There’s been quite a bit of M&A activity from leading ad networks in recent months. The buys suggest ad nets are looking to broaden their offering. The online display market has become a lot tougher of late with the arrival of ATDs and agency-side ad nets, like Xaxis. Throw the DSPs into the mix, and the DR market is quickly becoming a s*** fight for established third party buyers. Ad nets are being told point blankly by their agency pay masters that they will have to offer a lot more than just a black-box buying solution if they are to get budget. Let’s say life is becoming harder for third party buyers inside the agencies, particularly WPP and Publicis. But recent M&A activity suggest that ad networks are rising to the challenges of a more competitive market. Let’s look at some acquisitions and diversification that show the changing strategies of some leading global ad networks.
Me And My Showbiz Buddy, JT, Just Bought A Social Network
Sometimes life has a funny knack of imitating art. And so it was in the case of JT and MySpace. Not content with playing an onscreen social media baron, Justin Timberlake thought it would be fun to play a similar role in real life. He was a key part of the Specific-led consortium that recently bought the flailing social media giant. Getting past the absolute SURREAL nature of all this, Specific Media actually made a solid strategic investment. It bought a publisher with traffic of 50 million uniques, and it also got access to a coveted social graph. Data and inventory acquired for less then $35 million. Not a bad deal at all. And if they can get JT and his show biz pals to promote MySapce, it could well become the music social media hub on the web. This is a significant move by Specific. Buying publishers is a smart strategy for ad networks. If supply and data become open to everyone through the automated channel, then it's in the interest of a third party buyer to lock some of that supply and data down. You want this inventory and data, then come through us.
The Ad Network Supermarket Sweep
I've seen a lot of positive commending ValueClick's recent acquisitions. I would have to concur with all of them. Having forked a mere $70 million for GreyStripe - less than tenth of what was paid for Admob - to build out its mobile proposition some months ago, it has just added a personalised re-targeting solution, namely Dotomi, for under $300 million to its growing range of product offerings. For those on these side of the Atlantic unaware of Dotomi, just think a smaller version of Criteo. I'm jumping two moves ahead and telling you now that once ValueClick rolls out its DSP, a Dotomi integration will not be far off. ValueClick is future proofing its business for a world where agencies and advertisers take more control of their media buying. If they don't want the black box solutiion, just offer the DSP/ Dynamic Re-targeting/ Automated Mobile Buying tool. The only thing ValueClick is missing now is a Facebook-buying platform. More acquisitions will follow no doubt. Moving beyond DR and into multi-channel buying.
Following The Israeli "Ad Net" Model... No Really
As usual the ad nets working out of Europe's ad tech hub, namely Isreal, are ahead of the curve. All of them have more or less shed their ad net skin and evolved into fully fledged marketing solution providers. What the hell does that mean? It means that they have evolved their business beyond the cosy confines of the agency media plan. Take DMG for example. In a recent ExchangeWire interview, it said that much of its business (about 75%) came from client direct. An early mover into exchange trading, it has built its business and prop tech around the automated channel. DMG clearly feels its DR offering in both online and mobile display is better than anything an agency can offer - and can win direct business. Other examples include YBrantDigital. Although technically an Indian-owned company, much of their operation is run out of Tel Aviv. YBrantDigital has diversified its business into PPC and Facebook. It is currently one of the biggest buyers in the Facebook channel, having built its own platform. It also bought the Lycos search engine for a snip, giving it access to some decent search data. This all gives YBrandt a compelling multi-channel proposition. And if you were to ask either of these two "ad nets" to define their business, they would veer in the direction of the marketing solutions specialist. You will see lots of big ad networks taking a similar strategic approach.
The show down with agencies is still a good 12-24 months off - but it is coming. In the meantime some of the smart ad networks - sorry, holistic-marketing-solution-thingy - are making smart moves in buying/building the solutions that both advertisers or agencies can use to buy and optimise media.