe with opportunities.