Comcast Ventures is training startups like Away and Hippo to become TV advertisers and says they're spending millions of dollars a year on TV

Hippo Home Insurance TV ad

Direct-to-consumer companies that grew up online are ramping up spending on TV.
But TV is still too pricey and lacking in performance metrics for many of them.
Comcast Ventures, the investment arm of cable giant Comcast, is trying to create the next generation of television advertisers by teaching its DTC portfolio companies how to buy TV.
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As direct-to-consumer companies that launched on Facebook look for their next customers, at some point they'll look to television, with its ability to introduce products to a new, mass audience.

But for many of these performance-driven companies, TV is still out of reach in price and ability to prove it drives sales.

Comcast Ventures, the investment arm of cable giant Comcast, is trying to crack the code. The 20-year-old fund has 55 consumer-aimed startups in its portfolio, including direct-to-consumer companies Away luggage, fashion jeweler Baublebar, and discount store Hollar. Four years ago it launched Accelerate, a program to help its DTC portfolio companies advertise on linear TV. Eight companies have gone through the program, including Away, Baublebar, and Zola.

"Many startups come up through digital advertising," Arjun Kapur, growth partner at Comcast Ventures and head of Accelerate, told Business Insider. "Over time, their cost of acquisition on Facebook, Google, goes up. We recognized, TV is expensive. So we take over all the TV advertising for a startup. We probably fast-forward their life on TV by two years. We're creating the next generation of TV advertisers."

Comcast Ventures provides agency-like services

Comcast Ventures does many of the things an ad agency would: Advising the companies on (but not making) creative and handling their TV planning, buying, optimizing, and measurement. The goal is to prove TV works so the startup can hire its own agency and experts.

The program also helps Comcast's other units by steering business their way.

NBCUniversal does around $10 billion in annual TV revenue and is looking to DTC companies to fuel its growth. The startups that have gone through Comcast Ventures' Accelerate spend $3 million to $5 million on TV per year, said Andrew Kwok, who has been managing the program since 2017, and a portion of that goes to NBCU and Comcast cable properties. (Kapur said Comcast Ventures takes advantage of its corporate brethren NBCUniversal and Comcast Cable but it doesn't limit its ad buys to those properties. "Our goal is to get the best ROI; for some, NBC, Comcast, doesn't work. We're agnostic to what their media plan ends up being.")

To be sure, DTC's impact on TV is still a drop in the $70 billion annual TV advertising bucket — for all of 2018, DTC companies spent $2 billion in TV advertising. But DTC companies are starting to nibble away at traditional marketers that have been the bedrock of television's business.

Comcast Ventures is smart to give these companies media skills at a time when few DTC companies are doing TV and fewer are doing it well, said Mike Duda, managing partner at agency and venture capital fund Bullish, which has invested in DTC darlings like Casper, Harry's, and Birchbox.

"If all you do is bring money, it's a commodity," he said.

Comcast Ventures is trying to expand its services beyond TV advertising

The Accelerate program has largely flown under the radar. Now Comcast Ventures is ramping it up with new hires and plans to extend it to other kinds of advertising and services, like events, or payment processing. It hired Kapur in March to oversee the program and Sue Kwon in October to help Comcast Ventures' and its portfolio companies with their PR and marketing.

"We started in TV and are expanding beyond that," Kapur said. "Just bringing an investment dollar to a company is no longer valuable. There are so many businesses that need the support, expertise we have, that we should be leveraging. That's what the next generation of founders wants."

Comcast Ventures is also looking at ways it can push other levers at Comcast to benefit its portfolio companies. To that end, it hired Madura Wijewardena in January as head of business development to connect portfolio companies with other units in Comcast.

TV is still daunting for many DTC companies

TV still has its doubters for many DTC companies, because of the sticker shock and skepticism it can drive sales. Companies have to be big enough to take part in the program, which is invite-only.

Bullish's Duda said many DTC founders are brilliant but they're too narrowly focused on performance marketing, and at some point, its effectiveness will decline. Meanwhile, television can work extremely well and be another arrow in their quiver, he said.

One such startup in Accelerate was Hippo Home Insurance, which started in 2015 to simplify home insurance. The Accelerate program helped it run TV ads on cable and measure it using TVSquared, a TV measurement and optimization firm, said Andrea Collins, head of brand marketing at Hippo.

Collins now says Hippo is sold on TV's value for driving brand and sales goals. But Hippo initially was wary of TV's high perceived cost and the need to prove it worked, something TV traditionally hasn't been used for.

Kapur acknowledged these limitations. "The lead time and cost, should it not work — TV is a little bit of a fear factor," he said. "There's a lot of companies for whom TV can seem daunting and out of reach. We reduce the chances of failure significantly. But the entry is still challenging."

Comcast Ventures is trying to get an edge

The Accelerate program serves a bigger purpose at Comcast Ventures.

CB Insights ranked Comcast Ventures as the 13th most active corporate startup investor behind firms like Google Ventures, Intel Capital, and Salesforce Ventures — down from 4th place in 2017.

With corporate venture capital pouring into startups, competition among firms is stiff. But Comcast Ventures thinks that providing these kinds of services can give it a leg up. If the startup wins, so does Comcast Ventures.

Comcast Ventures also is looking to invest earlier in a company's lifespan to improve its chances of success.

"There's so much money out there, but we're trying to differentiate ourselves by bringing an advantage," Kapur said. "We all know startups are more likely to fail than not. We want to increase the success rate of the portfolio and be above the industry average."

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