Leading Early-Stage Ad Tech Investor, Project-A, Discusses its Incubator Offering & Investment Strategy
You could argue that European VCs and early-stage investors are clueless about ad tech – and tech in general. You could say that, and you’d be right. A lot of companies continue to struggle to get risk-averse European investors to invest in their solutions. There are some exceptions, and they are mostly based in Germany. Project-A is a good example of a progressive ad tech investor, with a number of strategic investments already made in the space. Led by a number of alumni from the Samwers’ Rocket Internet, including Florian Heinemann, Project-A invests in ad tech companies as well as incubating in-house technology and e-commerce projects. ExchangeWire recently spoke to Project-A’s Danuta Florczyk and Marie-Claire Raden about the company’s approach and how it invests in ad tech.
Can you give us an overview of the company structure? How does Project-A work? Is it a similar model to Rocket Internet?
It has a similar model, however there are differences in how PA goes about its business, in particular, our approach to projects is quite different to that of Rocket’s. Project A’s strength lies in the operative support it provides to its ventures. Experts from different areas such as IT/Development, Marketing or HR/Organisational development are made available to create a free-flow of knowledge throughout the company. We take particular care to ensure that both momentum and sustainability can be harmonised.
What is the relationship between Project-A and its funded companies?
We have a very condensed working relationship with all of our ventures. For us, it is not just about financial support, but also about creating sustainable business models. We do this by staying immersed in the market and passing on our experience and industry knowledge. We work closely with our investments to create individual, sustainable and cooperative working practices, as well as finding and effectively implementing individualised solutions to whatever issues arise. PA is an investor, mentor, enabler, ambassador and sparring partner. As partners, we want to be perceived as a reliable, co-operative and consistent team who take the right steps at the right time and provide a clear focus.
Do you help incubate funded companies?
Yes we do, it is important for us that we don’t just give them an injection of funds, however. We also provide Marketing, IT, HR and PM support to help the ventures succeed.
Where does Marketing Technology (data management, media buying, etc.) feature in the Project-A operation?
Apart from e-commerce, marketing technology is an important investment aspect for PA. What makes PA different is that we are very data-driven, in all areas. We systematically exhaust all sources of data, for example, by efficiently collating data from the AdServer, DWH and CRM.
Does this operation reside at the Project-A hub, or in the bands themselves?
We develop innovations internally and the ventures then profit from this. If we decide on a certain technology, or have implemented a new tool, it migrates into the ventures. Here, too, we also offer support with the implementation in each venture and we operatively work with them on it. A good example of this could be with a new tracking tool or other marketing aids.
What is the role of Project-A when it comes to ad tech? Is it a big focus? You’ve made a number of strategic investments, like Glow. How do you arrive at these decisions? What are you looking for in terms of the investment?
Ad tech is really important and plays a crucial role for us. We invest in innovative tools that add value to our marketing plan, and which have a high market potential. The development of ad tech is driven by our investments – we invest and then we work on development. This is proving to be a successful strategy for us.
Do you think Project-A can execute all RTB/data-driven buying needs in-house? What framework and infrastructure would you need to create to enable this?
Yes, we truly think so. To ensure that this channel remains in-house, PA recently launched a new venture: Tectumedia. Our experience told us that ventures could take care of most of their operative marketing work themselves, with the obvious exception of RTB, however. RTB is complex and particularly time-consuming in relation to decision making, set-up and workflow. There are also financial considerations. Which start-ups can afford to work directly with a DSP considering the current minimum spends per month?
Our new venture, Tectumedia, is there to support our start-ups with Programmatic Buying. Reading synergies from our own ad tech investments (Eyeota, Glow, Semasio, Metrigo) puts us in a good position to offer input on how to get the most out of tools and how to push them further. To offer optimal campaign performance we also provide expert consultation on campaign management and optimisation. Tectumedia is leading on this and it assimilates our own Ad-Tech investments into its services.
Given the scale of the organisation, could Project-A roll out a media-buying solution of its own that serviced companies outside companies you’ve already invested in and brands you have strong relationships with, like Otto?
Although interest in data-driven Display has undoubtedly increased exponentially in Germany, its actual implementation has been quite slow. Access to the right technologies has been an issue, but there is also a lack of know-how out there. To engage in Programmatic Buying you need a strong analytical team, which is at odds with the traditional Display Marketing skill-set. We envisage that RTB will be primarily managed by BI in the future and that classic Display optimisation themes will become more secondary. This is the main impetus behind the launch of Tectumedia. We have experienced BI, IT and marketing experts at PA and these are the basis for a successful RTB set-up. Apart from our own ventures, Tectumedia also works with clients from the Otto Group and other external clients.
How are you seeing the growth of data-driven media-buying in Germany? Are we now at the tipping point for adoption of programmatic buying?
No, not just yet. Although everybody is talking about it, nobody really seems to be doing it, or at least not doing it 100%. To give you an example of how contradictory the market has become, there are publishers who have made their inventory available to RTB, yet still maintain a strong sales team. So, one could get cheaper access to traffic through a salesperson than with RTB – this makes no business sense. RTB will grow as people slowly come around to the new way of operating. The signs are all positive. Importantly, the above is all relative to Display Performance, Branding has experienced a different genesis.
