March 23, 2016

The digital media battlefield as ad blocking forces are deployed

I like technology, digital trends, the media landscape...and if I had to pick a hot topic affecting all of them lately my choice would be the ad blocking phenomenon. I guess I am a little biased after having worked at an adtech startup for the last 7 months, but still...

It is obvious that since the advent of the internet, traditional media have suffered declining advertising revenues as readers have shifted from paper to digital editions. Publishers have effortlessly (and not always successfully) tried to find business models (subscriptions, diverse freemium schemes, 100% ad-based, etc.) to rebalance their top lines.

Such eagerness to generate increasing digital revenue has in most cases led to a proliferation of advertising at the cost of the user experience. We have reached the point where such ad proliferation has caused many users to find their navigation experience increasingly disturbing, intrussive, short, a perfect storm for ad blockers (and an opportunity for new non-intrussive advertising formats).

According to a report by PageFair and Adobe, ad blocking will result in almost $42bn in foregone revenues in 2016 globally (rising from $21bn in 2015). The same report points out double-digit YoY increases in users' ad blocker adoption.

Bad news for publishers as their already somewhat weak digital revenues are impacted by a tidal wave. Obviously, publishers are trying to react by forcing users to disable their ad blockers in order to navigate a site or by kindly asking them to do so...We have just known that, for instance, leading French publishers such as L'Equipe, Le Monde or Le Figaro are pushing together against ad blockers.

This is obviously bad news for advertisers as well. Along these lines, Fast Company reported in January that at the last Interactive Advertising Bureau (IAB) annual conference, Adblock Plus (one of the leading players worldwide) was kicked out.

It is probably easier said than done but at the end of the day the solution is about finding a balance between revenue and user experience. It sounds obvious, I know. As users, we have to understand that publishers have to pay salaries, premises, technology, etc (like any other business!), and that advertising plays a critical part in that. We cannot demand "free" quality content just like that and we should tolerate some reasonable degree of advertising. At the same time, publishers have to acknowledge that it does not make sense that any given user just wants - in a majority of cases - to close a pop-up as soon as it opens, or skip any pre-roll as soon as it kicks off.

And it is in this context that finding and implementing new advertising formats - native advertising, programmatic technology, etc. - that provide relevant (as opposed to general), quality (as opposed to junk) information to users may be the key to finding that balance. Happy, recurring users mean more traffic which, in turn, should translate in higher revenue. But finding the right formula for this equation is still something in the works.

March 10, 2016

Startup fundraising - some simple, yet practical, lessons (I)

Over the last few months I have been working on fundraising. It is a challenging process that takes time, effort and organization. At this point I can share some piece of advice based on my own experiences which will hopefully help entrepreneurs and/or startups going through this process for the first time.

There is a lot of thorough literature out there on this topic, which has been contributed by people way more experienced than I am and who for sure have many more war stories than I do. My goal is not to provide the definitive fundraising guide but to simplify things a little and just provide some easy steps for those who get involved in this process for the first time or so. These are a few:

(1) Invest time in research: there are hundreds of investors out there and each one of them is different.  Put in some good prep time to figure out who you can contact as a potential investor in your venture. Some things to look at are:
  • investment stage: angel investors and investment clubs tend to focus on very early-stage investments (ie. seed), while venture capital funds range from seed stage to early, growth and later stage - follow the letters typically attached to post-seed financing rounds in which they have participated (A, B, C, etc... - moving along the alphabet means later stage);
  • sector focus: venture capital investors typically target different sectors but that does not mean that everyone targets everything. Do not waste time and energy approaching those funds whose investment strategy lies outside of the sector where your startup operates; 
  • geographic focus: make sure the investors you target typically fund companies from your continent / region / country;
  • business model: leaving geography and vertical aside, some investors primarily or exclusively focus on specific business models. For instance, marketplaces are really hot these days. 
  • who does what: funds' websites typically provide information on the team members, their backgrounds and areas of expertise (but not necessarily their respective emails). Identify who in each team is potentially best suited re: your company;
  • Crunchbase is your best friend: it is the best free database out there to research for investors and to identify rather quickly - do not forget to check investors' websites too - who can be a potential good fir for you
(2) Get introductions from your network: VCs, in particular the most reputed ones, receive countless pitches, so being able to stand out from the crowd to get their attention is critical. You will hardly succeed if you go through their general "" inbox. Analyze your network (e.g. LinkedIn) and ask friends, colleagues, fellow startups and other contacts to make an introduction for you; this will certainly not guarantee any funding but it will at least give your pitch a better chance to be read.  Plus it may help that friend of yours to score a point with the VC if the latter decides to fund your project.

In the absence of an introduction, find ways to avoid the general inbox. Look for the right person's email (see last bullet above), reach out via Linkedin or Angelist, etc...

(3) Try to build rapport and credibility from the outset: you are not going to be given many opportunities (most likely you will just have one shot) to get any given investor's attention. Making a good impression from minute 1 may give you the chance to start a conversation. On the contrary, a bad first impression will shut the door in your face. Yet obvious, these are some things to take into consideration:
  • avoid typos, both in your communications and in the pitch deck;
  • write an effective email (in particular if you have not been able to secure an introduction): in addition to some general guidelines like these, try to build a connection (e.g. referring to the addressee's past investments or industry focus, following up from a previous event where you met) with your counterpart and do your best to capture her interest (e.g. the "magic" your product is bringing to the market, any awards or competitions your startup may have won);
  • be professional in everything that you do: reply promptly, follow up timely, etc.
(4) Organize yourself: unless you are operating in a very niche space (in terms of sector and/or geography), the research mentioned in (1) above may result in multiple potential leads. This means that you are going to be communicating with a lot of people/organizations and that the flow of information (who and when you have contacted, outcomes from calls/email exchanges, follow up actions, contact details, etc.)  will be very significant. You may think that your amazing memory will be able to retain everything clearly, but that is wrong. Find ways - a CRM, spreadsheets, organization tools like Redbooth etc. - to keep your information organized; otherwise you will be wasting the precious time that you need for a whole lot of other things.

In subsequent chapters I will be touching on a number of other aspects to be accounted for during the fundraising process. But I hope this helps for the time being.