POWER LEADER: Predictive AI in Advertising with Proxima's Alex Song

Welcome back to POWER LEADER with our next expert, Alex Song, Founder and CEO of Proxima. Coming from the world of earned media relations, I am intrigued by my marketing counterparts and how machine learning is impacting their roles.

The direct-to-consumer (DTC) audience further segmented by those who are iOS users is ripe for disruption. Song and his team have “cracked the code” on the post-iOS 14.5 world pairing proprietary data with machine learning to impact predictive AI in advertising.

Let’s jump in.

SE: What innovations are you bringing to your industry? What sets you apart from your competitors?

AS: Digital advertising continues to be a massive industry, but Apple’s iOS privacy updates and skyrocketing Facebook advertising costs are making it much more difficult for companies to scale and thrive online. More than 60% of iOS users have opted out of iOS app tracking, which eliminates the signal between advertisers and consumers.

That major shift makes for a punishing advertising environment, with the cost of customer acquisition increasing by 50% over the last two years.  Now companies must spend more for less impressive results.

As a DTC brand founder who managed to exit in 2021, I experienced the challenges that were brewing in the digital advertising ecosystem due to a plethora of cheap capital and the rising costs of customer acquisition. I started Proxima, an AI audience technology, in 2022 to help digital businesses navigate these challenges by providing better targeting and performance across media platforms such as Google, Meta and TikTok at scale.

Using predictive AI, Proxima leverages anonymized, first-party data and more than 55 million unique shopper personas from a network of 13,000 brands to reach new customers, lower customer acquisition costs and increase ROI on ad spend.

SE: What is a recent win or announcement your company just celebrated? Why does it matter?

AS: I’m very excited to share that on April 19, 2023, Proxima launched its self-service platform to enable increased profitability and performance at scale across major

advertising platforms.

Our clients say best why it matters.  Kasper Garnell, co-founder and CMO of Joe and The Juice said, “Proxima is our unique advantage to prospecting effectively post iOS14.5. Proxima is super easy to use and an incredibly powerful tool for profitable customer acquisition.”

Ooshma Garg, founder and CEO of Gobble, reports that “Proxima has been a game-changer for customer acquisition. Their AI consistently finds qualified, high- value subscribers and has reduced our CPA by over 30%, giving us the confidence to scale our ads.”

SE: What are your company’s industry major challenges right now?

AS: Privacy updates and sky-high advertising costs on Facebook and Instagram, once the launch pad for thousands of small DTC businesses, are making it increasingly difficult for digital companies to target new audiences and acquire new customers efficiently.

Additionally, economic conditions have wreaked havoc on many major tech companies which are bellwethers for the rest of the industry — and capital is in shorter supply and more expensive.

This makes cost efficient customer acquisition and establishing profitable unit economics more critical than ever.

SE: What stories aren’t currently being told about your industry that your audience should know?

AS: Meta’s Advantage+, a program touted as optimizing full ad campaigns with machine learning, is increasingly tipped in favor of Meta’s big spenders.  In fact, Advantage+ is the beginning of a significant strategic shift for platforms like

Facebook and Instagram.

Our data reveals that larger brands, with the ability to spend more on Advantage+ campaigns, are reaping disproportionate benefits compared to smaller brands on Meta. More specifically, while Advantage+ campaigns were more expensive across the board, they were 26% more expensive for smaller brands, but only 4.7% more expensive for large brands.

We can help digital companies of all sizes overcome this challenge with improved targeting and more efficient results.

SE: How do you envision your business changing in the next 3-5 years?

AS: It’s very hard to predict with any certainty because we must see where macroeconomic conditions take us.  My mantra is to prepare for the worst and hope for the best. During the pandemic there was high demand for digital solutions, which lulled digital marketers into believing they should expect high returns for the foreseeable future.

But then the economy changed and Apple’s new approach to app tracking happened. The digital advertising community as a whole also has to ride the wave with the performance and stability of current media platforms (Twitter implosion anyone?) and the emergence of new ones. Our vision as a business is to be the essential growth platform for all digital businesses.

In the near term that means optimizing our audience solution and further leaning into AI, one of the most revolutionary technologies we’ve ever seen. In the mid to longer term, we must build a comprehensive product offering that supports the livelihood of our digital customers across all the most important facets of their business health.

SE: What changes do you think are necessary for your industry to stay competitive in current economic times?

AS: Keeping pace with AI, for one.  AI is changing the face of business and society — you can’t turn around without reading about OpenAI and Chat-GPT, for example. Predictive AI’s impact on digital advertising will continue to be massive for targeting new high-value customers and scaling advertising budgets profitably.

Advertisers need to partner with companies like Proxima that can offer them the right AI tools and techniques. Another thought: I strongly urge my clients to take calculated risks. You must budget for testing — in other words allot small investments to testing new media platforms.  You never know where the next social media arbitrage opportunity will be, so you should test small ad budgets on new entrants to understand their impact on customer acquisition.  You won’t stay relevant if you don’t explore new waters.

SE: What measures has your organization taken to ensure you're driving towards the most important goals?

AS: We are a mission driven organization that invests significantly in ensuring alignment of our most valuable assets - our people. Ideas are great but it’s the execution that enables businesses to reach truly remarkable milestones. Our people drive that execution which means prioritizing them above all else.

This shows up in the culture we’re building and values we operate within. Culture is not perks or parties, culture is the operating system that your team commits to when leadership isn’t present. We have many important values but two that I emphasize are Transparency and Grit.  We believe deeply in transparency and providing an environment where candid feedback is the norm and company performance is visible to all.

We seek out individuals that take extreme ownership over their responsibilities and embrace the grind of startups with levels of grit that are unmatched.  We’re just getting started but it’s so important to ensure that we’re starting with the right people in the right seats.