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Lessons Learned; What the MarTech Revolution can Tell us About Investment Opportunities Today

Chris Young, Co-Founder and Partner, Revel Partners

Chris Young, Co-Founder and Partner, Revel Partners

Data and AI enabled the digitization of advertising and streamlined the buying and selling of ads. Now, those same forces that drove innovation and transformation in advertising are impacting new verticals across the board. AI-driven SaaS platforms are helping build marketplaces and increasing connectivity between clients and enterprises. It’s a fast-moving, rapidly evolving space but thankfully there are plenty of pointers to guide investors based upon what we saw data and AI to do marketing and advertising a decade earlier.

MARKETPLACES

The emergence of automated marketplaces in advertising first occurred with the application of data and AI to DSPs. This brought them under the umbrella of programmatic buying. In the wider venture space, B2B marketplaces based on these principles represent a perfect hidden investment opportunity.

We are now entering a broader era of marketplaces run by AI. Programs for training models, making corrections, and delivering custom experiences all rely on data. Marketplaces of every stripe are transforming verticals thanks to data and automation. They're also democratizing previously walled-garden spaces.

Key contenders have already begun to emerge in different niches, like agriculture, cannabis tech, real estate, and even the art market. There is plenty more opportunity for growth here as well, which is good news for investors.

WORKFLOWS

Automation helped transform workflows in advertising. The same type of platforms that drove efficiency in advertising are now helping to change how other enterprises function.

Media and marketing companies rely on a complex network of stakeholders, processes, and decisions. They all needed to maintain perfect cohesion and cadence to succeed.

“Companies Are Now Fully Reimagining How We Work. Products That Solve Meaningful Problems In The Areas Of Productivity, Brainstorming, And Communication Tools Are Some Of The More Obvious Areas Of Opportunity”

Marketing departments were hamstrung by inefficiencies. This left less time for campaign planning and implementation. Automation changed that. It spurred productivity and collaboration. This drove revenue and streamlined operations and that meant billions of dollars to the bottom line.

The need to automate manual workflows is not unique to advertising. Essentially every business relies upon complex internal networks. Most are only growing more complex. The need to streamline old processes or develop new ones is urgent. A recent study by IDC Market Research found that companies lose 20 to 30 percent in revenue every year due simply to inefficiencies.

Companies are now fully reimagining how we work. Products that solve meaningful problems in the areas of productivity, brainstorming, and communication tools are some of the more obvious areas of opportunity. It’s low-hanging fruit for smart platforms that automate manual, out-of-date workflows within an enterprise. It’s also a great opportunity for investors looking for the next B2B SaaS platform that can reimagine how entire categories function.

ANALYTICS

When the MarTech revolution first happened one of the key factors driving change was the overall embrace of data analytics to help inform business decisions. Best-in-class enterprises across verticals have also begun to embrace data analytics and with good reason.

The nature of the game has changed along the lines we first saw play out with MarTech. Business decisions based on a data-driven understanding of customer preferences and behaviors in both online and offline environments are necessarily superior. Data and analytics programs represent the foundation for understanding customer motivations and where businesses can find a competitive edge.

Yet, just as the MarTech revolution indicates where investors should focus their energies, it also points to places they should avoid.

BUYER BEWARE

In the late aughts, DSPs began disrupting ad networks and forever changed the way they bought and sold media. Up to that point, ad networks were essentially bundling audiences and ad inventory before DSPs came along. An ad network’s media plans were opaque by design. DSPs and programmatic platforms changed all that through transparency and automation, enabling brands direct access to media and the ability to manage it.

The new platforms provided self-service access to components within media that enabled enterprises the ability to easily target, optimize, and price. This is what’s going on with other (non-MarTech related) data-driven platforms today, particularly at the enterprise level.

As an investor, it’s just as important to understand where not to invest as it is to know where to place your bets. Investors need to be cognizant of which side of the fence an enterprise, technology, or platform sits on when analyzing a given space.

MarTech is a great teacher in this sense. It offers a glimpse into how the application of data and AI will play out in a given sector in a variety of ways. It’s also a warning, of sorts. Businesses who ultimately don’t embrace the changes and opportunities automation and data afford will likely face the same fate as the ad network did a decade earlier.

Weekly Brief

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