The Inevitability Of 'End-To-End Solutions'

I wrote in RTBlog last week that the ad tech marketplace has begun consolidating, and today’s AOL/Adap.TV news only solidifies this. The programmatic online video ad platform was purchased by AOL for $405 million via a mix of cash and AOL stock.

But the purpose of this blog isn’t to tell you about the acquisition (Online Media Daily has you covered there). This post raises the issue of consolidation, "end-to-end solutions," and why companies with high aspirations need to start planning where they really see themselves in five years (note: Adap.TV was founded in 2007, just six years ago).

Despite display being what gets talked about most, video has had some of the most interesting news in the past year. Between Tremor’s IPO, YuMe’s decision to go public also, and Adap.TV putting themselves on the block, these video advertising companies have given everyone else something to look up to. Not in the sense that sale is what everyone is shooting for, but in the sense that, if you are fortunate (and smart) enough to end up with a company worth triple-digit millions, you’re likely to explore the possibilities. Even if your company isn't worth that much, some form of consolidation is not off the table.

Online Video Daily posted today that Ed Haslam, YuMe’s SVP of marketing, said that YuMe’s entry as a publicly traded stock “at least created interest and attention in the digital ad market by investors.” Putting aside the fact that Tremor’s stock price has dropped upwards of 25% since it went public, the simple fact that ad tech companies are trading publicly is “a good thing,” Haslam said.

I agree, except I don’t think it’s only the companies going public that are putting ad techers at the forefront. In fact, after Tremor’s rocky start and YuMe shares trading at around $9 a pop instead of their once-intended $12-$14, I think more ad tech companies might look for buyers over IPOs.

Perhaps Adap.TV got “lucky” in landing a strategic buyer, but I don’t think so. Don’t more and more advertisers want end-to-end solutions? In order for end-to-end solutions to exist, strategic buyers need to exist.

The fact that AOL considered an online video ad platform worth $405 million? When the legendary, over-a-century-year-old Washington Post was just purchased for $250 million -  a whole $155 million less? That’s a win for the industry. But it’s also a sign that end-to-end solutions are not only desired, they are inevitable.

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