Baking Tech Into Marketing

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Brands marketers are hungry for innovation and new ways to engage their customers, but at the same time the tech landscape seems confusing and fraught with risk. Meanwhile, the tech entrepreneurs often have such a laser focus on a particular idea they fail to see who could use it most.

The Bakery, a new London-based tech accelerator dedicated to the advertising, marketing and communications sectors, aims to connect the two sides. It wants to shift the mindsets of both brands and tech start-ups by inviting them to make cutting-edge technology part of big brands’ marketing recipes from the start.

“The whole idea is creating a marketing strategy that already has an element of technology baked into it. That’s better than saying, ‘We want to sell more beans, or more beer, and then at the last minute thinking: Oh, we need an app for that and tacking it onto the edge’,” Andrew Humphries, the Bakery’s co-founder and tech entrepreneur, said in a phone interview from Recife, Brazil, where he was busy recruiting start-ups to participate.

The Bakery is tapping into one of London’s strengths. Like New York, the city has a strong advertising sector, and the close proximity to industry giants benefits start-ups. For example, WPP, the London-headquartered global advertising firm, is continuously snapping up small companies to help it become more digital.

The Bakery, which launched last month, is yet another way for London’s start-ups to get their technologies noticed and adopted by big-name companies. The accelerator is building a roster of 30 start-ups to participate in an initial matchmaking day on March 26th, when brands and agencies will narrow the list down to the first class of 10 start-ups. (Start-ups interested in signing up can find more information at http://www.thebakerylondon.com) The Bakery hopes to repeat the program again in the Fall.

Selected start-ups — which will most likely already have a prototype and some funding — will then get to work with global brands on trial campaigns covering everything from sports cars to bathroom fixtures. BMW, Stella Artois, Heinz, Panasonic and Ideal Standard are the announced participating brands. Advertising agencies Vizeum, Havas Worldwide, Karmarama, MBA and Kitcatt Nohr Digitas – all work for the participating brands — will help incorporate the technology into the trial campaigns.

Upon being selected, the start-ups will get a brief from one of the brands, a budget of up to £50,000, and desk space in The Bakery’s 6,000-square-foot office space in East London’s tech hub. They will have eight weeks to develop technology to meet the brands’ needs and develop a “go-to-market” strategy with the ad agencies. “The £50,000 they’ve ring fenced for the initial trial is really just a toe in the water,” says Humphries.

The Bakery’s research indicates nearly a third of UK marketing budgets are now going digital. “These global brands are looking to spend many millions of dollars on digital marketing,” Humphries the accelerator’s co-founder. “That’s the real carrot for technology companies to get engaged with the brands and their agencies as early as possible.”

Although the start-ups will be paired with a specific brand, at the end of the trials all the participating brands, which do not compete directly with each other, will have the option to negotiate to work with any of the start-ups, Humphries says.

The Bakery will look for a small equity share — typically 2% to 8% — in the tech companies and if that is not possible, they will seek a commission on revenues resulting from the introductions made through the program.

The brands, too, may be interested in seeking stakes in the companies. One of the highest-profile tech start-up/brand partnerships of the past year was between Square and Starbucks. The coffee chain was so successful at using the payment app that it invested $25 million into the tech company and now distributes Square card reader devices in its U.S. stores.

“Our advice is brands shouldn’t try to own these things because (start-ups) benefit from working with a number of clients. As soon as one brand tries to own it, it will typically kill it,” Tom Salmon, the Bakery’s managing director, said on a recent afternoon, while sitting in a Soho cafe near the digital marketing agency that he founded. “You can get a lot of value out of a start-up by simply being their best client.”

For the Bakery, Humphries says the ideal applicant might be someone like the developers behind Pingit, a payment service that emerged from London’s Tech City cluster. Barclays Bank bought the technology and with more than one million users, Apple named it one of the best apps of 2012. The bank put the app at the center of a marketing campaign to encourage new customers to see it as an innovative, friendly bank.

“What we’re really looking for is the next Pingit. A new way of engaging customers that probably nobody’s thought about,” Humphries says.

Already applications have come in from start-ups in “hot areas” like mobile location shopping or mobile loyalty apps. Salmon says the Bakery is hoping to attract a range of companies whose expertise might range from analytics to social TV.

“We’re hoping we’ll find a lot of stuff we don’t know about. We’re interested in applications from people who are looking into things that feel quite futuristic at the moment,” Salmon says. “Like the idea your BMW can have its own digital footprint, or presence, and the things you can do around that and what you can build on top of that.”

He says he hopes it’s not just the brand marketers whose way of thinking changes, but the start-ups as well. Entrepreneurs who never considered their product to be marketing technology might need to step back and ask themselves what other problems they might solve and whether brands might benefit, Salmon says. “The success of this will be down to the start-ups that we get,” he says. “We just need amazing companies to come and be involved.”

 

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