J&TVentures' latest investment is AdScanner, a start-up that enables big brands to effectively measure and plan TV advertising using data from telecom companies. Its founders, Marin and Kristian Ćurković, explain that despite all the predictions, it is still a billion-dollar business with great potential for growth.

The story of AdScanner is a story of two brothers. How long have you been in business together?
M: AdScanner is our first joint venture. My older brother was born in Germany, but he lives and works in Croatia, while I was born in Croatia, but I live and work in Germany. Somehow we switched. We are very different. I have always been in the media and agency world; I was in charge of media buying for Group M, while Kristian was in telecommunications, working as CEO of Croatian H1 Telekom.

Is it easier or harder to do business with your family?
M: In our case, it's easier. For one thing, we are separated by many years and miles, so we don't see each other every day, and we also complement each other extremely well. Kristian has technical, financial and organizational skills, while I focus on marketing, product and customers. Of course, the advantage is that even though we may fight with each other like any other co-founders, in the end we will always stick together.

K: The important thing is that we respect each other very much and we have no problemsaying it when something is not working. There is more openness in the family, and you can sense when someone is down, when they need encouragement. You know when you have to take the initiative. The times are generally moving towards more empathy in business; people need to be closer to each other. In order to push people beyond their limits, you have to understand them, not just boss them around. In a company with family leadership, this is more natural.

Who came up with the idea for AdScanner?
M: We came up with the idea in 2012 when we both still had permanent jobs. At the time I was manually handling media purchasing for TV, and Kristian came up with the idea that there had to be a better way, and that as a telecommunications company they had a lot of data from this area. It was a perfect overlap of our two worlds, so we went for it. But for a long time it was just a garage project and we had no staff. It wasn't until 2017 that we thought it was time to get it going for real, and we quit our jobs.

Was itan instant success?
M: It took sometime; we were naive at the beginning. We created a web interface for our product, put a payment system in place and expected people to start coming in and paying. But we realized very quickly that this was something new that we hadto show and explain to our customers. In addition, our business involves partnerships with large corporations that cannot be established in a month, it takes a year or more. So we have to think and plan at least a year ahead.

Were you faced with the fact that television is not perceived as a "sexy"topic?
M: The marketing world has significantly moved in our direction in recent years, but in 2017 it really was so. People were questioning why they should even care about and invest in television when Netflix was going to kill it anyway. For the past 10 years, people have been saying that TV is dying, but this still hasn't happened, and today people are talking about next-generation TV. The year 2020 will bring a lot of people back to TV, but the trend started much earlier.

So it's not just a short-term effect of the pandemic?
Think about all the screens you have in your home. There's always one of the biggest ones that serves as a kind of family fireplace. And that screen, unlike the others, is much more for passive, so-called lean-back consumption. We're not constantly running our finger over it, it doesn't require frequent interaction. And for this use, the linear model of watching TV still makes a lot of sense.

K: We have to distinguish between television as a medium and a piece of hardware. As a device it definitely has a chance to keep growing, screens are constantly getting larger and better. It will remain the main tool for media consumption at home for many years to come. Twenty years ago, children sat in front of the TV waiting for stories. Today, they are on YouTube where they consume the same stories, just in a different way – they can choose. We will certainly see increasing consumption of non-linear content in a linear way. Companies will know when to play us something, just like Spotify does with music.

Is this associated with the fact that a lot of people are tired of choosing what to watch?
M: Even services like Amazon and Netflix are gradually offering the option to watch pre-selected content. In France, Netflix already has its own linear channel, and so does Amazon in Germany, where it streams football, for example. There will always be a demand for content that people can just sit down to. Today, there are already long-term studies on the subject, describing a phenomenon called subscription fatigue. I'm sitting on my couch, watching Netflix, and it's annoying that I have to keep choosing from scratch. We will eventually be consuming a sophisticated stream of content, with advertising in between - and suddenly we’re watching television again.

But there are no classic ads on Netflix, for example. Is there any room for you to make money there?
M: There will definitely be ads on Netflix in five years – that will happen 100%. Amazon has already started it, Disney is going to start it too – those companies have nowhere else to grow. Although it's also possible that there will be an option to pay for the service without ads, along the lines of YouTube Premium. But frankly, we don't care whether the user is watching linear or non-linear media on TV at the moment. We use data from telecom providers, from set-top boxes.

US firms iSpot.tv and Samba TV from the same sector have already raised around $50million from investors. How fast is your competition developing?
M: There aren't many companies doing it on a comparable scale, say 5 to 10. Plus, there are two paths to the goal, two different sources of data. The first is to get content viewing data directly from the end devices, from the TV manufacturers. This is also the case with iSpot.tv and Samba TV. But we believe the better route is to access the data through telecom companies, primarily because of GDPR and data protection. They have signed contracts with users and the necessary permissions. In Europe, the privacy protection is already well set up and quite strict, but the US will follow and, in my opinion, will eventually be even stricter.

Your new partner is Vodafone. How much has this moved you forward?
M: To give you an idea, up until now we had access to data from about 1.5 million households. Vodafone has 13 million in Germany alone, plus more than 20 other markets. We can reach tens of millions of households – it's a huge leap. That was the point of the last investment round – to be able to scale quickly. Until now we have gone market by market, but now we have a team that can expand to five or ten markets at the same time.

So telecommunications companies provide data. Who is your paying customer?
M: We share a portion of our revenue with the telecom companies in exchange fordata, which we get from big advertisers. I'll give a specific example: in Germany, we have recently started working with the L'Oréal brand, which spends one million euro every day on TV there. Thanks to us, they can increase their efficiency by 5-15%. That’s a lot of money from a million euro a day, and we get our share of that.

Do you also work with agencies?
M: We do, but the brands themselves are most important to us – there are thousands of them on the market, whereas there are dozens of relevant agencies.

What are your next steps?
M: Right now our main market is Germany, but by this time next year we want to have an open path to at least five other major European markets. Apart from the UK and France, Italy and Poland are very interesting from a TV point of view. In the longerterm, there is North America, of course, once we have large pan-European partnerships and a large data stack to monetize. But we are also moving forward with the product.The big jump will be when different audiences see different ads. This is something that has yet to be implemented on a large scale, but we and our partners are able to do that.

K: There are three main pillars that have to be in balance: the first are resources –fortunately, we have those sorted out now and we are happy. The second is technology, or the product, and the business strategy associated with it. That's where we're constantly trying to move forward. And the third is an organization that enables scaling. We have to focus a lot on that now, because it's not easy to grow from 50 people to 100 or more quickly.

Are there big differences in TV consumption between countries?
M: Definitely. Americans often don't understand how fragmented Europe is. There are differences in prime time, advertising prices, time spent with different types of content, technology. It's a big barrier to entry for outside companies if they want to enter multiple European markets at the same time. If they don't understand them, they can't be effective and successful. That's also where our added value lies.

K: In Bulgaria, for example, there are over 130 TV content providers, a lot of local companies that control a large part of the space. And much of the broadcasting is verging on the illegal. These are very complex markets where it is not enough to just provide data, a more detailed insight is needed.

Does this mean that you give your customers advice in addition to a campaign measurement and planning tool?
M: I always say that a fool with a tool is still a fool. Our data and tools are something that wasn't there before, so this naturally brings up a lot of questions. So our sales team is also consultative, but it's important to strike a balance. We don't want to become an agency, but because we bring something new, we have to explain it. We've seen it in the past when new companies like Facebook came in, they were very successful if they could offer a layer of customer support aswell.

Why did youchoose J&T Ventures when looking for an investor?
K: We had the rather luxurious problem of having multiple offers to choose from. We could have raised more money, but we said we didn't need it yet. Communication is key from my point of view, and J&T Ventures are open, direct and transparent, plus they have a great team of people.

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