Publishers Look To Capitalize On Consolidated Services
Publishers have been stepping up marketing services in hopes that brands and agencies will consolidate their list of publishing partners and invest ad dollars in fewer coffers. The move has begun to affect the profitability of ad exchanges.
Online Publishers Association president Pam Horan said agencies and marketers want fewer publishing partners that can build large-scale multiplatform campaigns to reach consumers across devices and media.
Marketers want to consolidate spending with a couple of key players across platforms. Horan said the evidence is the investments that Meredith and Hearst have made. "The macroeconomic environment set that up, and I don't think that's going to change," Horan said.
Hearst acquired iCrossing in 2010 for an estimated $325 million to offer a series of marketing and mobile services. A study that OPA conducted with Harris Interactive around the same time analyzed the link between consumers and content, identifying a "deeper connection" between consumers and media sites, rather than with Facebook or portals, Horan said.
This focus by publishers helped OpenX, an ad exchange based in Los Angeles, reach profitability in Q4 2011, exceeding an annualized revenue run rate of more than $100 million, according to Tim Cadogan, OpenX CEO. The company’s advertising technology services, including OpenX Enterprise, achieved a Q4 year-over-year growth rate of 100% compared with the same period in 2011.
Cadogan said OpenX is capitalizing on the trend by publishers to build-out services. These content hubs need ad exchanges that can remove the complexities of managing ad serving across media channels. Building one foundation enables other companies to integrate services consistently through an application programming interface.