Being a venture capitalist focused on ad tech investment gives Ciarán O’Kane a bird’s-eye view of the sector. Right now it’s soaring.
Among First Party Capital’s investments to date include attention technology company Lumen and LightboxTV, which helps agencies manage TV campaigns in an increasingly fragmented landscape.
It’s a hot space to be in, with enormous consolidation taking place globally, he tells Winterlich, pointing to T-Mobile’s recent acquisition of digital outdoor provider Vistar Media and Experian’s purchase of data management platform Audigent.
“Mergers and acquisitions in ad tech has gone bananas, there are deals all over the place,” says O’Kane. First Party Capital will see two exits of its own this year, enabling it to launch a second fund, worth $50 million (€48 million).
As well as being an active time for the sector, it’s an interesting one, he points out, not least because of the pressure US politics is bringing to bear on some of its biggest players, including “magnificent seven” stocks such as Meta.
The Facebook parent’s doing away with fact-checking headlines around the world and was, as O’Kane points out, founder Mark Zuckerberg’s attempt to “pucker up” to the Trump administration. But once you move beyond emotive responses, it’s actually a huge boon for agencies, he reckons.
“It’s an opportunity from an ad tech perspective and from an agency planning perspective, to take money out of Meta and put it elsewhere,” he says. It’s also a “diversification opportunity for brands” looking to mitigate the risk of their brand appearing alongside offensive content.
“From an ad tech point of view, and from an investment point of view, this is brilliant because you are going to have opportunities around brand safety, and opportunities to look at other platforms with better moderation and a better environment for brand spend,” says O’Kane.
Opportunities
Even if it is only the crumbs from Meta’s table that become available, as a business that generated $160 billion (€155 billion) in ad revenues last year, those crumbs will be significant, he points out.
“You can talk about the implications for society, but let’s be honest, if Meta wasn’t around it would be something else,” says O’Kane. “I look at this from a cold business point of view and think it’s an opportunity, and one that agencies should be relishing. It’s a chance to go to their clients and say look, here’s an opportunity for us to try other channels.”
On the other hand, while companies such as Meta, Google and Amazon are all leaning heavily – and investing heavily – into AI, notwithstanding the shock upset of Chinese upstart Minnow – O’Kane already had something of a jaundiced eye for what he calls the GenAI “magic show”, particularly in relation to its impact on agencies.
In his role as investor he has assessed copious pitch decks for AI-powered planning tools and, he tells Winterlich, so far, at least in relation to planning, hasn’t been unduly impressed.
“I could see it being used for omni channels, or to suggest planning,” he says, “but I also think you can’t take away from [human] planners who instinctively know what works and what doesn’t. So it’s more of a suggestion aid than a replacement.”
“Where I think agencies will make a lot of money from creative is in production, which I think AI hits pretty aggressively.”
TikTok
Despite all the political noise, he doesn’t see TikTok as facing an existential crisis and believes a way will be found to satisfy the US government’s fears around its Chinese ownership. It’s not beyond the bounds of possibility that Elon Musk would buy it, he points out, given his Tesla connections in China.
Far more interesting to him is the impact TikTok is having on viewing behaviours. “It is changing people’s media consumption,” he says. “TikTok is like the new [TV] channel ... it’s not a social channel, it’s not like an Instagram ‘look at me’, it’s more of a consumption piece.”
That’s particularly interesting to him given First Party Capital’s investment in Pixels, an ad tech firm that pushes TikTok style “snackable” video content to drive attention and boost brand impact across the web. “I think that’s a really big vertical going forward,” says O’Kane.
Another area tipped for growth is retail media, wherein ads are placed within a retailers website or app. Though still relatively small in Ireland, it looks set for large growth internationally. Customer data science company Dunhumby reckons Europe’s retail media market alone will grow from €13.8 billion at the end of 2024 to €31.3 billion by 2028.
For agencies the challenge it brings is increased fragmentation and a lack of standards, warns O’Kane. “I think it just becomes another programmatic bucket. Agencies don’t want to plan for 140 subscale retail media solutions, they don’t have time. And it’s going to be impossible to measure, target and manage integrations, and to actually activate campaigns. That’s a resource issue,” he points out.
“What agencies really want is the ability to go to a DSP (demand side platform) and look at the landscape and have measurement around attribution – as in, I got this ad on X and got that outcome.”
Commerce media
Right now the biggest news is Amazon’s new retail media service, which allows retailers to run and manage contextually relevant campaigns on their own ecommerce websites, giving them access to Amazon’s customers and their “insane demand”, he explains. “Effectively they are scaling the opportunity around retail media, aggregating all the tier two, three and four retailers.”
But as retailers inevitably push back against ceding too much territory to Amazon, demand for ad tech companies such as Kevel, which offers the infrastructure APIs needed to quickly build custom ad platforms for sponsored listings, internal promotions, native ads and more, will also grow, he reckons.
Kevel is committed to helping publishers drive new revenue and, as it puts it, “take back” the Internet from ad tech giants like Google, Amazon and Facebook.
It is, O’Kane believes, “one of the stars” of the ad tech world, and one of a number whose time looks to have come. “I think retail media is the biggest opportunity in ad tech. People are just not seeing it.”
Advertising that connects shoppers with products and services throughout their buying journey, whether physical or digital, is increasingly termed “commerce media”.
“It’s not the same brands being shuffled around at agency level,” says O’Kane. “It’s brand-new money coming into the ecosystem, which is why the opportunity is huge.”
To hear more from podcast and content series Inside Marketing, click here
