Top 4 Marketing AI Startups
s my old poker-playing buddy Tommy V. would have said, $5 billion buys a lot of Whoppers. That particular example of fast-food cuisine cost about a buck in those days, and Tommy saw the world as more-or-less Whopper-denominated. Today, though, we’re talking about the $5 billion that VCs invested in artificial intelligence startups last year, according to AI research firm CB Insights.
Depending on your world view, that may or may not seem like a lot of money (or Whoppers). But here’s a stat that’s big in any context: based on CB Insights’ data, 2016’s $5 billion resulted from a compound annual growth rate (CAGR) of 53.5%, starting from $589 million invested in 2012. Keep multiplying $5 billion by 1.5 for a few more years and pretty soon you get to serious money — on top of the already invested $12.5 billion cumulative total for 2012-2016.
Earlier this year, CB Insights ranked the top 100 most promising AI startups, and Fortune magazine produced this cool info graphic divvying up the top 50 by industry and global region (speaking of region, 62% of VCs’ invested AI dollar value went to U.S. startups in 2016, compared with 79% in 2012).
Which brings us to the top four advertising/marketing AI tech startups, as agreed on by CB Insights and Fortune.
I recently discussed these companies with my newer buddy, Teddy K.: Ted Kohnen, managing director of Stein IAS Americas and Asia, who started up its San Francisco office in 2015.
I’ve never played poker with Ted — and wouldn’t want to, given what I know about his math skills and algorithmic knowledge. But he’s used these startups, pitched them to clients, or both.
Here’s our rundown:
Appier (Taiwan): Five-year-old Appier has $48.5 million total investment and uses AI to predict what audience members are likely to do next. It’s basically a real-time ad-optimization engine that finds your audience across multiple digital devices, emphasizing the mobile. ““They’re creating a more evolved and sophisticated version of your own audience data pool, which used to be called ‘cookie pools’ back in the day,” Ted explained.
Appier’s key is the predictive part: if you know someone just bought shoes, they’re not likely to buy another pair right away — but maybe they’re looking for socks next. Yes, that’s a simplistic example, but you get the idea. Says Ted: “Depending on who you are as a marketer, you may think that’s higher value, or just a riskier proposition. Predictive analytics isn’t quite ‘there’ yet.”
Drawbridge (San Mateo, Calif.): Like Appier, Drawbridge is all about the cross-device reach and has a patent to prove it (on a “system to group internet devices based upon device usage”). It has $45.5 million invested, an “anonymized ID” that can be used beyond advertising (for things like fraud detection) and a founder (Kamakshi Sivaramakrishnan) who ranked No. 11 on Business Insider’s list of the 30 most powerful women in mobile advertising.
But it may not be the sexiest use of AI you’ve ever seen. “What Drawbridge is doing is more around an amplified version of targeting technology than ‘intelligence’ in the way marketers think about AI. What’s important is, they know when someone switches devices, so an advertiser can capitalize on that move,” says Ted. Kleiner, Perkins, Caufield & Byers and Sequoia Capital are the main investors.
Insidesales.com (Silicon Slopes, Utah): A who’s who of VCs have placed heavy bets on InsideSales.com: $264 million, total, with veterans Hummer Winblad starting the first round and in on every one since. Microsoft joined in the last couple rounds, and has a partnership to provide InsideSales.com’s predictive analytics to its Dynamics CRM customers.
Of note, the company was founded in 2004 but apparently didn’t take on VC investments until 2012.
Ted recommends InsideSales.com lower down in the funnel: the last mile. “When you have a lot of prospects, you won’t get anywhere if you try to focus on all of them at once. But if you focus on the 20% that are more likely to convert, you’re more likely to hit your numbers. Their technology uses AI predictively: it looks at all the variables and says, ‘These are the prospects you’re more likely to win, and win this month.’ Or, it might say you’re likely to win this prospect, but probably next year. It helps the sales force laser in on the opportunities they should focus on now,” explains Ted.
Persado (New York): “Of all the AI ad players, this is the coolest,” says Ted. “They find the phrases and words that drive the greatest action for your audience.” His favorite example is from Persado’s launch video, showing an elderly man getting a reminder to take a pill from his smartphone.
“Instead of ‘It’s 4 p.m., please take your pill,’ Persado’s message is, “Hi, Charles, we need you to take your pills now, your family needs you to be healthy and strong.’ It was a more emotional message, a more relevant message to that individual, and it therefore drives action,” explains Ted.
He put Persado at the top of the funnel, driving acquisition, but also throughout: landing pages, nurture streams, closing. “They’re all about the right phrases that trigger actions in a given context.”
Founded in 2012, Persado has a total of $66 million invested since spinning out of Upstream in 2013. Bain Capital has been in every round, and American Express, Citi Ventures and Goldman Sachs are investors.
Although Persado comes close, none of these call to mind the kind of immersive, intimate, individualized content experience I’m looking forward to from the future of marketing AI. But they represent what’s working — and making money — today.
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