We last examined VK about its advertising and marketing investment strategies back in January – that is, in a completely different world, before the coronavirus pandemic began to wreak havoc on the global economy.
Although there is as yet no comprehensive data on the impact on digital advertising (which, after all, is still being played out), early data and jokes suggest a rapid decline, while some categories of advertising costs completely disappear.
And as we noted in our previous survey, Crunchbase data shows that over the past five years, adtech has already declined by about 10% per year.
So what does the landscape look like now and where are the remaining opportunities? To find out, we collected updated answers from two investors who participated in the previous survey and presented three new perspectives:
- Eric Franky, Operations Partner, Mathcapital
- Christina Tsai, CEO and Founding Partner, 500 startups
- John Elton, partner, Greycroft
- Pär-Jörgen (PJ) Pärson, General Partner, Northzone
- Michael Brown, Founder and Managing Partner, Bowery capital
For the most part, they recognized landscape problems – not just a pandemic, but the general maturity of the industry – but also pointed to opportunities in areas such as machine learning. As Elton said briefly: “Marketing and advertising do not go away.”
Eric Franky, MathCapital
How much time do you spend looking at marketing technologies or advertising startups right now? Are you more focused on one or the other?
Adtech and martech are our main categories as a foundation. We selectively invest in categories that can benefit from this (for example, DTC or media brands) or benefit (for example, next-generation CRM or HR technology). But 90% of our attention is Adtech and Martech.
What are you looking for in your next investment?
As always – the first team. We are looking for founding teams with talent, vision and energy. We take a fairly broad approach to products and categories, but we spend most of our time focusing on two topics: the post-privacy era of marketing (i.e., new, cookie-free, compatible forms of identification and infrastructure) and the future of digital media ( i.e. video, OTT, audio, etc.).
How has COVID-19 affected the investment landscape of adtech and martech? Are there any other options?
Dealflow fell slightly, but we still see great opportunities. We have several pipeline investments for the second quarter. The problems are now similar to other sectors: spending time getting to know teams and evaluating growth expectations in the world only at the moment.
What advice do you give to your portfolio companies?
Right now, two months after the block, most of the adjustments were made to the budgets and plans, the teams (and clients) were set to complete remoteness, and the situation was somewhat stabilized. Now is the time to focus our teams on sales and marketing. This is a unique and rare time to outperform larger, slow-moving competitors and adapt to the market.