2021 has been a good year to be an ad tech investor. Valuations are surging, Wall Street is happy and exits are frequent and satisfying. It’s the perfect time to double down and invest in an area that has been largely ignored but is poised for major upside in the next few years: Digital creative ad technology.
Think about it. When was the last time we saw a major ad tech funding round that was directed at the actual ads themselves — the messages people actually see everyday? I’d argue that now is the perfect time.
The adtech startups that can figure out how to adapt ads that can interact with the remote control, a synced smartphone or voice commands — maybe even make them shoppable — can theoretically produce a game-changer.
Here are five reasons why VCs should consider ratcheting up their investment into ad tech startups building the next generation of creative tools:
Creative tech is far from being saturated
Consider how much has been spent over the 15 years on digital advertising mechanics such as targeting, serving, measuring and verification. Not to mention the trillions that have gone toward helping brands keep track of customer data and interactions — the marketing clouds, DMPs and CDPs.
Yet you can count the number of creative-centric ad tech companies on one hand. This means there is a lot of room for innovation and early leaders. VideoAmp, which helps brands make ads for various social platforms, pulled in $75 million earlier this year. Given how fast platforms like TikTok and Snap are growing, it won’t be the last.
Digital ad targeting is being squeezed
Ads need to do more work today. Between regulation, cookies going away and Apple locking down data collection, we’ve seen a renewed interest in contextual advertising, including funding for the likes of GumGum, as well as identity resolution firms like InfoSum.
But the digital ad ecosystem can’t get by only using broader data-crunching techniques to replace “retargeting.” The medium is practically crying out for a creative revival that can only be sparked by scalable tech. The recent funding for creative testing startup Marpipe is a start, but more focus is needed on actual tech-driven ideation and automation.