Viewpoint Snaps Up Unicast
- by Ross Fadner , December 2, 2004
The move--likened by one pundit to an NYU film student buying MGM--initially surprised many industry observers, mainly because the two companies seem to have different business models. But, said industry analysts, the disparities between the companies might actually benefit them both.
Viewpoint is principally a technology firm that owns a platform that competes with Microsoft's Windows Media Player. Viewpoint uses its platform to create rich media content for its clients. Much of the company's ad revenue comes from its visual search engine, the "Viewpoint Toolbar," completely unrelated to rich media. Ad serving itself only constitutes a small part of Viewpoint's business model.
Unicast, on the other hand, has an established presence as one of the major independent rich media ad vendors; competitors include PointRoll and Eyeblaster. Unicast brings to the table established relationships with several advertisers and top agencies--particularly traditional agencies, which are fond of Unicast's TV-like interstitial format.
Therefore, with this deal, Viewpoint will gain access to Unicast's prestige and established advertisers, while Unicast will have access to Viewpoint's resources.
Viewpoint CEO Jay Amato said the deal gives Viewpoint more video products than anyone else in the marketplace, and positions it for rapid growth. "The whole is much greater than the sum of its parts," he said. The company's advertising products now include rich media ad serving via in-page, in-stream, in-banner, and via intersitial. Viewpoint will also continue to create rich media content for brand clients like GE, Xerox, HP, Honda, and Toyota.
Amato said Viewpoint will integrate its sales force into Unicast's sales force, since the rich media provider's sales team is the larger of the two. "There is no waste with this deal--we need all the people we have."
Allie Savarino, Unicast's senior vice president, global marketing and partner services, said the combined distribution of both companies gives Viewpoint near 100 percent Internet audience penetration on over 1700 sites worldwide. Notably, Viewpoint brings its relationships with America Online and Yahoo! to the table, while Unicast adds MSN.
Some say it would be a mistake to view the deal as heralding a wave of mergers.
"This is not rich media consolidation," said JupiterResearch Associate Analyst Nate Elliott. He said that rich media consolidation isn't really possible anymore, because the major rich media providers--all small independent firms--offer similar services and think they're in a position to corner the market. Essentially, Elliott said, rich media companies have too much overlap to merge with each other, and none of them are in a position to buy.
Rishad Tobaccowala, president of Starcom MediaVest Group IP, said the crux of the problem is that not enough money is being invested in rich media. Without investment dollars, he said, no real leaders are able to emerge, which is why the current situation revolves around small players.
Tobaccowala called the Unicast acquisition more "complementary" than a mark of consolidation. He added that marketers are hoping for consolidation because it makes the process of buying rich media far easier. Advertisers currently need to familiarize themselves with the proprietary platforms of several small rich media startups--a process that Tobaccowala said can be confusing and time-consuming.
Jim Nail, principal analyst for Forrester Research, added that marketers have long complained about there being too many vendors and formats. He agreed the acquisition complements both companies, but also thinks that any move toward one set of tools and one technology platform is a plus for marketers. "Viewpoint is a very elegant technology," he said, adding that the combined services will give clients "a single palette" for creating rich media content for their own Web sites as well as for advertising purposes.
