The following was compiled by Richard Yan, a first-year student at the Kellogg School of Management. Richard previously worked at mid-market private equity fund GarMark Partners, where he analyzed and invested in debt and equity transactions and managed portfolio companies in a wide range of industries.
Panel: Digital Marketing & Internet Services: Futures and Exits
- Jim Dugan (KSM ’97), Chief Executive Officer, Co-Founder and Managing Partner, OCA Ventures
- Ahmjad Shehade, Independent Marketing Consultant, skinnyCorp
- Ken Gaebler, CEO and Founder, Gaebler Ventures
- Mike Marasco, Partner, Solesde; Professor, Northwestern McCormick School of Engineering and Director, Northwestern Center for Entrepreneurship and Innovation
- Thomas E. Parkinson (KSM ’85, NU ’82) (Moderator), Partner, Woodland Venture Management
Why Digital Marketing?
– The sector is attractive because it is easily scalable for any company, from SMEs to large multinationals, to invest in effective and proven online marketing campaigns in a capital efficient manner
– There is a wealth of data that is currently being collected on internet users now. However, there is still a gap between what is collected and what has been analyzed.
– User generated content is inexpensive, but underestimated and underused.
– A wealth of user generated content exists that can be effectively used in digital marketing campaigns, as evidenced through the success that digital marketing start-ups like Brickfish has had.
On Traditional Advertising/Madison Avenue…
– The traditional model is dead – the old agencies have been holding the data close to their chest for too long and should be scared of the engineers who are disrupting the status quo
– There has been an imbalance in media spend allocation towards traditional media versus online and that will soon change, driven by the economic conditions leading to greater focus on advertising spend that is traceable with a clear ROI
Futures & Exits
– From an investment perspective, the opportunity for a start-up, with very little capital, to become a digital marketing firm is enormous given the scalability of the business. This makes it easier for angel and early-stage investors to invest in this space.
– Capital efficiency will be key for companies seeking VC funding in light of pressures on the current VC model. Companies will be expected to do a lot more with fewer dollars.
– Given the recent acquisitions – AdMob, Teracent and Quattro Wireless – larger companies are certainly eyeing the space as new platforms are developed in a race to find ways the capture as many eye-balls as possible
– Madison Avenue has been paying attention to the space and the players, as evidenced by the acquisition of 24/7 Media by WPP