Behavio became famous in the Czech Republic thanks to its modern market research via mobile application Trendaro. This year, however, it is heading for the American market with a SaaS tool that helps global brands create and measure advertising campaigns. The company, which was founded by grammar school mates Jiří Boudal, Libor Mořkovský, Marek Nebesár, Vojtěch Prokeš and Lukáš Tóth, obtained an investment from J&T Ventures and Presto Ventures for this purpose. Jiří Boudal, Managing Director of the company, introduced its plans to us.
VC funds usually invest in quickly growing, scalable start-ups with international potential. How is Behavio, which looks like a research agency from the outside, meeting these criteria?
We founded Behavio as a technology company, and our first employees were programmers. At the very beginning, we wanted to make an automated product in the area of market research, but we found that the market lacks one very basic thing – a tool capable of measuring how people make decisions when they shop. As they mostly make decisions subconsciously based on quick thinking, we can’t want them to list the reasons why they chose a washing machine from one to ten in a questionnaire. In the beginning we had to deal with this problem, so we created an application called Trendaro, which took our entire original budget. At the same time, however, we won our first client, McDonald’s, and we achieved good results in terms of projects; to be honest, it was easier for us to hire sociologists than programmers in the beginning. We are glad for that, in the end, because I believe that we bit off more than we could chew. The idea that we will change market research even though we didn’t do much of it was too ambitious. Now we have completed hundreds of commercial projects that allowed us to check our framework, as well as research software.
So now you are coming up with a product that will change the world of market research.What exactly will be the result?
Simply put, our aim is to develop a tool that helps marketing departments improve the efficiency of their ATL campaigns. The advent of Facebook and the digitisation of everything kind of hid the fact that the by far biggest money in marketing is still in ATL advertising–to TV, online videos, print. These are the channels that increase market shares of companies in the long term. They influence the so-called salience, which is the mental availability of brands correlating with market shares. We are building a tool that allows companies to build the salience of their brands quickly and efficiently; to make people remember the brands when they need something.
What does this tool look like as viewed by a marketing specialist?
In each stage of campaign preparation, from a brief and creative conception to a complete visual or video, marketing specialists can record their advertisement and check if itis built well enough and if it meets all the key criteria, or they can have it tested with a representative sample. They can find out that the campaign is emotionally strong but lacks association with the brand, so they are wasting money. As for videos, we measure the individual criteria every single second.
The name of your company implies that the know-how of making effective campaigns is based on behavioural economics and psychology. Is this true?
It’s not everything,but behaviouralism plays two important roles in our framework. If people make decisions subconsciously, we need to adapt our research to this fact in order to obtain some results – we call this method ‘task, don’t ask’. Instead of asking people direct questions, we put them in certain situations and let them work with associations. We have built various models over this and evaluate what really influences their behaviour. Secondly, a marketing specialist must know how to influence subconscious decision making.
To what extent does our subconscious make decisions on a seemingly rational choice of products?
People don’t have time to make decisions. If they were to go through all the options and set up selection criteria in every choice they make during their day, they wouldn’t be able to do anything else. That’s the reason why decisions are made subconsciously, on the basis of quick thinking. When I need something, one or more brands will usually come to my mind, and I almost always choose one of them. When I’m in a shop, I can’t look at hundreds of products simultaneously, some of them simply stand out. This is why the market share of companies correlates with salience. Our work consists in instructions what to do to make people think of our brand first – which things are useful and which don’t help at all. We educate marketing specialists and make sure that we ask the right questions in the right way in our surveys.
And you concentrate this all in a single software tool.
For some reason,there is no simple tool that would allow managing the creation of ATL campaigns well enough. In some companies Byron Sharp is mandatory reading; his institute,focusing on research of how marketing actually works, is paid by the biggest global brands, such as Coca-Cola, and ad-hoc surveys are placed there, but everything is expensive and complicated. We are trying to include all the know-how. We haven’t found a different tool that would be capable of measuring the key criteria in such detail and that would give advice how to handle them.
Is it possible to measure campaign quality in a universal manner, or do some campaigns stand out?
We are not defying creativity; what really matters to us are the basic pillars for strengthening salience. Of course, there may be campaigns with a different objective, such as selling acertain thing as quickly as possible, but short-term sales are not strategically important for brand growth. The best campaigns think one or two years in ahead, and our tool is universal in that area. Even an advert that is weird or original should benefit the brand in the first place; the aim is not to amuse people but to turn their emotions into purchases. If an advertisement that is funny is 30 seconds long but the brand is only visible in the packshot at the end, most people won’t connect the two.
Is your tool intended for agencies, too, or just for ordering parties?
I think that it will be primarily used by marketing specialists of the client, or by strategy specialists in agencies, but it will help creative staff, as they will get clear briefs.
Are your current customers Czech companies or foreign ones, too?
We’ve done a number of surveys in Europe, in about ten countries, but ordering parties are always somehow connected to the Czech Republic. We didn’t have a global ambition with the agency part of the business, either. At the moment, we are actively focusing on preparation for expansion to the American market, but we are not planning to offer agency surveys there. We considered doing the global product through research panels, too, but this is extremely complicated. It is for this reason that we’ve been contacting companies in the USA, informing them that the product will be prepared in autumn and offering them to try it out. We are preparing a proof of concept with Google, which will evaluate its own campaigns, and we are in touch with Facebook, which wants to make sure that the campaigns of its advertisers work to the greatest extent possible.
Why did you decide to go straight to the USA and not start ‘safe’ in Europe?
We believe that our product has global potential and that it offers something brand new. We know that the initial stage will be painful so, begging your pardon, we want to get our head smashed in as soon as possible. It was the same in the Czech Republic. We had a good thing, but it took a year or two for us to be discovered and accepted by the right people.The sooner we start in the USA, the sooner this unpleasant time will be over. In terms of market research, it is the biggest market, and in terms of culture and language, it is actually closer to us than many European countries – we watch American affairs virtually every day and we speak their language. We want to make sure that Series A is managed by an American fund in 2023.
How did you choose your current investors, Presto Ventures and J&T Ventures?
In the beginning we addressed almost everyone, and it turned out that even though every fund looks universal, they tend to have something that is close to their heart. People on the board of J&T Ventures understand marketing as well as the importance of brand building; they have their B2C companies and they don’t just focus on performance tools. Both Presto Ventures and J&T Ventures understand our ambition. It was easy to see that the other ones love online marketing and have a different way of thinking, for example. Or we didn’t agree upon the share – some funds want at least 25% or more.
Were the investors afraid to invest money in a company that has five founders?
Of course, they always wanted to meet us all, but we are a well-working team. We haven’t fallen out over the 25 years we’ve known one another, so I don’t think it will happen now. We also wanted to cover everything properly in our Memorandum of Association in order to avoid losing a friend because of business. It is also an advantage that we occupy all key management positions and complement one another very well – one of us understands sociology, anotherone specialises in products, one is a born businessman and one is a top programmer.