Jumptap, Mobile, & the Four Horsemen of the Consumer Apocalypse
If you want to see the future of the tech world, come to the back entrance of the CambridgeSide Galleria mall. With your back to the water, go through the first door on your left and take the elevator to the fifth floor. But hurry, because by the end of summer, it will all be gone.
The company there is Cambridge, MA-based Jumptap, and it is moving its headquarters to Boston’s Seaport District in September. Jumptap, one of the most heavily funded tech companies in town—$121.5 million since it started in 2004—makes software for targeted mobile advertising through an ad network. But exactly how it does that is somewhat incidental to this story.
Because I’m not talking about the future of mobile advertising, or even the future of mobile here. I’m talking about the future of the tech titans of our era—Apple, Google, Amazon, Microsoft, Facebook—and almost everything they touch, as mobile technology infiltrates their business units and partner relationships.
Jumptap and many other companies find themselves in the middle of a maelstrom. The big guys are starting to look more and more alike and do many of the same things. Microsoft and Google are making their own tablet computers. So is Amazon—which, by the way, is also rumored to be looking at acquiring Jumptap. Apple, of course, makes software to go along with its hardware. And there are rumors of a Facebook phone and browser. Where does this all lead?
George Bell, the CEO of Jumptap, has some provocative thoughts on the topic. He was the CEO of Excite and Upromise through the dot-com boom and bust, and became a managing director with General Catalyst (one of Jumptap’s lead investors) before joining Jumptap in 2010.
“Everybody’s becoming everything, and the thing I worry about with that is, they think the prize is so large that we may wind up with four walled gardens,” says Bell (see photo, left). “That’s lousy for true understanding of consumer behavior and true understanding of targeting and data, because inevitably the four of them will act as gatekeepers over their own environments.”
He’s talking about the idea that Apple, Google, Amazon, and Microsoft (say) will each have proprietary ecosystems, complete with their own hardware and rules. For instance, an ad campaign running on Amazon’s Kindle Fire might not be able to do the same kinds of tracking as a campaign on Microsoft devices. That could impact the quality and relevance of ads and services that people see on their mobile devices. Granted, no one is that excited about seeing ads, but if they’re relevant to where you are or what you’re looking to do, then they become an important part of the mobile experience. And Bell is saying a major obstacle to that future is the big guys each having their own rules.
“It’s a lousy solution for consumers and advertisers in some ways, but the stakes are so large that these four horsemen of the apocalypse, they have the balance sheets to do this,” he says.
What’s more, the companies’ behavior makes other big players respond in similar ways. Amazon could resort to making phones. Hewlett-Packard and Dell could make all their own software. Samsung could try to “leapfrog the whole tablet generation and say, ‘I have my own ecosystem,’ and everything is video,” Bell says. “The incentive, financially, for these big companies to behave in that way is very high. There’s no incentive happening right now for them to be flattened and to treat each other equally.” He adds, “If mobile develops into these cornered but quite large ecosystems, it’s going to be very hard to be truly democratic about how you place advertising, focus on consumers, and measure results.”
Bell is saying these closed networks can be bad for consumers and advertisers, as well as publishers. But, of course, they’re also bad for a mobile-ad business like Jumptap, which wants to sell its ad-targeting software for all platforms. Complicating matters is that the company competes directly with Apple and Google, among other big firms with mobile-ad offerings (like Millennial Media).
So, reading between the lines, is Jumptap’s best bet in fact to be acquired by someone like Amazon, even if it means becoming part of a proprietary machine?
Bell wouldn’t take the bait, but his answer makes me think the rumored deal isn’t happening—at least, not yet. (Of course, that might be what he wants me to think.) “Neutrality, if you can maintain it, is a very powerful position against that landscape,” he says. “You have to have capital and patience. At the end of the day, advertisers want that neutrality. Consumers want that neutrality. The very preachy way that Google and Apple talk about being companies that are making your life better, it may come back to hurt them if they become too proprietary.”
But now, with information technology being driven by adoption of personal devices and mobile apps—rather than workplace equipment—won’t consumers decide who wins? “You hope that’s right,” Bell says. “The whole thing moving toward consumers, you’d think, would put more power there.” On the other hand, he emphasizes “the power of the channels, and the ability of these companies to ‘bribe’ into the channels” and spend “multiple billions of dollars” to build their own offerings and ensure that “everybody will be in some ways captive to one or two of those large ecosystems.”
Bell draws a parallel with the early days of the Web, but he says the mobile world is more extreme. “Unlike the Internet, everybody gets that the stakes are huge,” he says. “The browser wars between Netscape and Microsoft, which were proprietary environments, worried all of us. I was running a portal those days. There were two sets of standards, but we didn’t have to dork around with hardware.” In the end, Microsoft beat Netscape—but even when Firefox, Mozilla, and Chrome came along, the tech industry agreed on a set of standards for things like setting a cookie and doing tracking, he says. “That opened up, by the way, eight years of venture capital investing around those common standards for targeted algorithmic buying and so forth,” he says.
He doesn’t sound as optimistic about mobile—and what it’s doing to the broader tech industry. “What’s been underreported is the amount of volcanic activity that this ultimately has to lead to,” he says. “‘Oh well, Google made a device. Microsoft decided to make its own tablet. OK, what’s next?’ No, no, no, that’s tectonic. That’s right in the face of 25 years of [manufacturer]-developer relationships. It’s because they think they can sustain this walled garden idea as the PC dies and people drift off into mobility.”
But it’s still early days, especially for mobile advertising. Depending on which surveys you believe, something like 10 to 23 percent of all media consumption in the U.S. is on mobile devices, but only 1 percent of advertising dollars are on mobile devices, Bell says. “That disparity between ‘where are your consumers’ and ‘where is your advertising money’ has never been worse,” he says.
In other words, business has to get better for mobile tech companies like Jumptap. “I don’t think yet that the promise of ‘location’ and ‘always on’ and ‘always in my pocket’ have been exploited or thought through,” he says.
Is there anything that could blindside the whole mobile industry? “The big, big issue is TV,” Bell says.
I would elaborate, but we’re out of time for now, so stay tuned.