Blippar's woes show tech start-ups must work with ad agencies

Blippar tried to 'become bigger than the internet itself', but its leadership forgot that media and creative agencies remain the most effective gateway to marketers.

It could have been so different for Blippar, the augmented-reality tech specialist, which is facing an uncertain future as one of its major investors is reportedly blocking a bid for emergency funding.

The London-based company launched in 2011 with an exciting product that has obvious use cases for marketers: the app allows users to point their smartphone at an object and scan "Blipps" to unlock additional information and interactive content. In 2016, it was able to claim that more than 65 million people in 170 countries used the app. 

Some of the world’s biggest advertisers were listed as clients, including Nestlé, Procter & Gamble and Nike. Investors then were consequently bullish, having poured more than $130m into the business over the past seven years.

Fast forward to today and its major investor, the Malaysian government fund Khazanah Nasional, has reportedly lost patience after two years of losses, including £34.4m for its most recent financial disclosure in 2017.

Yes, Blippar’s struggles are a symptom of AR being a technology for which demand has generally not yet caught up with supply.

But here we also have a cautionary tale for tech start-ups with unicorn-shaped fantasies: media and creative agencies remain the most effective gateway to brands because of their expertise and credibility with marketers.

Blippar appeared to play this game well in its early days by creating tools that agencies could use to create their own AR-driven tools.

But, in 2016, chief executive Ambarish Mitra unveiled the Blipparsphere, a product that would ostensibly take on Google by creating a visual search engine – ie you point your phone at an object and the app could essentially tell you what it is, plus additional information. With just a hint of hubris, Mitra claimed that it could be "bigger than the internet itself"

Suddenly, investors were enchanted by a business model that relied on visual search. The only problem is that it hasn't worked very well, because it’s very difficult to create a visual search engine powered by artificial intelligence. And, by the way, Google is now winning this visual search race with Google Lens (which, coincidentally, has just become available on Apple iOS devices).

Strategically, it also meant Blippar was in effect bypassing ad agencies and trying to go direct to clients with AR products. 

One source who knows the business well laments: "This was a decision by the CEO to let the original business wither on the vine, because there was a lack of funds to develop products. You’ve got £50m-plus invested in AI stuff that hasn’t resulted in any AI products whatsoever.

"If they carried on with a dual strategy, they would have the AR equivalent of Photoshop – it would be a very valuable piece of tech and all the creative agencies could now be making their own AR."

The prospect of Blippar’s demise should be a source of concern for advertisers and creative agencies keen to find innovative solutions to brands’ problems that can’t be easily dismissed as gimmickry. 

If brands care most about reach and efficiency, tech innovators must accept that the likes of Apple and Google own the smartphone ecosystems that consumers live on, meaning they are in the game of content creation. Blippar could have created a platform that would enable ad agencies to work across Apple and Google through software, but it chose instead to chase the Blipparsphere dream. Some may praise Mitra for having the courage of his convictions; others may think he was guilty of drinking his own Kool-Aid.

Tech innovators ignore creative and media agencies at their peril. If you want to get in the room and be taken seriously by big brand marketers, your best chance to be shown inside is to accompany an agency with legacy relationships and marketing expertise. The ad networks are offering interesting paths for start-ups to do just that, such as R/GA's Venture Studio and Publicis Groupe's NextTECHnow.

Whether Blippar’s investors will solve this impasse remains to be seen. But even if they do, this troubled company appears unlikely to be given the luxury of learning from past mistakes for much longer. 

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