Excited to Announce Artisan!

Sometimes the best journeys are the ones into the unknown.  I remember catching up with Bob Moul after he had left Dell late last year.  He had spent a lot of time focusing on Philadelphia’s startup tech scene, passionately working with the Mayor’s offices and programs like DreamIt.  The one area Bob kept coming back to was mobile – as a new frontier, a new challenge, and potentially a new opportunity.

He met Scott Wasserman, founder/CTO of AppRenaissance, and joined on as CEO.  It was a talented team of mobile developers building custom mobile apps for companies.  While the apps they built were really solid, to say it’s not an obvious venture investment was an understatement.  But we loved Bob and the great work he had done at Boomi (sold to DELL in November 2010), and were going to partner with him in whatever area he found interesting.  “Don’t worry, by working closely with customers we’ll find the product opportunity in here,” he said.  That was a few months ago.

Well, today I am thrilled to announce they found that product far more quickly than I anticipated.  Artisan aims to bring to the mobile app world the deep set of tools and infrastructure that exist on the web today.  The initial product is an A/B/n testing software, which allows companies to target specific users with a different look and feel, without requiring coding changes and resubmission to the app store.  Simple examples could be showing a Platinum color app for holders of an American Express Platinum card, while Gold for others, and Blue for those on that product.  One could test how button placements affect conversion.  Or explore user flows within an app.  Again, all areas marketers understand well, have done on the web, now available on mobile!

The best thing is that the platform will extend to a lot of different areas, ranging from advertising to personalization.  Lots more to come here, but I think Bob’s vision of building a large public software company out of Philadelphia is much closer to reality.  I’m delighted to partner with the team and sure as heck we took that journey into the unknown!

Advertising in 2009

As many of you know, Ad-Tech is in NYC this week.  It’s a great conference that brings together some of the leading traditional and digital thinkers to explore the latest topics affecting the industry.  The timing of this Ad-Tech was particularly interesting given the broader market environment. 

I had the pleasure of being on a panel entitled “The Digital Economy” with David Moore of 24/7, Bob Raciti of GE, Imran Khan of JP Morgan Chase, and moderated by Henry Blodget.  Much of the discussion focused on the state of the online advertising market.  I thought I’d share some of my predictions:

·      2009 will mark a very, very tough year for overall advertising, and I would not be surprised if the total ad market (which exceeds $230 billion) declines by 10% or more.  Mary Meeker had put out an interesting analysis that showed the correlation between GDP and advertising spend at 81%.  Based on that analysis, at a 0% GDP growth rate, one would see a 4% decline in overall advertising.  With a 2% contraction in GDP, one would expect to see 8% decline in advertising.  I believe 10% is a real possibility.

·      There will be a continuing rotation of dollars from legacy advertising markets to online advertising.  The overall online advertising market (which is only $25 billion out of that $230 billion pie) will grow, though at much more muted levels than the 15%+ currently predicted by the market.  More likely is mid single digits overall.  History shows that advertising eventually follows the user, and given how woefully behind ad dollars are to the time spent online, growth should be expected.  This will be offset by declines in the unit pricing, both on a CPM and CPC/A basis.  Clicks or actions won’t matter if the consumer cannot ultimately convert because they don’t have the money.   

·      We will not see the 25% drop that we saw between 2001 -2003, for two reasons:  1) Overinflated tech startups are not buying from other overinflated startups.  Online is mainstream and touches nearly every industry in a meaningful way.  2)  The inventory being offered has evolved from display only many years back to display, search, SEO, email, lead generation, affiliate, etc. 

·      This contraction could put MAJOR pressure on the traditional media players.  In particular, I worry about the newspapers, who still generate over $38 billion in advertising, with content that is often readily available from hundreds of sources, including blogs of which many are viewed as more “authentic” to young readers.  I think we can see some major failures over the next few years.  Those who produce premium content, or content that has a high cost of production, controlled distribution, and long shelf life (eg the networks, film studios, etc) will have to work through their transitional issues and the current tough environment but will survive and thrive online.  

·      Within online advertising, consistent with prior recessions, we will see retrenchment to direct response/performance oriented spending.  Search will grow much faster than display, as people will release dollars only to the extent they are certain they will see them back very shortly. 

·      Other areas of robust growth will include online video and in gaming advertising, as people increase time on leisure entertainment.  Online video will get even more compelling as we get beyond the pre-roll only.  There is such a rich opportunity to make advertising within a video context so much more engaging and real-time.  You can engage the users with calls to action, can make real time “hot lead” phone connections, can offer incentives to induce immediate behavior.  We should watch for some exciting innovations.

We are still early in many aspects of the online revolution.  One of my companies, Conductor, just released a report that showed over 75% of the Fortune 500 have no presence for their keywords and brands in the natural search domain.  Consistency of measurement has continued to prove a challenge to unlocking more spend.  We have plenty of data, just no good idea how to agree on it.  Increasing fragmentation in the sources of online spend in a market where people had enough to do with just TV and newspapers will require much more robust technology for automation.   The whole concept of de-portalization and free flowing content will necessitate a re-writing of all of our Web 1.0 and 2.0 tools.  There is still a lot more innovation needed to move the rest of the $200 billion or so that is not yet online, and so while the short term market looks tough, the long term opportunities remain exciting.