Microsoft NavicGates Television -- Again, Acquires Leading Addressable TV Ad Firm
The deal signals a broader industry shift from Web-focused interactive advertising deals back to television, and follows several important recent developments including WPP Group's investment in Navic rival Invidi Technologies, Google's partnership with EchoStar's Dish Network for Google TV Ads, and the official unveiling of Canoe Ventures, a cable industry initiative headed by former Madison Avenue media honcho David Verklin.
The deal also is the latest in a succession of attempts - largely failed ones - by the world's biggest technology company to leverage its lock on computer operating systems, and a minor position in the online world, into the $80 billion television advertising marketplace. Over the years, Microsoft has invested heavily in a variety of platforms that were supposed to bring interactivity to television, including WebTV and various generations of TV operating systems, and has even positioned several other products as potential television Trojans, including the Windows Media Center and its Xbox video game platform.
While Microsoft has largely failed to make a significant dent in the television business, the acquisition of Navic and its integration into its APS Group is intriguing. Among other things, Navic is now aligned with a major interactive advertising unit, aQuantive. For another thing, one of aQuantive's secret weapons is Atlas DMT, an ad serving platform that is one of the best deployed in interactive TV and video-on-demand systems.
Navic made some other recent news on Madison Avenue, announcing the hiring of another ad industry media icon, former Initiative Worldwide chief Alec Gerster, as its chief marketing officer in April. Gerster, who spent years as the chief media executive at Grey Advertising, and was part of the team that led an early investment in Visible World, another promising interactive TV advertising technology company.
Microsoft's Navic deal follows WPP's investment in one of its chief rivals, Invidi Technologies, which is believed to be close to announcing deals with several major cable operators to deploy its addressable TV advertising switching technology. The Invidi stake, which is held by WPP's GroupM unit, parallels Microsoft's in another respect. Like Microsoft's Atlas DMT stake, WPP also owns a major ad serving platform: 24/7 Real Media. And like Microsoft, which put a savvy Madison Avenue executive, Brian McAndrews, in charge of the asset, GroupM global CEO Irwin Gotlieb has become a member of Invidi's board.
"Television media represents the largest percentage of advertisers and agencies' media budget today," McAndrews said in this morning's announcement. "Together, Navic and Microsoft will deliver addressable television advertising solutions to help our partners better manage media spend by increasing advertiser reach and ROI, and maximizing publisher yield on television advertising."
That, of course, is something others - including Google and the cable industry's Canoe Ventures - are also racing to achieve, and much of it will depend on each player's ability to achieve enough distribution of their technology to generate the kind of scale that has made television advertising the dominant and ubiquitous ad medium it remains today - and which a number of industry gurus believe it will remain into the foreseeable future, despite the rapid growth of online video.
In fact, during an opening keynote at the OMMA Publishing conference Tuesday morning in New York, Brian Wieser, director of industry analysis at Interpublic's Magna Global unit, made a compelling case for why television would continue to dominate the advertising mix for at least some time to come. Among other things, Wieser noted that it still works very effectively and is far more efficient for the world's largest advertiser to buy than the supposedly more effective and efficient emerging media, including online video (see related story in today's edition).
Meanwhile, a highly respected industry consultant, PriceWaterhouseCoopers, this morning released its annual media outlook report, and noted that while online and mobile digital media technologies are driving growth, traditional media - especially television - will remain dominant for at least the foreseeable future.
"Established and traditional business segments will continue to dominate revenues, with the exception of recorded music, where digital distribution will surpass physical distribution in 2011," the PWC report predicts.
"We're seeing a new business model solidify for entertainment and media companies," said Marcel Fenez, managing partner, global entertainment & media practice at PWC. "Some, such as the film industry, have dabbled in this in the past, but those will be small movements compared to what lies ahead. No single company will be able to successfully go it alone over the next five years. The challenges are too significant and the demand for innovation too complete."