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3 predictions of what a market correction could mean for ad tech

3 predictions of what a market correction could mean for ad tech Eric Wheeler

Running your company from quarter to quarter financial figures makes poor business sense, but that doesn't seem to stop the media and everyone else from trying to predict the future of both the tech sector and the market every three months.

The problem is that everyone starts with a confirmation bias, and then seeks examples to prove themselves correct.

If you think the market is doing poorly, and you see layoffs at Yahoo! and Intel, and lowered revenue expectations at LinkedIn, Yahoo, and the Rubicon Project, you can make your case.

Conversely, if you think things are going well, you can see that Facebook is poised to beat the street's estimates, M&A activity is on the rise, and VC investment continues to flow into both ad tech and marketing tech companies.

Regardless of your bias, the ad tech and marketing tech spaces are constantly in flux because this is a thriving, evolving space. If your ad strategy is still "set it and forget it," or you're replicating a successful campaign from 2012, you are not keeping up with the technology or the times. Today's CMO has more data, insights and cross-platform capabilities than ever before.

With the more than $4 billion acquisitions of Marketo and Demandware, there is an obvious consolidation in play as big players get bigger, smaller ones get bought up, and others keep hoping to make it to the top.

So, what's ahead for the industry? And what this potential market correction means?

Expect slower, steadier growth

As bigger companies continue to gobble up some of the smaller players and market valuations come down, there will be slower, steadier growth expectations. The bigger players will need time to integrate their new offerings into a more cohesive solution, and smaller financially independent companies will have time to iterate and move the needle forward on their technology. In both cases, the groundwork is being laid for the future, but that might not result in hockey stick sales projections in the present.

It's also important to keep in mind that although Google and Facebook are dominating ad tech, they really haven't cracked marketing tech, so that's an area to keep an eye on.

Renewed focus on profitability and the bottom line

I don't mean to say profitability and focusing on the bottom line should ever be taken lightly but, during a market correction, there is a heightened need to make money and focus on your core strengths. This is especially true when there is a tough IPO market, difficulty in VC fundraising, and when long-term profitable growth will make you stand out more than industry noise and buzz.

The big players will absorb even more

There is no denying that the large platforms (Google, Apple, and Facebook) and the marketing tech leaders (Oracle and Adobe) will continue to absorb more dollars and companies, and that will come at the expense of the overall ecosystem. This isn't anything new or unexpected, though. You only need to look as far as digital media M&A advisor Terence Kawaja's House of Cards-inspired presentation for a well-researched viewpoint on the fact that the ecosystem is metaphorically a house of cards. While I agree with Kawaja's point of view that things are screwed up, it's also notable that marketing tech is a much bigger market overall when you include websites, email, CRM, retail beaconing, etc. Because of this diversity, we won't see a zero sum game with just one winner from the big players. A number of big winners will most likely emerge.

In markets such as ad tech and marketing tech, change has become a constant. And there will always be room for those innovators whose products push the industry forward. Maybe me. Maybe you.

  Eric is the CEO and co-founder of 33Across, bringing 20 years of experience leading successful Internet businesses to 33Across. Prior to 33Across, he was the CEO of [email protected] and Executive Director of Ogilvy Interactive North America. Under...

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