The outlook for advertising technology start-ups isn’t what it used to be. The barrier to entry is higher than ever before and only a few companies still manage to succeed before being acquired and split apart. Hagai Tal, the CEO of mobile advertising technology company Taptica has a few words of advice for those thinking to launch an ad tech startup: “Don’t do it!”
We spoke to him about the state of the industry and where he may still see an opportunity.
What’s the current state of the ad tech industry?
The technology space follows a typical boom-bust pattern. The ad tech industry is finally coming out of the fog, especially in the past year or so due to M&A deals. It’s becoming clearer which players are doing what. It’s not that the complexity is gone, but the value can be found more clearly.
Why are you advising tech entrepreneurs against starting up an ad tech business?
The market has evolved immensely in the past couple of years. The barrier to entry is already very high, and it will continue to rise. New entrants to the market can’t bring in more of the same. While this worked before, technology is now just the starting point. Today, they must come up with something highly innovative, leveraging data and sophisticated connectivity. Otherwise, there is no chance of survival.
Are there any particular areas of innovation that have greater potential in terms of overcoming these initial barriers?
At the end of the day, it’s all about the data. The biggest problem in the industry continues to be the same – 99% of people who view ads are not clicking. If you utilize the data to solve this issue, then you have a greater chance of overcoming these barriers.
What’s your long-term prediction on the ad tech market?
I believe all platforms will be connected in the future – mobile web, mobile app, TV, video and desktop – and data will be the enabler.
For those considering an ad tech start-up right now, would you have any advice?
To succeed in this space, you must focus on innovation and how it will bring value. You have to make sure to connect the business to the technology. If you’re only thinking about the technology, it won’t work. Rather, the business must lead the technology.
April 21, 2017