The Urge To Merge
Aside from the sappy love story (OK, who didn't smile when Joe's dog came running over the bridge in the last scene and you knew they would finally get together?), one of the side plots involved the battle between the mom-and pop-stores vs. corporate America. Depending on your perspective, there were pros and cons to both business models. (For the record, I tried to come up with an analogy from a more testosterone-driven movie like "Gladiators" or "Braveheart," but it was just too much of stretch -- even for someone in marketing who should be able to put a spin on anything).
Kathleen's Shop Around the Corner provided a personal touch, a trusted relationship and a depth of knowledge on children's books that can't be matched by the 19-year-old clerk with the logo'd polo and khaki pants over at FoxBooks. But the larger store offered a much larger selection of books, a wider variety of products, a nicer locale and really comfy chairs.
This storyline is certainly not a new one, and it plays itself out in every line of business as companies compete for market share. Whether the method is driving competitors out of business or acquiring them, the result is the same: less competition.
Over the past year, we've been watching a similar storyline playing out in the online ad network space. During that time, we have seen a number of small to medium-sized networks gobbled in the rush to gain market share and dominance in the lucrative online advertising world.
Here's a brief list of some of the more notable acquisitions:
With the skyrocketing purchase prices and hyper-competitive nature of this industry, it would seem that the acquisition frenzy would continue into the foreseeable future. In fact, investment bank Petsky Prunier reports over 193 M&A transaction totaling $11.4 billion for the Marketing, Advertising and Digital Media Industries in the first quarter 2008 alone. To further the point, a recent article from The New York Times looks at the next wave of consolidations that may be on the horizon.
This leads us to the big question: Is all of this consolidation good for the industry - and, more specifically, for publishers?
Let's examine some of the pros and cons of ad network consolidation, as well as the rise of the ad network giants.
Regardless of which side of the fence you fall on this issue, I think we would all agree that there is obviously a need for both large and small networks to meet the wide range of needs from a vast array of publishers and advertisers. Even in this climate of consolidation, we continue to see new networks sprout up as quickly as others are gobbled up, so there seems to be no need to fear that the innovation and competition spurred by the entrepreneurial spirit is in danger of fading away... yet.
I'd like to hear from you on this subject. How do you feel about ad network consolidation? Is it good for the industry as a whole, or is it just good for the investors who are cashing in on the land rush?