Trident Capital Blog

eXelate’s DMP

A few days ago eXelate (www.exelate.com), one of my portfolio companies, announced the latest release of its Data Management Platform (DMP).  A DMP is software that centralizes the management of online audience data.  It enables marketers to manage pixels, control data access and latency, package and segment data, gain insight into audience activity through the use of analytics, and control privacy.  Similar to Demand Side Platforms (DSP) that enable Real Time Bidding (RTB) and are radically transforming online display advertising, Data Management Platforms are becoming an essential and important component of the emerging display advertising technology stack. 

Because of the DMP’s importance to display advertising, over the past year several companies have announced such solutions.  I organize these solutions into three categories: a) pureplay technology offerings, b) solutions aimed at the advertiser, and c) solutions aimed at the publisher.  The best example of the first category is Demdex (www.demdex.com) that was recently acquired by Adobe.  The best examples in the second category are the DMPs offered by BlueKai and by our own portfolio company Turn.  In my opinion, the best example of the final category is eXelate’s DMP, with Rubicon having a potential competitor.

eXelate’s DMP enables publishers and data owners to manage access to their data through a system of configurable connectors.  As publisher websites are increasingly pixelated, eXelate’s DMP helps reduce the impact of these pixels by monitoring site latency and leveraging pixel-free integrations.  eXelate’s DMP also helps publishers leverage data on their own ad inventory and through media extensions.  It enables publishers to build direct relationships with data buyers, set pricing and prioritize their data buying queue, and get visibility into how much revenue audience data is generating including analytics on historical trends relating to pricing and volume.

A major concern for publishers today is data theft.  They want to control audience access by detecting and monitoring third party trackers running on their websites.  However, today they are challenged in determining who is accessing data on their sites and what the associated monetary and privacy risk may be.  eXelate’s DMP allows them to gain the appropriate visibility.  By also incorporating the latest consumer privacy policies it allows audiences to control what information a publisher’s site can collect on them and provides an easy opt-out of all third party cookie activity.  In this way, publishers learn more about their audience.  Publishers can then incorporate eXelate’s data about their visitors in order to serve them more relevant ads.

Exelate offers both a data marketplace and a DMP.  The work the company is doing to support its data marketplace customers has provided particularly useful know-how that has been directly reflected in the DMP’s functionality.  For example, the marketplace is already interfacing with hundreds of publishers and has server to server integration with many DSPs.  Making these integrations successful in a way that enables RTB has provided valuable knowledge that is reflected in the DMP’s configurable connectors and has resulted in improving its performance, thus reducing latency.  Pureplay DMPs don’t have extensive knowledge in this area unless their customers choose to share their relevant experiences with them and even then one would assume that it will take some time before these are reflected as appropriate DMP characteristics.  Similarly, eXelate has been working for the past couple of years on defining analytics that help its publisher customer analyzing the big data that is transacted in eXelate’s marketplace in order to understand their audience.  Determine which of these analytics need to be supported by the DMP only comes from having such experiences. 

Over the next 12-18 months I expect that Data Management Platforms will be a very active technology area with new offerings specialized by intended user (publisher or advertiser) entering the market, and with several startups being acquired by larger companies, e.g., software providers, data providers, ad agencies, that are in the process of creating complete RTB systems.

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Social Commerce and Our Investment in 8thbridge

Today we are announcing our investment in 8thbridge (www.8thbridge.com), a company that provides social commerce solutions to mid- and upper-enterprise customers.  Following our successful investment in Extole (www.extole.com), a company that provides social marketing solutions to the same market segment, we had been looking for an investment in social commerce to round out or portfolio.  The meteoric success of social commerce companies like Groupon, LivingSocial, Gilt, Rue La La, and Haute Look convinced that there will be a need for integrated solutions that enable companies to participate in social commerce.  Brands are aggressively building their Facebook presence to take advantage of where consumers spend their time.  For this reason we believe that they will invest in solutions which enable social interaction on Facebook and use it as an important sales channel.  Over the past two years 8thbridge’s team led by Wade Gerten has developed an innovative social commerce application and has signed up a significant number of large customers including companies such as Delta Airlines, Haute Look, Brooks Brothers, and Mark Avon’s fastest-growing division. 

Consumers connect to a brand on Facebook for three reasons: 1) to stay current on available new products, 2) to receive coupons and discount offers, and 3) to let their friends know about the products they support.  Corporations like Coca Cola, Starbucks, P&G, and Disney have come to realize that consumers are engaging around their brands on Facebook and during the past year they have started investing heavily on marketing programs that to facilitate and enhance this type of engagement.  Social commerce may be a key to demonstrating ROI to brands on Facebook.  Companies use 8thbridge’s solution to enable in-stream shopping in Facebook’s brand’s pages, essentially the equivalent of natural search for a brand.  A recent report published by Booz& Co puts social commerce of hard goods (apparel, tickets, etc.) at $5B during 2011 and projects it to grow to $30B by 2015 split almost evenly between US and the rest of the world, for a growth rate of 56%.

During a relatively short time we’ve seen social commerce solutions evolve in three phases.  The solutions of the first phase offered stores built on the tabs of a brand’s fan page.  The solutions of the second phase offered shopping in the news feed.  Brands can market to consumers who opt-in and they in turn market to their friends.  The most recent solutions are able to utilize the power of the Open Graph enabling consumers to engage their friends, participate in a truly social shopping experience and in the process get better deals.  Several of 8thbridge’s customers, with Delta Airlines being the leading one, have already implemented such third-phase social commerce programs using the company’s solution.

We view social commerce as an extension and complement to ecommerce; certainly not a replacement.  Whereas consumers go to ecommerce sites seeking needed items, they engage in social commerce more for impromptu purchases.  Ecommerce is fueled by paid search, SEO programs.  Social commerce on the other hand is fueled by fans and their friends, paid Facebook ads, and social marketing programs driven by ecommerce sites.  Finally, whereas ecommerce sites use affiliates to drive traffic and sales, social commerce uses affiliates to drive sales within social networks. 

Social commerce is still in its infancy.  We expect that during 2011 brands will continue experimenting with both social marketing solutions as they look to expand their presence on Facebook as well as with social commerce solutions such as those provided by 8thbridge as they try to determine how to best sell to consumers without distracting from the overall Facebook social experience.  We also anticipate that around the 2011 Christmas holiday season companies will start looking for hard ROI metrics for these solutions.  In addition, merchants are also waiting for Facebook’s approach to commerce and how parallel it will be to its approach towards social games.  We look forward to working together with 8thbridge’s team to build a great company around this exciting opportunity.