What Would It Take for an Adtech Platform to Conquer the SMB Market?
Last week, I argued that Magnite, having just acquired Streamr, a CTV creative automation company that aims to make CTV advertising accessible to SMBs, should go all in on performance TV. My point was that creative automation is just the first step in tackling this opportunity.
If Magnite is really to expand its addressable market by catering to performance marketers and SMBs — and, in my understanding, this is the single most important opportunity for open internet adtech because big brands and holdcos will not supply order-of-magnitude-level growth at scale — it can’t just automate creative. It needs to build or buy performance measurement and optimization technology, offer unique or (even better) owned and operated inventory, and enhance creative effectiveness.
However, there’s another obstacle preventing Magnite and its peers from building the AppLovin of the open internet (i.e. a performance marketing platform rooted in CTV and display): distribution. As an M&A professional asked in response to last week’s newsletter, how does a Shopify seller that is used to spending on Meta and Google find out about a performance CTV product from a company like Magnite? No scaled adtech company has solved this. The longstanding DSPs and SSPs certainly haven’t.
As a marketer, I’m receptive to the idea that distribution is actually the biggest problem. But cracking into the SMB market is not an unsolvable problem for adtech platforms such as The Trade Desk and Magnite. It’s a problem no one has made an honest effort at solving yet.
In that spirit, let me suggest a few leads for a company that genuinely wants to take the moonshot of expanding programmatic to performance marketers and SMBs.
3 Steps Adtech Platforms Could Take to Tackle the SMB Market
Acquisitions: Acquire a company already serving the performance advertiser market. This would give a more established company the tech, team, and initial customer base to expand. A very early-stage company probably doesn’t suffice. I’d imagine this is a nine-figure acquisition.
Marketing investments and vision: Most adtech companies have very little marketing vision. Is reaching SMBs and ecommerce brands harder than holdcos and big brands? Definitely. But is Magnite or, for that matter, any other adtech platform taking that challenge seriously? Not to my knowledge. Magnite has gone out of its way amid the current acquisition to say it's not targeting SMBs directly. What if instead they said we are taking the moonshot — we are going to bring thousands of SMBs onto the platform and we're going to do it by doing xyz from a product and GTM perspective? I'd like to see someone call this shot and rally their troops around it.
Marketing personnel and tactics: If you were organizing a marketing strategy around this objective, here are some of my intuitions on what you'd need to do:
a. Hire a marketing leader dedicated to this market. Most adtech marketers (myself included) are not experts on this problem.
b. Develop an influencer strategy centered on the channels (TikTok, X, FB, Reddit) where ecommerce brand owners/marketers spend time.
c. Sponsor podcasts that reach this audience. My hunch is this is definitely an audience that consumes ecommerce / business building podcasts.
d. Get really good at creating your own content about how to do marketing and how to leverage the platform — so that new customers discover you and learn how to maximize the opportunity.
No adtech company is, to my knowledge, doing any of this. So, I do not believe the distribution challenge can't be solved. I think it's fair to say no one has genuinely tried. Which makes sense — because it’s a really hard problem that might lead to a significant failure. But if a public adtech company like TTD, Magnite, or their peers is going to have the success of AppLovin, this is the scale of problem they need to try to solve. Otherwise, the likely result is, as we’ve seen for most public adtech companies, stagnation.
And for the most ambitious entrepreneurs and businesspeople (not to mention their shareholders and talent), that is a result that will not do.
