VC’s Advice to Agencies: Get Tech Cred

NEW YORK Mark Kvamme has a unique perspective on the future of ad agencies. He founded CKS, an early Web shop, and has since become one of Silicon Valley’s most successful venture capitalists.

His advice to attendees gathered at today’s American Association of Advertising Agencies’ Digital Conference: creativity alone won’t cut it in the future. As advertising moves from messages to engagement, technology is a critical component for success.
“You have to have world-class creative, but you have to have world-class tech folks who can translate that into conversations,” said Kvamme, currently a venture capitalist at Sequoia Capital, one of Silicon Valley’s leading VC firms.
Google, which Sequoia backed, found that its market share would change based on whether its search results came back a tenth of a second faster, proving that technology is far more than just an add-on as media becomes increasingly digital, Kvamme said.
While the ad world has focused on the reach and frequency of messages, Kvamme believes digital media overload is placing a premium on interactions. In the near future, advertisers will go from valuing whether their messages show up in front of people to enticing some sort of engagement, he said.

“You’ve got to create a two-way communication with consumers,” he said. Sequoia companies like virtual world Stardoll bring brand into their environment as virtual goods: Users can choose to wear Donna Karan fashions, for example. With a premium on engagement, more advertising will follow this model, rather than its typical relegation to the sidelines of a page, he said.
“The idea of advertising in content is going to change,” Kvamme said.
Ideally, advertising can follow the model of Google, which convinced companies that search advertising is not an expense, but a cost of selling goods in the digital marketplace.
How the Net will evolve is still a moving target, Kvamme said. While Sequoia made prescient bets on Google and YouTube, he admits to passing on an opportunity to invest in Facebook after founder Mark Zuckerberg showed up to a meeting still in his pajamas. He’d overslept.
“You kind of have to look past those things,” he said.