Recent mergers and acquisitions in the media buying industry over the past month have the potential to shake the very ground on which we stand.
Last Friday was certainly an eye-opener. The emails started rolling in as soon as the Microsoft/aQuantive deal was announced, most of them expressing unbelievable surprise in the subject line. Over the course of mere weeks, the shape of the interactive marketing landscape would be altered forever. Agencies discovered suddenly that the ad management systems they had come to rely on to serve client ads were all owned by media sellers.
DoubleClick, which owns a sizeable chunk of the advertiser-side serving market with DART for Advertisers (DFA), was recently acquired by Google. Just as its clients were absorbing this news, Microsoft swooped in with its purchase of aQuantive, the parent company of Atlas Solutions. If anybody on the agency side was uncomfortable with the notion of a media seller ultimately owning its ad server, there was effectively no place to go.
Atlas and DFA are the market leaders on the advertiser side of the ad serving business. Other market leaders with competitive offerings, like Mediaplex with its MOJO Ad Server, were already owned by companies that sell online ads. A few minor players still exist in the marketplace, but nothing with the scale or market share that DFA, Atlas and Mediplex command.
I'm not saying that it's necessary to run scared. I simply think it's important to mention that if the appearance of conflict worries you, there's effectively no place to go.
Build, buy, adapt?
The new shape of the ad serving marketplace might make a larger agency or holding company want to look around for applications that could be adapted to the purpose of advertiser-side ad management. This could make companies like Eyeblaster, X+1 or CheckM8 possible acquisition targets for agency holding companies or well-funded interactive agencies. These companies all have applications that, with some tweaking, could become ad management platforms from which advertisers could serve and track their ads. Alternatively, agencies could code their own, but few agencies seem eager to enter the software development business these days.
As I'll explain in a bit, it might not be wise for agencies to make investments in ad serving technology at this point. If things go the way I think they'll go, doing so might be somewhat futile. It makes me wonder about WPP's plans for 24/7 Real Media, which the company recently acquired. 24/7 has some assets in house that could be easily adapted to serve ads for WPP agencies, but it's questionable whether that will give agencies in the WPP family a competitive advantage or not.
What's the plan?
My chaos theory involves Google driving the agency-side ad management market. I've floated this theory at the iMedia Agency Summit and on certain industry discussion lists, and I haven't heard too many people dismiss it as a possibility.
I think Google is going to approach DART in much the same way that it approached Urchin. When Google acquired Urchin, the company repackaged it as Google Analytics, integrated it into things Google was already doing, and gave it away for free. I think Google will eventually offer free or low-cost ad serving for both publishers and advertisers, integrating AdWords, AdSense, its sales platforms for offline media, and other features into it.
On the advertiser side, this would let interactive media planners and buyers purchase search media, offline media, online display advertising and other media types, all from the same desktop interface. For publishers, especially smaller ones occupying space on the long tail, it would allow for the management of advertiser campaigns. It would also give these publishers plenty of options for handling remnant inventory, including the direct integration of AdWords, Google's content network and other potential options.
Giving DART away would be a huge strategic coup for Google, as it would allow it to grow its network more quickly, gain access to valuable advertisers at all levels, and make it tougher for Microsoft to monetize the Atlas portion of the acquisition it just made. Doing so is also consistent with what Google has done in the past, and it makes sense in the context of the company's corporate mission.
Follow the leader
I've written about ad auctions and exchanges favorably in the recent past, and with all the industry efforts underway to bring exchanges to the market, it's obvious that the recent acquisitions are driven by the need to lead and control that market. The consolidation of the ad serving market might just be an ancillary effect.
Google has been blazing the trail toward bringing an exchange format to all forms of media. Microsoft may have taken a leap forward with its new acquisition, but it's still clearly following Google down this path.
What agencies need to be thinking about
Consolidation has made it evident that Microsoft and Google are serious about changing the face of media buying as we know it. Not only do we need to adjust to the notion of sellers now owning our ad management systems, but we need to prepare ourselves to buy media in new ways. It won't be long before everyone has access to radio, television, print, search and online display inventory through the same interface. Agencies need to think about how they'll align themselves internally to cope with this. Will radio buyers yield to interactive buyers? It remains to be seen.
Agencies also need to adjust to cope with the exchange dynamic. If you're not already buying media through exchanges or auctions, start doing it now. It won't be long before exchange options for all media are available to you, and it represents a different way of buying ad inventory. The agencies that succeed at this are the ones that understand how the marketplace dynamic works within exchanges.
There is no doubt that we are once again on the cusp of a sweeping change in the industry that is going to grant significant advantages to companies that can adapt quickly.
Tom Hespos is the president of Underscore Marketing and blogs at Hespos.com. Read full bio.