“We’re not trying to be profitable from a P&L perspective, but we are ready to invest to make sure we capitalize on opportunities,” Schmitt said. “Sometimes, we might even invest in a product for two years or more before we get a return on it, but we don’t mind doing that.”
And that’s because even though the mobile space is starting to mature, it’s still hot.
“Apps are already eating the world, especially in terms of time spent, and it just keeps getting bigger and bigger,” Schmitt said. “From that perspective, investors are excited.”
But Michael Oiknine, CEO of mobile attribution company Apsalar, which announced $8 million in Series C in November, sees clouds on the horizon – though not rain.
Consumer-facing mobile players like Snapchat and Uber are the ones eating the world. The B2B side of the equation is experiencing far less of a bonanza, he said.
“B2C companies are raising like crazy and they’ve got valuations that are absolutely enormous,” Oiknine said. “But my feeling is that ad tech is really quite dried up now. VCs just aren’t all that interested in ad tech, especially if the business is media-oriented.”
For the moment, the convergence of ad tech and mar tech is where money can be found, said Oiknine, pointing to mobile marketing automation startup Kahuna, which raised $45 million in Series B in August, as an example.
“That’s also why we were able to raise, but my feeling is that this will dry up as well, not because the business model is not sound – it’s very sound compared to media revenue – but we’re starting to see too many people doing the same thing, and it’s going to be even more difficult in mobile because of Facebook.”
Differentiation – or the lack thereof – is also a problem, said Katz.
“Historically, the challenge with ad tech has been that there’s either not a lot of differentiation or that it’s tough to tell from the outside which ones are truly differentiated,” Katz said. “Now that these markets are starting to mature, the things that remain attractive to investors are those that are either scarce or highly differentiated, and as the center of gravity becomes stronger and stronger, the pockets of opportunity become much smaller.”
Saturation and a dearth of differentiation are not a good combination, Oiknine said.
“VCs will pick up the phone and call customers to ask them what they think of company A vs. company B or C,” Oiknine said. “And a lot of the time, those customers will say, ‘I don’t know how they’re different. They all say they do the same thing.’”