January 22, 2019
Series ‘Bee’ Funding Announcement
Today we announced the closing of a $15 million Series B funding round, led by existing investors Foundry Group and RRE, along with new investor Amasia and participation from You & Mr Jones. This is a great vote of confidence in our team and our disruptive business model, as we continue on our journey to bring transparency to the often murky ad-tech world. I want to give a bit of perspective on the round, the business, and where I see things going over the coming years.
Ad Tech Isn’t Dead
The common wisdom is that the Ad Tech sector as a whole is dead, with Facebook and Google scooping up the spoils and vendors falling prey to inevitable “consolidation”. We (and presumably our investors) don’t believe this is true.
First, programmatic advertising is a very, very, large and growing market. To paraphrase Marc Andreessen: Programmatic is Eating the World. eMarketer estimates that the US programmatic market will reach $22.9 billion this year, still growing over 20% annually. Separately, the buy-side take rate from DSPs remains in the 15%-20% range, which means the market opportunity for Beeswax is in the range of $3-4 billion, with maybe double that globally.
Second, while large players like Google are certainly doing well, we firmly reject the idea that marketers are going to put all their eggs into that basket for the long term given the strategic importance of programmatic buying. We’re already seeing the backlash from companies on the tightening policies of the big guys around GDPR and data ownership, and this is unlikely to reverse.
Third, and most importantly, the market has changed. When programmatic emerged around 2010, there were a vast number of funded, ad-tech companies with all types of business models, many of which were non-transparent. Over the past five years, buyers have both demanded transparency, and, as a consequence, squeezed non-working dollars out of their media plans. The result has been difficult times for vendors built on murkier business models while vendors that embrace transparency have thrived.
The Programmatic Barbell
One of the key questions for investors looking at Beeswax was the total addressable market, or “TAM”. Beeswax’s unique Bidder-as-a-Service™ enables our customers to deeply integrate programmatic buying into their enterprise stack using real-time APIs, custom algorithms, and other “hooks” that we’ve innovated against since our initial launch three years ago. But which customers need all that, exactly? And how many of them are there?
Well, obviously we think there are a lot of them. 🙂
But more specifically, what we see is that the programmatic market is shaping up like a barbell. On one side, you have easy-to-use and low-risk solutions from the large, tech companies. These solutions are usually under-powered and lack APIs, but they get the job done. No one gets fired buying DoubleClick. On the other end of the spectrum, you have API-driven, transparent platforms that let customers get an edge on the competition and are ideally suited for in-housing. You can guess which side we’re on.
To use an analogy, most DSPs are like buying equities using an online brokerage. Beeswax is like running your own hedge fund.
OK, the money’s in the bank. And as I like to remind the investors, they can’t take it back. So, what now?
We are doubling down on our game plan, creating the most transparent and flexible bidding system in the market, and offering our solution to both media companies and marketers to help them get more out of their advertising spend.
Here are a few highlights of our investments in 2019:
- We just moved into a beautiful new office in Manhattan that can seat up to 140 people. We have lots of jobs on our careers page.
- We are hiring across the board, primarily in NY and London. Did we mention the careers page?
- We are investing heavily in tools to make this easier and more powerful for data scientists to deploy in our cloud. In fact, our commercial director in Europe, Cadi Jones, just wrote a great piece about why marketers should invest in custom bidding algorithms.
- We are continuing to build on our leadership position in video and connected TV, as we announced just a couple of weeks ago.
Finally, thanks to all the customers, employees, and investors who continue to believe in Beeswax. There’s a lot more to come.