Lewis Black once noted that a Starbucks across the street from another Starbucks in Houston, Texas, meant the world was coming to an end. Other noted signs of an imminent apocalypse include plagues, pestilence, the arrival of the four horsemen and, of course, a search engine owning a search engine marketing company.
That's right sports fans, just when you thought it was safe to get back on the web, our world has changed again. The last few weeks have seen an undeniably scary and most certainly game-changing phalanx of acquisitions.
With purchase prices at 100 times earnings (in at least one instance), the winds of online marketing and certainly search engine advertising have changed dramatically. What does it all mean for search? Why don't we have panic in the streets and a breakdown of social services?
Here's the 1-2 SEM conflict of interest punch:
- Google bought DoubleClick. DoubleClick owns Performics. Performics is (among other things) a search engine marketing firm.
- Microsoft bought aQuantive. aQuantive owns Avenue A. Avenue A also performs search marketing.
Why aren't people everywhere crying foul? Wait, it gets more interesting when you look at the ad-serving equation:
- Google doesn't allow third-party ad serving. DoubleClick is the biggest third-party ad serving company in the business.
- aQuantive also owns Atlas. Atlas is the other big dog in the ad-serving business.
So let me see if I have this correctly. I thought the idea of using a third party to serve ads was avoiding the conflict of interest associated with placing and buying ads from the same company?
You didn't see this one coming?
Google bought analytics provider Urchin in March 2005. Analytics are traditionally used to determine the effectiveness of site design and advertising performance. Buying and measuring advertising using the same company didn't seem to be a problem with Google/Urchin, but that was a different time and place.
aQuantive has owned an advertising agency/search engine marketing company along with an ad-serving company for years as well. Also, that doesn't seem to present a conflict of interest or a barrier to generating big revenue.
WPP recently announced that it will acquire the ad network/search engine marketing company 24/7 Real Media. The end game here seems to be "own the data at all costs," never mind the traditional media and advertising model. That corpse has been rotting for some time.
Ad serving is a commodity-based business and that may be changing. Clients like to think they own their own data, but those days are coming to an end.
Data is the name of the game
While brands add pages and pages of protective care clauses in every contract with media vendors (to make sure no competitors get wise to tactics), it seems that media vendors and agencies are now in a position to get access to all kinds of information.
Of course, the exchange of data has been happening since day one in advertising sales departments everywhere. Behind closed doors at the media vendor/search engine, little Johnny talks to Jane about the budgets of each account they work with.
Here's one reason for hiring an agency: chances are people at agency A don't have those kinds of conversations with agency B.
Then again, the sales rep at the search engine just had lunch with agency B. After two martinis, agency B let its client's biggest competitor's budget slip. The rep isn't smart enough to dismiss that information as bonus-inflating banter, but ethical and deductive reasoning classes don't seem to be taught at the university anymore.
Forget the data
One of two things is about to happen. The first and least likely scenario (since no one has seemed to care yet) is that clients will suddenly wake up to the conflict issues and demand services from conflict-free companies. Holding companies will claim that no conflict exists and proper separations have been deployed, but that won't matter.
The idea of accepting advertising recommendations from an agency that is owned by the media company doesn't seem to matter anymore; access to data has taken priority.
By they way, I've applied for a trademark and coining rights for the phrase: Conflict Free Online Advertising.
The second and most likely scenario is that mergers and acquisitions will continue as they have and everyone will have access to everyone else's information, thereby making the role of said information nugatory. Media conglomerates will have spent billions to keep up only to realize they have brought about nothing.
Agencies: staying alive?
With all the land grabbing going on, the new method to greatness appears to be: he who owns the data wins. The media-buying landscape is changing into a level-playing-field-for-all auction universe. The line between agency, media provider and neutral third party is disappearing right before our eyes.
What will agencies need to do to stay alive?
The obvious play for independents is an immediate, unique selling proposition shift. They can move to sell the idea of independent thought and media recommendations without agenda, but will it stand up to the massive knowledge base of the one-stop everything offering? Only time will tell.
The end of the world is upon us, or perhaps the beginning of the end. The value an agency has always brought to the table -- creative execution in strategic development -- will never disappear. While the world as we know it is changing, those who will carry the future of creativity have nothing to fear.
Kevin Ryan is chief executive officer at Motivity Marketing. Read full bio.