• by December 2, 2004

At first glance, today's news that Viewpoint Corp. has acquired Unicast Communications for about $7.4 million looks like another case of interactive industry consolidation. We've seen a few mergers this year. AOL bought Advertising.com, Digitas scooped up Modem Media, and aQuantive purchased Razorfish - they are among the most notable.

But the Viewpoint/Unicast situation would appear to be more than a mere case of consolidation. For starters, Viewpoint isn't really a rich media provider. It's a company with a technology platform for delivering video; it builds and develops Web sites with video capability for Fortune 500 companies using a suite of proprietary tools.

Unicast, marketer of the superstitial and full-screen video ad formats, is known as a rich media provider. The company supplies online publishers with ad formats to deliver broadcast-quality video.

By combining forces, Viewpoint gets some new tools and Unicast gets the distribution it never had. But think about it: Unicast, despite aggressive promotion and trial, never did get Yahoo!, arguably the biggest and most influential portal, to adopt its full-screen format -- the format it introduced a year ago.

Yahoo! assessed and tested it, but I would hazard to guess that it found the format intrusive and disruptive to the user experience, something the portal watches over with something akin to religious fervor.

But that's only part of the equation. In recent years, Unicast's business model was more aligned with online publishers than agencies, which are the gatekeepers to advertiser relationships. Its technology was rather clunky and cumbersome and there were problems with adoption rates.

And herein lies the rub - Unicast just didn't have the scale or volume it should have had or could have had. It's a company that's struggled to find a viable business model; traction was hard to come by even with several notable high-profile campaigns.

The trouble is that sites can only run so many superstitials, according to insiders, who say that only a few sites will accept them. Such sites also have caps on them, playing maybe up to one or two per user, per day. The impact is small. The media dollars are not there.

The Viewpoint/Unicast deal is expected to close by Jan. 3. Let's see what happens.