This edition of Real-Time Banter features a conversation about the future of artificial intelligence and machine learning, through the lens of venture capitalist Sarah Fay, Managing Director at Glasswing Ventures. Sarah was interviewed by Jennifer Lum, Chief Strategy Officer for Adelphic.

Jennifer: What is Glasswing Ventures?

Sarah: Glasswing Ventures is a new venture capital firm entirely focused on artificial intelligence (AI) and machine learning. My partners, Rick Grinnell and Rudina Seseri felt it was the right time to launch an investment company in this specific area because AI is set to create the next big wave of value creation in the technology space, adding trillions to the economy over the next decade. AI is the third big digital tech wave. The first wave came with the advent of the Internet, which emerged in the 90’s introducing the market to ecommerce and all kinds of online activity. The second wave was Social and Mobile, which have completely changed behavior over the last decade. Technology will continue to change behavior through the connectivity that is now embedded in a growing number of our devices – some statistics point to as many as 100 billion connected devices by 2020 – and the unprecedented amount of data that can be leveraged to make all of our interactions smart. AI will be the layer that allows us to more efficiently communicate with our devices and make technology more embedded in the world around us. Instead of being handcuffed to our computers and mobile phones, we will be able to speak to our environment to receive services and information.

I’ve heard people ask ‘Isn’t it a bit early for AI?’ but I believe we are right at its inflection point. AI has been around for decades. It just hasn’t had the appropriate platforms to draw from. We are now reaching a critical phase where those platforms and connected devices are available. AI applies to consumers and the way we interact within our daily lives, but also to enterprises, making companies more intuitive and smarter in how they operate. Companies like Adelphic, for example, are already using AI, allowing their systems to make faster and smarter decisions.

The Glasswing brand revolves around the Glasswing Butterfly. It’s a real butterfly species with transparent wings. The metaphor represents our transparency with our investors, the transparency we expect from the founders we partner with, and the transformation we mean to bring to these companies as well as the marketplaces they serve. The Glasswing Butterfly is actually a mechanical wonder, despite the fact that it looks delicate. We like to imagine that butterfly flying up and to the right!  We are mainly focused on making investments in the Northeastern US. AI development is very rich in this geography. We focus on Series A funding, which is a needed tier of investment capital particularly on the East Coast, and particularly in Boston where we have so many successful Seed investment firms bringing deals to life at the very early stage.

What investment areas are you focused on for 2017?

Although my background is in marketing and technology, I’m comfortable with the language of technology and how it applies to all different categories of business. As far as my role with the firm, I am reaching out to those in my network across a variety of industries to let them know that we’re looking to invest in Series A startups in the AI space. When companies are launching an AI based business, they’re looking for strategic investors and a firm where they fit into the ecosystem of a portfolio. My partners have a great track record for managing a portfolio of investment companies. I will participate in every investment that we make – not necessarily as the lead investor or board director, but as someone who helps founders across the portfolio to strategize and build their businesses.

Can you tell us about your professional experience prior to joining Glasswing?

The bulk of my career was spent as an entrepreneur and CEO in marketing and technology services. I started as an entrepreneur with a firm called Freeman Associates, a media agency specifically designed to help technology companies negotiate and spend their media budgets. I started there before the Internet launched for broad consumer use. But our area of expertise set us up for success, because when the Internet emerged, technology companies were among the first to shift advertising dollars to online. This became a key differentiator for our agency and helped us to grow quickly. The company grew 100 percent CAGR five years in a row, and we ended up being acquired by Carat, a global media organization (Aegis was the parent company). So, I went from being part of a very successful niche organization to joining a global organization with more than 14,000 people. This happened right as the Internet started to be used by marketers as a platform for digital media and marketing.

In 2000, I launched Carat Interactive, the digital media practice for Carat in the US- right into the teeth of the dot com bust, so there was a challenge at first getting off he ground. But we were nimble and able to change the business quickly. We focused on search engine marketing, CRM, creative, and service where we could capture more revenue than just a small percentage of the media budget. We started with 25 people in 2000 and by 2006 we had grown the business into a network called Isobar of 700 people and $100 million in revenue. It was a real rocket ship ride and extremely successful – the agency was filled with incredibly talented people and thought leadership, and the growth was completely energizing for the whole company. Around 2008, the decision was made to merge the traditional and digital sides of Carat, and I became the CEO of the newly formed company and managed the transition. Incorporating two very different businesses with different cultures is a huge challenge. It was probably one of the hardest things I’ve ever done, but it was the right thing to do for clients.

Shortly after that, I became CEO of Aegis Media North America, a 2,000 person organization at the time. When I left Aegis in 2009, I had a number of board opportunities offered to me. I decided that instead of taking another full-time position, I could make a business of working with startups, acting as a board of director or advisor to these companies. It gave me the opportunity to work with founders at the very cutting edge of where media was changing and re-shaping the industry, and that has been the most exciting part of my career so far. – I’m hoping the VC world will be even more exciting!

It’s funny that we were saying ‘This is the year of the mobile’ as far back as 2002.   It was very clear to me even back then, looking at usage statistics, that mobile would provide a major marketing platform,- but acceptance from marketers evolved so slowly. It was a running joke that we expected every upcoming year to be the Year of Mobile for a decade! But when it hit, it really hit. Since I lived through every stage of mobile’s journey, it was thrilling when it really took off, because I finally felt validated – and of course I have been rooting for companies such as Adelphic and Celtra. According to eMarketer, mobile accounted for $46 billion of the $72 billion spent in digital advertising in 2016. That’s amazing!

And digital advertising growth has not been limited to mobile. The same can be said for companies in the programmatic, video and social marketing technologies. It is fascinating participate in those areas. That has set the stage for me to become a VC.

How have your operational experience and board work helped you transition to investing?

I’ve spent the last 7-8 years evaluating new business concepts and meeting entrepreneurs. While I haven’t before made a career of investing – I have been doing many of the things a VC does. I’ve been deciding which companies to work with, I have certainly been in the marketplace long enough to see successes and failures and to understand what factors contributed to either type of situation. You learn to recognize the significant importance of a team that can execute and evolve their company ahead of the market. Beyond evaluating companies, I have been a board member and have worked to help my companies succeed, which again will be a big part of the job going forward. In addition, I’ve done some Angel investing that includes some strong companies. Aside from all that, I have two very seasoned partners to show me the ropes in any new areas. I’m incredibly excited and ready for my new life as a VC!

What opportunities are you most excited about for AI and advertising/marketing tech?

AI has the opportunity to be a game changer when applied to all kinds of organizational or individual work processes. AI eliminates work that is otherwise done manually, making people and systems more efficient, and saving time and money. AI can have an immediate impact on a company’s growth and revenue potential. We aren’t zeroing in on one category, but it’s that type of potential that I am excited about – technology that can really move the needle.

Why hasn’t ad tech been popular among the investment community?

I think we have to recognize that it’s a crowded and complex marketplace and the buying community hasn’t changed too much over time. We have the same buyers making decisions about which of the myriad ways they can improve results against existing metrics. While the industry is oriented toward innovation, advertisers are trying to simplify their stacks and methods for targeting. It’s going to get to a point where they want to stop adding incremental pieces to their marketing technology stacks. We have also seen the industry start to really shovel money into Facebook and Google, which is boxing out many companies and new forms of innovation. Opportunities may still certainly by found in areas where big shifts happen, and we need to stay tuned for areas where the needle can be significantly moved against new returns.

For example, when Adelphic first launched, a big shift was happening. Advertisers were just figuring out how to tap into the mobile marketplace and they were trying to make mobile advertising scalable. That was a big opportunity. There continue to be new technologies and ad tech developed that add incrementally to these efficiencies. In many cases, the advertiser or publisher will be able to use these to achieve, say, another five percent ROI, which is usually nothing to sneeze at, but it’s also not necessarily a game changer – there are a lot of ways to generate that incremental five percent. The issue is that there are so many innovative solutions, and an advertiser can’t possibly do business with all of them. But a game changer may come along, and that’s what I have my eyes peeled for – especially if AI is at the core.

What are your thoughts on the current state of the programmatic market?

The programmatic marketplace is mature. A recent eMarketer statistic showed 73 percent of digital advertising dollars are spent programmatically. You hear some agencies saying their goal is to have 100 percent of advertising spent programmatically. The ambitions are to do more in programmatic, not less. I think programmatic advertising will continue to evolve. For instance, programmatic buying and selling behavior is certainly moving to TV media. The TV marketplace is very different and programmatic will evolve according to these differences and be different for that channel. Appending data to inventory will become the norm. People will not buy blindly without knowing which audiences they are reaching and how that applies to their pricing. I see programmatic continuing to be important. The fragmentation of audiences, markets and media sources necessitates automation in order to adeptly reach specific audiences, and that fragmentation is continuing.

What do you think the agency of the future will look like 5 years from now?

There are so many different types of best practices across the agency spectrum. How an agency strings these services together is where the magic will be. In the future, there will be a focus on truly understanding who the customers are and what moves them, and there will be a real-time aspect to that. Creative and media will have to dovetail to perform together. I am pointing to the future, but these practices are closer than we think.

Marketers will get better at conversational marketing, which means they will have more two-way conversations with customers. As an example, chatbot marketing will become a key practice. China is ahead of us in this area. People call China the ‘messaging economy.’ Somehow consumers have really responded to interacting with chatbots. Brands don’t necessarily need to create their own chatbots, but they can find ways to insert themselves into chatbot conversations. Is chatbot going to be a dominant form of marketing? Not necessarily. But remember, at one point social media was a very small part of advertising – it was the cherry on top of the cake. If you look at the market today, social is a very big part of things. In many cases social media is central to a brand’s strategy, and ties in to all of the other channels. Social strategies will continue to evolve to include chat and voice elements. No matter what shape a campaign takes, it’s important to understand who the customers are, what motivates them and how they want to interact with the company or brand. Building loyalty is becoming the primary marketing goal, and advertising will use customer data to acquire new customers that mirror their loyal customers.

What was your first mobile phone?
This is a little embarrassing and I’m dating myself, but it was a car phone. It was a big black, lunchbox-sized phone that went under the front seat of my car. Whenever there was a new way to communicate, I had to have it. The car phone was a completely new innovation and I just had to have one as soon as it was available, so I could be in constant contact with my clients. This was back when I was in advertising sales. It was too heavy to even lift it of the car.

What is the first app you open everyday?

Email. Email leads to all of the other apps, but email is the center of my universe.

The post Real-Time Banter: Adelphic and Glasswing Ventures Discuss Artificial Intelligence and Machine Learning appeared first on Adelphic.

This edition of Real-Time Banter features a conversation about digital out-of-home advertising with Michael Provenzano, CEO of Vistar Media. Michael was interviewed by Jennifer Lum, Chief Strategy Officer for Adelphic.

 

Jennifer: What is Vistar Media?

Michael: Vistar Media is a software company that bridges the gaps between location data and media in the physical world. We do that by ingesting geo-temporal data sets – location and time  – and then we analyze that data to make better advertising decisions by understanding where consumers are moving throughout the day and their purchase behaviors.

On the media side of our business, we built the first programmatic system for the out-of-home industry. We connect our customers to over 90 percent of the digital out-of-home assets in the U.S., and in 2017, we plan to expand into the U.K. and Canada.

We have a whole stack of products – everything from an ad server to a DSP – kind of like the old days of Right Media, where it was all in one. We have revenue management tools for suppliers, direct ad serving, reporting and billing, and inventory management tools as well as access to our exchange. On the buy-side, we have the traditional ad server for tracking, providing transparency and accountability for buyers, and our DSP for digital savvy clients to login and purchase digital out-of-home ads. We do a lot of things for one company.

Can you share the founding story of Vistar Media with us?

Vistar Media official started in January 2012.

Jeremy, my good buddy from college, and I stayed in touch over the years. He had an interesting life having lived in London and Monaco working in finance. At this point, I had wrapped up Invite Media and was taking a few months off to travel.  Jeremy was doing research in the real estate business and realized that there was a large out-of-home business. After all, it is a $7.5B industry. He didn’t know too much about advertising, but knew I had been in the tech industry and thought this would be a good opportunity.

I jumped in and started researching. I quickly realized there were no data sets or measurement solutions for out-of-home advertising. The industry was really behind in terms of media, which is fascinating considering this market is not going anywhere. People are always going to leave their homes. Out-of-home is real estate, just like an apartment in downtown Manhattan would be. It will continue to have value. A billboard will always be there and have eyeballs. That’s value and a great messaging vehicle.

This opportunity was very logical in terms of starting the business. I always had passion in software and building companies, while Jeremy is very entrepreneurial. I reached out to Mark, our Chief Architect at Invite, who was at Google, and the three of us got it started in six months and moved to Philadelphia. We had to do three to 12 months of integration work with each media owner – there’s no simple handing over an ad tag. The first year and a half was just building the pipes and getting everyone connected.

Our value proposition was to sell to digital buyers who don’t buy out-of-home ads today. It’s important to these media owners, it’s a few million dollars to some of them.

You pioneered the DSP category as a founder of Invite Media. Has the programmatic market played out as you thought it would? What changes do you foresee over the next few years?

I think I was a bit naive to expect the programmatic market to be more than it is today. Everyone knows that programmatic has skyrocketed, but I’m still shocked to see people buy banner ads via ad networks, taking 60 percent margins out of a media buy or buying commoditized media in a non-transparent way – media that you can’t plan against, buy and measure very simply. Search falls into that category, video, online display, social, mobile is half and half right now, brands are still trying to find the measurement component.

I’m shocked when I hear about ad network business models “crushing it” and making tons of money off of that lack of transparency. As a marketer, how irresponsible is that? Most of the stuff I see is simply arbitrage and it’s scary that that can exist today. I don’t understand why all these ad networks exist. I’m a little disappointed.

I would like to see more agencies focusing on transparency for their clients. I get it’s hard as an agency person. Some have over 300 vendor meetings a year. It’s crazy people spend that much time in meetings. That’s an investment problem. I blame VCs and investors for that problem because they allow companies to raise large sums of money and that puts them in a nasty spot. If you raise enough money, then you can’t sell the company for a reasonable amount and you can’t merge because a VC gave them money to make the same software – so many mergers in this space don’t make sense. So companies will build a duplicate sales team to do the exact same thing. This has gone on for a while and there are so many display DSPs that are still in startup purgatory because of this. That’s an issue. We just saw TubeMogul get purchased. Focusing on one product and being great at it is important from a channel perspective, but over time I’m not sure what these companies do.

Management at agencies needs to clean that up and fix those problems. On the investor and vendor side we need to be more responsible about how we move money around.

Why did you specifically choose to focus on DOOH?

I think OOH is an under-appreciated medium. Not too dissimilar to real estate where you have distressed assets, up and coming neighborhoods – the assets are there, the eyeballs are there. Marketers have always suffered from not understanding which eyeballs are there and how to measure success for the marketer.

There’s a gap in attribution, and without attribution, we’re at a time where it won’t grow. The growth side of OOH is very small, somewhere between two and three percent a year. I have a fear that it could have the destiny of print. The reason I say that is mobile phones are just a moving, smaller billboards with a much more personal connection and data on the consumer. So if OOH doesn’t elevate itself as a measurable, attributable medium, it will get its lunch eaten by mobile. And there’s no reason for it because the same ways people can measure mobile they can measure OOH.

When you look at verticals, usually under one percent of CPG spend is spent on OOH. That’s crazy. It’s the largest vertical advertiser there is and they don’t spend nearly anything on OOH in U.S. That’s scary. You have such a small piece of the pie from one of the largest verticals. Their TV spend is off the charts, but as TV becomes more addressable or TV dollars move into digital dollars, OOH is in a really unique spot to catch that money if we upgrade our systems, prepare ourselves and work with proper measurement companies in the same way the digital vendors have in order to catch those dollars.

This transition is happening and it’s not exactly from one channel to another, it’s simply from media that cannot be measured in an efficient way to media that can be measured. We need to be in the bucket of “can be measured.” It’s very binary. At the end of the day, the goals are very logical around the business – this is a valuable piece of real estate but people don’t understand why it’s valuable because it has not been properly measured. If we can show attribution for some of the largest marketers, it’s logical that the overall investment in OOH would increase.

Are emerging measurement and attribution solutions for out-of-home similar to those in other channels? Or are channel-specific standards developing on their own?

Foot traffic is one measurement mobile has tied itself to in the past few years. It’s really important for mobile marketers as well as out-of-home. When we think about retail and QSR clients, we slap a study on to every campaign we can. If you don’t have enough impressions in a market, then it’s hard to measure something.

Vistar Media has recently partnered with name brand measurement companies to create the first-to-market out-of-home sales lift solutions for automotive and CPG products. Marketers will be able to target against segments just like you can online, then validate those who are exposed at a household level. 2016 was all about automotive and CPG. These companies believed in the opportunity of out-of-home, how big it could be and have worked with us for years. And it’s not just a Vistar effort. This is huge for the industry and should increase overall investment in OOH across the board.

Is there a publically known stat on the digitalization of billboards and out-of-home?

Most media owners work hard to digitize as much as possible. There are two factors here. One is the municipalities and government where they usually have to do trades. If you have three paper billboards, you can trade those in and put up one digital billboard. Digitizing boards requires a lot of government regulation and decision. That slows the process down.

They’re controlling utilization. Typically, they take their highest grossing assets in the best location and they digitize those first so they can show eight adds instead of one in that location. At the same time, if you were to take a location only 50 percent full out throughout the year and digitize it, now you’re talking about an even lower utilization rate – 50 percent divided by eight. It’s a much more drastic utilization problem, lowering the share of voice with a specific advertiser, CPM, and the rate. So it’s a balance. If the amount of eyeballs in one specific location at specific times aren’t growing then there is no reason to digitize more because you’re sitting on an investment for which you can’t prove ROI.

That’s the balancing act.

How should marketers be thinking of leveraging DOOH as a component of their cross-channel plans?

It goes back to measurement. I wouldn’t tell a marketer to invest in media that they can’t measure. That would be irresponsible to recommend. There are measurement solutions for all major verticals – retail, QSR, automotive, CPG. They shouldn’t think of out-of-home as a just a tonnage platform. We’re past that now. We’re able to look at true sales lists and in-store traffic. This is what we’re focused on and it’s the core to revenue and sales marketers.

I would urge them to think of out-of-home. Don’t just buy the medium, but look at how to measure and validate it’s working for your brand. A lot of brands can question that across the board. There is still a lot of vanity buying of out-of-home. I’m not a big fan of people investing in that way because we know data platforms exist that tell us who we’re reaching and if it’s working. I think people are scared of the results. They don’t know if they will be good or bad. But we can’t let fear dictate our investment decisions.

What other standards are developing for programmatic buying of DOOH media?

We’ve been working with the IAB and  DPAA, and OAAA to help develop standards in programmatic advertising. We wrote the first OpenRTB spec and we’ve written a lot around creative in points as well as how to do approvals for creative. We’ve been very open about our API and how it works in terms of communicating ads and making media more transactional than it was prior to us. Being a younger company, it’s hard to tell the big guys how to do things or what’s right versus wrong. It’s hard to build standards when there are a handful of big players in the space and they dictate what’s going on.

The final questions are personal and mobile-based and we ask them of all of our guests:

What was your first mobile phone?

It was probably a gold-plated Nokia with the game snake on it. It worked. I loved it! I was able to go online and create my own ringtone.

What is the first app you open every day?

Gmail. No question about that one.

 

The post Real-Time Banter: Adelphic and Vistar Media Discuss Digital Out-Of-Home Advertising appeared first on Adelphic.