Throw traditional out
the window and stop thinking like a creative in a print publication waiting for someone to turn the page. It's outdated. Only those who believe everything you know about online advertising continues
to become outdated shortly after it hits the Web will succeed. That's how technology companies profit and thrive, by continually innovating, and now ad and media buying and service agencies must do
the same to survive.
Publishers have begun to evolve, too, especially when it comes to their thoughts on search marketing. Hearst Magazines announced Thursday it acquired iCrossing and will
roll the company into Hearst Marketing Services, a new business unit led by Matthew Petersen, senior vice president at Hearst Magazines who previously held a similar position at Meredith.
Not
surprising, Hearst's plan to build out its marketing services will concentrate on digital. A couple of ad and search execs who have met with the Hearst media team say they "don't get search. With
online publishers falling behind, it's not uncommon to see a publisher the size of Hearst trying and play catch-up by acquiring a company strong in search market and digital media, though Forrester
Research named iCrossing as one of the top search firms in 2009.
Hearst's acquisition of iCrossing is likely to inspire other similar agreements, according to Scott Brinker. Ion
Interactive's president and chief technology officer says in the short term traditional media companies and others supporting old businesses will come under threat by the dynamics of the digital world
still have money and power to buy their way into the future.
In the long term, the architecture of the "future" media company continues to emerge, but it makes sense that search marketing
and an integrated Web experiences should become a core competency of publishers, Brinker says. For him, the question becomes will Hearst become successful in incorporating iCrossing's services into
their overall strategy and leadership.
For others, the big question remains whether this combined company creates a conflict of interest for the publisher. Could the deal put Hearst in
competition with media agencies? Aaron Goldman, principal at Connectual, who tells me independent stand-alone SEM firms are a rare and dying breed, says it it's a total conflict of interest for an
agency that buys media to be owned by a publishing group.
It's akin to MSFT owning Razorfish or Google owning Performics, both of which have since divested those assets. However, there is
precedent for this with Meredith buying Genex and New Media Strategies in late 2006 and early 2007, Goldman says. "Still, iCrossing will undoubtedly continue to serve and chase business with marketers
that might otherwise work with different digital shops," he says, noting the company will likely spruce up its own properties to generate more traffic.
Similarly, Adam Heimlich, Razorfish
group search director, who worked at iCrossing in 2005, calls the Hearst/iCrossing relationship "strange, a conflict of interest." Maybe as a media buying agency for other publishers other than
Hearst, but I view iCrossing more as a technology company that provides bid and feed management, SEO automation, display ad serving services, optimization, and dashboard reporting. The media buying
would sit on the sidelines for the dozens of Hearst publications, both online and offline.
Industry execs agree iCrossing's SEO and paid search services for the online versions of Hearst's
magazine portfolio provides obvious synergies. But a "neutral" media buyer looking for the best place to insert a campaign would find conflicts when trying to determine where to place ads for
iCrossing clients like Coca-Cola, Bank of America, Epson and Toyota in other publications other than Hearst's.
Heimlich says you have to compare the price they paid for the company with the
price they would pay to rent out services from another agency. A brand could hire Razorfish, for example, to work fulltime for less than $350 million, the reported sale price. For Heimlich, it makes
more sense to believe Hearst wants a new revenue stream and plans to get it through iCrossing's media buying and professional services business.