The Revolution Will Not Be Televised

6th KeyTHE

By Ashu GargGeneral Partner, Foundation Capital

@ashugarg

MarTech and theDecade of the CMO

MarTech and the Decade of the CMO

Technology has transformed marketing into a technical discipline as

much as a creative one. The number of marketing technology startups

has increased from 150 in 2011 to nearly 4,000 in early 2016. And we

expect technology spend by CMOs to increase 10x in 10 years, from $12

billion to $120 billion. It’s an amazing time to be a marketer.

But with the landscape changing as quickly and dramatically as it

has, it’s also a challenging moment. Which is why, one year ago, we

published MarTech and the Decade of the CMO, a whitepaper that was

written with the aim of helping marketers to navigate the complex

terrain that is marketing today.

In the paper, we enumerated the 5 Keys to the Decade of the CMO

—organizing principles to help marketers identify the technology that

will be paramount to solving their business objectives. I stand by each

of those 5 keys; but, had I written that framework today, I would have

added a 6th key: video. Because today it’s the digital video revolution

that will be the next defining moment in the decade of the CMO.

Introducing the 6th Key to the Decade of the CMO

2011

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1,000

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2012 2014 2015 2016

Key 1: All Hail King ROI

Key 2: Hire Math Men, Not Mad Men

Key 3: Publish or Perish

Key 4: Mass Personalization Is Not an Oxymoron

Key 5: Close the Deal

Key 6: The Revolution Will Not Be Televised

6 Keys to Unlocking the Decade of the CMO

Today’s MarTech Explosion# of Marketing Technology Startups

Source: chiefmartech.com

foundationcapital.com/decadeofthecmo

2

http://foundationcapital.com/decadeofthecmo

MarTech and the Decade of the CMO: The 6th Key

3MarTech and the Decade of the CMO

The Revolution Will Not Be Televised

It will be streamed, snapped, tweeted, and projected in virtual reality.


The revolution will not be televised. It will be streamed, snapped, tweeted, and projected in virtual reality.

Netflix, Hulu, Periscope, YouTube, Snapchat, Facebook Live, Twitch, Amazon, Vive, Vessel, The

Screening Room—the list of new video platforms goes on and on. TV isn’t dead yet, but as

people increasingly turn their eyes to other screens and modalities, video will engage a new

generation of consumers.

For today’s teenagers, watching video on their mobile phones is the norm. Nielsen reports that

the amount of time Americans 18- to 24-years-old watch traditional TV has gone down by 38%

in the past five years. And in the case of Generation Z (those born in 1995 or later), 70% prefer

streaming over broadcast or cable. It’s no wonder that eMarketer predicts that by 2020, digital

will account for almost 40% of total video consumption in the US. Not that anyone should be

surprised; this “overnight” trend has been 15 years in the making, getting its start when DVR

popularized the time shifting of programs. And today’s revolution is moving so quickly, you can

expect Generation Z to adopt VR as ubiquitously as millennials took to their mobile devices. Over

the next 10 years, VR headsets will be as widespread as smartphones are today, further blurring

the line between our physical and digital worlds.

Of course, it’s no longer just a question of when viewers watch but also how and where. The

rapid proliferation of video platforms—including the emergence of virtual reality—means that

brands have a host of new, more engaging ways to connect with their customers. But it also

means that marketing is going to get exponentially more complex and that there is a huge

opportunity for startups to write the rules of this new world order.

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The rapid proliferation of

video platforms—including

the emergence of virtual

reality—means that brands

have a host of new, more

engaging ways to connect

with their customers. But it

also means that marketing

is going to get exponentially

more complex and that there

is a huge opportunity for

startups to write the rules of

this new world order.

4


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2015 2016 2017 2018 2019 2020

Traditional TV Total Streaming Streaming % of Total

Over the Top Digital Video Revenue Doubles by 2020

(Billion Dollars)

US Digital Video as Percent of Total Video Consumption

(Billion Hours)

Source: Informa, Marketsandmarkets.comSource: eMarketer and Wall Street Research

5


Gen Z Millennials Gen X Boomers

13.214.8

24.119.7

Generation Z and the New Definition of Tuning InGeneration Z shows a love for video and a growing indifference to the big box and remote.

Generation Z as Culture Consumers(Gen Z = those born in 1995 or later)

Weekly TV Usage by Generation(in Hours)

In an era of emoji and six-second Vine

videos, we tell our advertising partners

that if they don’t communicate in five

words and a big picture, they will not

reach this generation [Z].

“

Dan Schawbel, Millennial Branding, as seen in the New York Times

90%Watch YouTube daily. Are on social

media daily.Prefer streaming over

broadcast or cable.Are multitaskingwhile watching.

80% 70% 77%

Source: Wildness

Source: US data, VisionCritical

in Q4 2015 were among those

over 50 yrs old.

All gains in live and time-shifted linear TV viewing

!

Source: Nielsen, nscreenmedia.com

6


In Nirvana:In this new environment, CMOs will be responsible for the

development of cross-platform, data-driven video strategies that

blur the line between content and advertising.

Scalable, personalized video content will be ever present.

Imagine video and VR content (instead of ads) that is so sleekly

produced viewers will want to stop and watch; when they do,

they’ll find the content nearly as engaging as the programming

they love. And robust ad buying platforms will make it possible

for brands to distribute this marketing content across a

fragmented and siloed landscape.

Brands will also have a comprehensive understanding of their

customer behaviors both online and offline, fueled by data from

sources such as payment platforms, wearables, mobile, and

Internet of Things devices.

59 million adults in the US

in 2015.

watched original digital video at least once a month

!

Source: 2015 IAB Original Digital Video Study

Imagine video and VR content (instead of ads) that is so sleekly produced viewers will want to stop and watch; when they do, they’ll find the content nearly as engaging as the programming they love. And robust ad buying platforms will make it possible for brands to distribute this marketing content across a fragmented and siloed landscape.

7


Challenges on the Path to Nirvana:Consumers have an array of platforms to choose from, with more and more sure to emerge in the coming years. Many of these outlets are already on-demand, subscription driven, and ad free—which creates the necessity for new, innovative brand marketing solutions.

New Models of Content Creation

As the number of platforms customers engage with (social, digital, VR, etc.) continues to increase, brands will need new models of content creation.

Unfortunately, the scale of content required is immense, and there are not enough people with the skills to make it possible. Just as marketing has become

a technical discipline, a new breed of technical content creators will soon emerge. Tomorrow’s content creator will have a skillset that blends digital design,

filmmaking, game development (for VR), and data science to enable the rapid creation and optimization of interactive branded video and VR content across

multiple platforms.

In addition, the cost of creating video content is enormous—and the cost of creating VR content even more so. Before brands can fully commit to a unified

video content strategy, they will need new tools and talent that allow them to create personalized content at scale across a wide range of devices. And today

this feels like a long ways off, as perfecting every aspect of content creation, from engaging mobile experiences to captivating Instagram photography and

clever Snapchat streams, requires expertise across completely unique creative pursuits—all at once.

than each of the major broadcast networks within a year.

If Netflix were a Nielsen-rated TV network,

it would attain a larger 24-hour audience

!

Source: Verizon Millennials & Entertainment Report 2014

>

8


Challenges on the Path to Nirvana: Seamless, Centralized Distribution Required

Once the content challenge is solved, marketers will also require easy ways of

distributing that content to reach customers at every step of their individual

paths to purchase.

Today, each platform is a silo. There is no easy way for a brand to approach

NBC and purchase ad space for The Voice across linear TV, NBC.com, Facebook,

Instagram, Twitter, and YouTube at the same time. As of now, the process must

be done manually, making it both expensive and inefficient. To ensure brands

are reaching customers in different ways and continually reinforcing their brand

message, solutions are needed to enable programmatic ad buying at a level of

scale and real-time optimization that is not possible today.

Tracking the Path to Purchase

Over the course of a one-minute video, it’s almost impossible to know what may

have triggered a customer purchase. Was it an impactful image? A line in the

script? Or maybe a viewer saw something that triggered a fond memory and

created a positive association with a product.

In order to hone their video/VR content strategy, brands will need attribution

solutions that help them better understand this customer behavior. For

attribution to be actionable, brands need comprehensive, cross-channel profiles

of their customers. Today, this profile is largely incomplete because online

consumer behavior isn’t always accessible to marketers, and offline activity isn’t

tied to a unified, accurate profile of a customer.

As brands aim to increase the amount of data about their customers they

capture and utilize, in order to avoid the Orwellian moniker, it will become

crucial that they communicate and address user concerns over privacy and data

security every step of the way.

none of the 4 major broadcast

networks are among their

top 10 brands.

For millennials,

!

Source: Verizon Millennials & Entertainment Report 2014

The struggle for today’s marketers is real.

Planning, buying, and measuring advertising

effectively across the developing silos of video

content—and tying together linear, digital, OTT,

and social platforms—is an immensely complex

challenge and will be so for at least the next

3–5 years. The MarTech industry needs to rise

to this challenge and help marketers realize

their cross-screen dream.

“

Brett Wilson, CEO/Founder TubeMogul

9

10MarTech and the Decade of the CMO

Distribution

UGCIntelligence Linear TV Over the Top Social

Creation

Infrastructure

Marketing Consumer

ExchangeAdvertising

Buy Sell

Aside from traditional TV commercials, video-focused marketing is still too new to be referred to as “established.” The entire industry is still emerging. In the future, we expect to see new technologies that support video marketers in the following ways:

content creation, distribution (including programmatic ad buying), and optimization.

Linear TV is dying. Long live video. And for those companies willing to take the lead, the coming era offers dazzling opportunity.

Today’s MarTech Video Landscape

Non-Comprehensive

FoundationCapital.com | @FoundationCap


https://foundationcapital.com/

https://twitter.com/FoundationCap?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor