Entrepreneurship: Why big brands are investing in startups

If you happened to pop by a Guardian store in Singapore, chances are you spotted snazzy-looking touchscreens featuring Unilever brands. The interactive apps use gamified branding experiences in an experiment in how brands connect with consumers. 

The campaigns were not developed by any of the agencies on the FMCG giant’s roster, but by PlayTMN, a little-known Singaporean startup. 

It’s a signal that multinationals no longer depend solely on traditional creative and media agencies to deliver winning marketing campaigns. They are enlisting new and nimble tech firms to make sense of the shifting digital landscape. But what impact is this having on the way agencies do business?

Big consumer brands such as P&G, Unilever and Mondelez are spearheading the new incubation model, which gives startups funding, support and sometimes access to in-house laboratory facilities. 

Last October, foods giant Mondelez tapped nine tech startups for ‘Mobile futures’, an initiative aimed at driving impulse buying and improving in-store marketing.

The campaign rolled out in Australia earlier this year, in an initiative pairing five well-loved brands including Cadbury and Philadelphia, with five startups in the mobile space. The final cut included: Myshout, an app that allows users to remotely treat their friends to a round of food or drink; Proximiti, a location-based services platform that personalises business websites to customers’ real-time location; and Issueapp.com, a magazine-generating app with “shoppable” stories.

Unilever announced early this year the creation of the Foundry, a platform that offers funding and support to startups in digital marketing, e-commerce and analytics. 

“We’re not just looking to play around and experiment for the sake of experimenting,” says Rahul Welde, vice-president of Unilever. “This is about finding the big companies and partners of the future. Our ambition is that these startups will scale with us to become long-term strategic partners.”

According to Welde, using the incubator model has three major benefits for brands. Firstly, it allows them to develop and iterate faster. Secondly, it brings a new, innovative mindset into the office. Thirdly, startups are less risk averse, so not afraid to disrupt with cost-effective solutions.

So far, the Foundry has identified a diverse range of companies in some specific niche sectors. 

Another small tech-agency, UK-based Unruly Media, has been making waves in Asia where its team of video marketing experts are currently expanding in the region. In May, they made headlines with  ‘Dove real beauty sketches’, which they distributed. The campaign generated 114 million views in the first month alone. Their core business is taking video content and amplifying it across the web by utilising a vast online video-sharing database that is six times larger than YouTube.

“Mad men versus maths men? We’re on the maths side,” says Phil Townend, Unruly managing director, Asia-Pacific. He sees the future of tech startups and agencies as collaborative, not competitive. “Unruly aren’t trying to scramble over the top of the media agencies and creative agencies to get to the client.” 

Another example is play-TMN, the Singaporean company behind the in-store gaming solutions in Guardian. “We create consumer engagement at a time when the consumer is ready to be spoken to, when shopping,” says Julian Corbett, co-founder and chief executive. “This is where 93 per cent or US$15 trillion of annual retail transactions take place.”

Then there is “experience agency”, Imagination. With 19 offices globally it is one of largest independents out there, and already counts Shell, Ford, Jaguar and Telstra among its clients. Unusual for an agency, Imagination has been developing tech software in-house for a year.

“Traditional creative agencies are in flux,” says Andrew Au, MD of Southeast Asia.“There is a lot of activity and growth, particularly in Asia-Pacific, so if you don’t already have the capabilities internally, there is a real push to on-board them.”

Rahul Vasudev, MediaCom’s head of digital, Asia-Pacific, says the developments are pushing agencies to work with startups. “It’s imperative for us to work with startups and be open to new ways of working; we collaborate together across the entire digital spectrum,” he says. “The biggest challenge we face working with startups is their inability to scale quickly across markets. As soon as we find a startup which we consider impactful, our intention is to scale it across clients and markets, but many of these companies are limited by monetary and regulatory issues.”

So what is the blueprint for the future? The jury is split. The newest marketers, such as Unruly, say traditional agencies that ignore the need for third-party tools may have difficulty winning bids. But from the client’s perspective, the traditional model is far from obsolete.

“There’s still a big role for our traditional agencies,” says Unilever’s Welde. “The technology startup companies bring new technology, but they still need a strong creative expression and application to land these new engagement tools in a way that consumers will embrace.”

OUR VIEW

Startups are challenging the traditional and dominant marketing companies. However, we predict a collaborative approach rather than a competitive one as agencies and new marketing tech companies start working together. 

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BIG IDEAS What tech startups can teach agencies

Working with startups gives marketers a breath of fresh air. They get access to hundreds of ideas. Participants come from more diverse backgrounds than typical agency folks, so ideas are more disruptive. 

Also, typical product or campaign development projects can take months, while our community can deliver results in just a few weeks. This speed and agility is something that larger organisations with layers of bureaucracy and more traditional innovation processes cannot match. When time to market is critical this is an undeniable competitive advantage.

Most of our clients are marketers. They are operating in mega-organisations handling billion-dollar brands, where risk-taking is neither encouraged nor rewarded. So they rely on proven, tested formulas delivered by a small number of carefully vetted partners such as creative agencies. Unsurprisingly, they have now run out of fresh ideas to break through the clutter.

While I’ve seen a definite trend towards investing in innovation through collaborating with startups, it is fair to say that most tech startups still get stuck in the 10 per cent budget pocket, under the guise of piloting and learning. 

The biggest challenge for any tech startup in this industry is to cross the chasm and shift from being seen as ‘play money’ to mainstream.

Joel Cere is global director of insights and innovation solutions at eYeka

CASE STUDY Gamified branding makes an impact

Since January, Unilever has been running campaigns on Singapore-based adtech startup, PlayTMN’s ‘InStore Touch Screen Network’ for its brands, which include Dove, Toni&Guy, Sunsilk, Vaseline and Lifebuoy.

So far, the campaigns have gained over 1 million engagements and generated over 16,000 hours of active consumer time, on 200 screens at health and beauty stores in Singapore. At the time of writing, the campaigns running in Fairprice grocery stores were active in six locations and had chalked up as much as 2,000 engagements at a single store in a day.

“We provide a unique media space,” says Julian Corbett, co-founder and chief executive of playTMN. “What is brilliant about gamified branding is that it engages the brain in a completely different manner to that of just seeing an ad.”

Their newest campaign for Unilever involves the ‘Dove Nourishing Oil Care Nutri-Oil Serum’. According to Corbett, “this one allows the consumer to play the ‘Frizz-Free 360’ game on playTMN and virtually experience how the product works in real-life.”