How brands can source the best tech startups

The proliferation of digital in marketing has already given rise to many technology start-up accelerators, which fund and coach businesses from idea to implementation, but the industry is seeing the emergence of initiatives that could be most aptly compared to a dating or match-making service.

However, while these new services might be capturing the attention of brands looking to use technology solutions for marketing problems, it’s important to take into account the challenges that come with using these initiatives.

The procurement process, ensuring business needs are being addressed and finding the right person or team within a brand to champion the use of tech start-ups are all examples of areas to watch out for – but ignoring these new ways of sourcing technology solutions could also mean missing out.

Fostering relationships with start-ups

The main difference between the available schemes is the approach to investment and the type of partnerships that are formed.

Digital agency 7ThingsMedia launched a project last month called Tech x Media that it describes as “Dragons’ Den meets Mad Men” and aims to partner its clients with the latest “pioneering” tech start-ups.

Different companies separately pitch a bespoke campaign to a participating brand and a panel of industry experts select a winner, identifying a campaign that is most innovative or aligned to the brand’s marketing strategy.

Similarly, media agency Starcom MediaVest launched NextTechNow earlier this year in which a team of experts audition start-ups, develop propositions and match them up with clients. It piloted the scheme in 2014 and matched 70 start-ups with brands.

It’s also been a year since the launch of The Unilever Foundry, which offers mentors and the opportunity of investment through Unilever Ventures in digital marketing start-ups in return for early access to new technology for its brands.

Jeremy Basset, director of The Unilever Foundry, believes that it’s better to invest straight into the start-ups rather than set up internal technology hubs or labs, as that is a costly investment in infrastructure.

Basset says: “It’s open innovation for marketing. It enables all of Unilever’s brands and functions to collaborate, experiment and pioneer with start-ups. It’s an efficient process to understand some of the best companies in the world, looking at how we can work with them and then move it into a pilot.”

The Foundry is currently running 60 pilots around the world in 32 different countries and is scaling almost half of those businesses.

Growth in technology

As these technology companies grow it’s vital for brands to stay ahead of the curve when it comes to sourcing technology that can be used in marketing and communications.

The latest figures show that the tech industry is indeed growing and has a positive outlook for the future so it’s clear to see why brands are looking to invest, work and partner with tech start-ups.

Basset adds: “For Unilever it gives us access to technology that is not available elsewhere. It helps us to be leading-edge and efficient in the way that we engage with consumers.

“That’s the important thing, especially if we want to be the best marketing company in the world. We have to be leading the agenda in how marketing is done and start-ups are one way that enables us to do that.” Read the full Q&A here.

A hotbed for innovation

In the last ten years a lot of brand innovation has come from start-ups, according to Rose Lewis, co-founder of start-up accelerator Collider. The company works with brand partners such as Unilever, Diageo and Puma.

Diageo’s innovation director Sara Springer argues that innovation can come from many different spaces but says that “when you own brands and your priority is communicating and engaging consumers and continuing to be relevant to them over time, you have to look at the changing landscape.”

Springer adds: “Our association with Collider has really helped us keep abreast of technology in those spaces. Having access to fresh ideas really early on helps us, so we can look at some of the specific brand opportunities and issues we have and potentially shape those products early on to help us meet specific needs.

“It gives us the opportunity to test new tech and get agile around running small low-risk pilots, which a big organisation can find tricky to do, in the knowledge that if they work they will deliver a giant leap forward when we apply them at scale.”

Addressing business needs with tech

One of the key benefits of these match-making initiatives is to find practical solutions to particular business needs. The 7ThingsMedia initiative, Tech x Media, facilitates strategy meetings with the brand and technology start-up to discuss possible gaps in digital capability on the brand-side.

“The greatest barrier to adopting digital-first strategies is not the scepticism in the promise but more the inexperience in their execution,” says founder and chief executive officer Chris Bishop. The aim for the service is to work on the execution side of the campaign by ensuring the right technology start-up is matched to the brand’s brief.

Kate Smyth, ecommerce director at shoe retailer Dune London, says evidence of innovation is one of her primary demands from tech start-ups pitching their services. “We ask companies to come up with solutions that they can envisage us using,” she adds. “Every brand operates in a different way and it’s finding the issues the brand has and the way they want to market to their customers and finding a solution to those requirements.”

The reason that Starcom MediaVest launched NextTechNow was because the agency realised that a lot of brand objectives and briefs had a tech solution element to them.

Jim Kite, group strategic development director at agency Starcom MediaVest – who heads up NextTechNow, says: “As more solutions are around mobile, data and content in digital, there is a realisation that we can’t do everything ourselves.”

Following a pilot throughout 2014, the project aims to accelerate collaborative partnerships by developing start-up propositions to deliver business benefits for its clients, particularly in mobile, social and data. Rather than pushing start-ups on brands it gets business directors to see if there are any tech solutions to brand problems.

Where does the responsibility lie?

There are other issues that can be encountered along the way apart from ensuring you have the right business for the right brand – in particular what function or department of a brand has this responsibility to source and work with technology start-ups.

Lewis at Collider says it’s why the business operates the way it does. “We don’t say to start-up A that we are going to take them into brand B that we think has this problem, it’s more of an immersive process,” she says.

Of the brand partners the accelerator works with it identifies ‘start-up champions’ within the company so that when the collaboration work begins the ‘champions’ can help to navigate the partnership.

Springer works in the ‘futures team’ at Diageo and says it’s useful to have people with a focus on two-to-three-years ahead and to “look over the horizon at tools, products, innovations that help us grow in the future”.

The team has a remit to look to the external environment on an ongoing basis and try to identify big opportunities or challenges that it thinks the business needs to address. “Once you identify what those might be, we work in conjunction with our markets,” says Springer.

There is a hope that it will spread to the wider brand organisation. The Unilever Foundry started with a focus on marketing but in the last six months the FMCG giant has involved research and development, customer, retail, and even procurement teams in the scheme.

Basset says: “Start-ups are transforming every area of society, not just digital marketing and therefore every function in Unilever is also being transformed.
“ One of the key things we are trying to do with Foundry is bring as many functions on board to then engage with start-ups because that is where the innovation is happening.”

The Tech x Media project initially targeted the marketing and ecommerce teams of brands but the plan is for future initiatives to include the wider organisation.

Bishop says: “It’s not only looking at technology that will drive a competitive advantage but to push companies to learn and leap from opportunity to opportunity. Best practice in this industry is emerging and these initiatives will in some part aid brands’ digital transformation, bringing in brand marketing, ecommerce and tech.”

A further issue affecting the smooth running of these matching services is the procurement process and whether a brand can use these smaller or younger suppliers.

Lewis says: “The problem with most big corporates is that they have these ludicrous procurement processes. It kills innovation because they are not able to work with the young innovate tech start-ups because the procurement processes don’t allow it.”

NextTechNow is achieving two partnerships a month but believes it could be more. According to Kite “there is a dirty little secret about why technology is not adopted as quickly as possible by clients”, which is ultimately rooted in clients’ approval procedures.

Although clients are keen to bring technology and innovation into businesses there are hurdles in the set-up, compliance, legal, procurement and booking of this type of media. “It’s quite a slow burn,” says Kite.

However it is clear that going with the big suppliers is not always better. Smyth at Dune London says the brand has had a “couple of issues” with traditional email marketing providers and that matching its needs to technology start-ups was a better alternative.

“Initially we start off with a list of problems that we are trying to solve and then we go out to as many people as we can and don’t exclude by size,” says Smyth. “The smaller guys are niche – with some of the bigger guys you would need to buy several different solutions so the ones that resonate the most do tend to be the innovative start-ups.”

Neil Capel, founder of Sailthru, the tech firm that works with Dune on its email marketing, believes it is also important for both sides to discuss their broader views about the future of marketing and how marketing technology will evolve in the coming years. “By aligning with brands in this area, we ensure that we’re operating as partners that are invested in a shared vision, rather than in a traditional vendor and client paradigm,” he says.

Using accelerators, match-makers and middlemen might not work for all brands, but the fact these services are growing suggests that the demand for new tech solutions is on the rise. Marketers should weigh up these options carefully, as well their own procurement processes, when sourcing external support.

Ecommerce is moving so fast that you are constantly solving problem after problem, whether it’s the device the customer is using or internationalisation or personalisation of your emails. We never start the search intending to go with a start-up specifically, we put together our requirements and then go out to a group of providers across a range of sizes. [However] the smaller companies are more agile.

Be mindful of the start-up: they are limited by a lot of things, least of which is cash. Spending a lot of time with a brand that doesn’t come to a conclusion to buy them [is damaging]. It’s a long process and by working with accelerators they get a chance to meet with the right people in the organisation. Equally if the brand goes it alone they might not understand the start-up.

It’s the tech expertise and I think a lot of the start-ups in the initial phases have two or three use cases that they think their tech is going to be great for, but there are a number of different brand partners that work in very different brands. What we can bring to the table is potential application that start-ups may not have considered, just from our brand knowledge and how we communicate with consumers in our category. Both parties bring a piece of the puzzle – it’s a symbiotic relationship.