"My career has always been right on the edge between adtech and SaaS [Software-as-a-Service]," said Ari Paparo, founder and CEO of Beeswax.
With stints at DoubleClick, Google and AppNexus, Paparo's resume reads a little like the history of NYC adtech in microcosm. His newest venture not only synthesizes everything he's learned over the last decade, but it also hopes to be a guiding light in a turbulent new era of advertising, one where technological customization will be in high demand.
Beeswax is still a tiny startup, but its mission to empower advertisers with their own customizable, cost-effective, cloud-based bidding service is a big one. For those who follow the dizzying progress of adtech, it may be one of NYC's most important new ventures to watch.
Beta and the giant
In April, the company's trademarked Bidder-as-a-Service (BaaS) programmatic advertising solution emerged from beta after partnering with Foursquare.
BaaS is part of a larger industry trend toward programmatic advertising, which Paparo compares to the stock market.
"It's not a great metaphor, but it's the best we have," he said.
Simply put, buying an ad has become very complicated.
Many clients purchase ads through a demand-side platform, or DSP, equivalent to a Charles Schwab or other online broker. However, there's a class of customers that don't want Charles Schwab, Paparo says. They want something much more malleable to their own needs.
"They want to run their own hedge fund," said Paparo. "If you want to innovate or differentiate in adtech—you want to try something that’s never been done before, or write your own code—you can’t be on a simple DSP built for simple results."
Paparo estimates it costs about $1M and at least six months of work for a company to build its own adtech hedge fund in-house. Beeswax can charge significantly less for its fully open and customizable cloud-based real-time bidding (RTB) stack. With some guidance, clients can alter and enhance the behavior of the stack, adding custom algorithms and third-party data to meet their needs.
Foursquare was an ideal test for the startup's service because the geolocation giant wanted a way to weave its vast knowledge of real-time data into a more innovative bidding platform for advertisers.
"If we catch someone on a Saturday afternoon going to a Ford dealership, we understand that in real time and should be able to charge a premium to advertisers based on that knowledge of the real world," said Peter Krasniqi, Foursquare's VP of Global Sales, in an interview.
Paparo knew Beeswax could help.
"Foursquare has been innovating quite a bit in the advertising space," he said. "They have probably the world’s best database of locations. They have the exact problem that I described—they wanted to innovate in advertising without spending an enormous amount of time and money."
Change is in the air
With only seven employees—three of them former Googlers, including Paparo—Beeswax's intimate culture pops with the kind of geeky humor one would expect from a small startup focused on merging SaaS and adtech.
The emphasis on innovative engineering with the end user in mind is no surprise given Paparo's history. He wrote the VAST standard for digital video advertising and was the buy-side product lead at DoubleClick before and after its acquisition by Google. During that time, he spotted a few trends that may be frightening to those reluctant to streamline, allow more client flexibility, and focus as much on the "service" as the "software."
The Beeswax model looks ahead to the future of adtech, keenly aware of how the influence of programmatic advertising is growing stronger on not just new media, but also traditional media advertising.
"We’re starting to see television get pulled into that world, which is very exciting," Paparo said. "More and more television commercials are addressable, or even biddable."
Users of AppleTV and Roku are beginning to witness the results of this change already, but Paparo knows it will take time, noting that in the "TV market this is going to develop quite slowly for a number of reasons, but it is coming eventually, and it is just a question of which mechanisms and policies are adopted over what time period."
The Beeswax team wants to be at the forefront of this paradigm shift.
"The programmatic genie isn't going to go back in the bottle," said Paparo. "The buy-side has now experienced the power of bringing their own data to the media equation and they're not going to be satisfied until all media can be purchased in a similar way."
