• by Seth Ulinski , Op-Ed Contributor, June 16, 2014

During the current quarter, display re-marketing specialists have been getting snatched up at warp speed. In Q2 alone, a total of three of these companies have been acquired. In addition to their function in the ad tech stack, a key theme with each of these specialists is their core vertical: Retail.  

As many know, the key value proposition of re-marketing (aka “retargeting”) is it allows companies (in this case retailers) to create ongoing dialog with customers. This is achieved via standard display ads and in some cases, a combination of display and email -- whether a site visitor decides to purchase or not, the tactic of re-marketing has proven to be an extremely effective campaign tactic for many a digital marketer. However, the ability to dynamically create/target ads is the secret sauce for display re-marketing specialists –- creating messages that include the exact product or service a consumer just viewed but may not have purchased.

Review of 2Q14 acquisitions: 

My thought is that an ERP software heavyweight such as Oracle seems to be missing out on this display re-marketing party and will likely pick up one of the remaining independent players such as AdRoll, Retargeter, or myThings (however, given AdRoll just raised a significant round, they may have other ideas than to get purchased at this stage). The first and largest of the acquisitions was Sociomantic, which should fit nicely with Tesco's core consumer retail business, as well as its consumer data unit Dunhumby. In May SAP purchased SeeWhy, a multichannel re-marketer with capabilities spanning display and email -- further rounding out SAP’s marketing automation suite known as ‘Hybris.’  On June 2nd, Marin Software announced the acquisition of Perfect Audience to the tune of $23 million. While Perfect Audience is a relatively young company in the re-marketing niche (hatched out of Y Incubator in Oct 2012), it was quick to enable clients with the ability to re-market not only via standard display, but also through social platforms such as Facebook and Twitter. Marin has a significantly more mature suite of digital marketing solutions than SAP and Tesco, but appears to have added Perfect Audience to enhance 1-to-1 or “personalized” marketing features.

Another consideration is that while each of these specialists are excellent at what they do, at the end of the day they are still essentially one-trick ponies designed to re-message existing prospects and customers.

Businesses are aware that existing customers are invaluable, while new customers are (typically) very expensive to attain. Figuring out how to win new customers via digital advertising is a holy grail of sorts. For the time being, the safer bet for ERP companies (i.e. SAP, Oracle) looking to expand automated marketing capabilities rests with retargeting specialists who make the lion's share of their revenue on the retail vertical.  At some point, however, growth becomes a necessity and that's where enterprise-level demand side platforms (DSPs) come to mind. These companies hang their digital hats on the ability to reach both existing customers via re-marketing (albeit not as finely tuned as the aforementioned specialists), but also deliver new prospects to the table across multiple verticals, not just retail (and yes, the specialists do have clients outside retail, but the vast major of revenue is driven from this segment).

Given Oracle's aggressive nature with respect to acquisitions combined with a need to maintain pace with largest competitor (SAP), it would make sense to Larry Ellison and Co. acquire a re-marketing firm. That said, don't be surprised to see Oracle court one of the larger multifaceted DSPs which are simultaneously evaluating IPOs and other exit strategies. While bold, this would afford Oracle the opportunity to “one-up” its chief rival from a capabilities standpoint, further leverage its investment in Bluekai, and compete for a larger bigger piece of the $42 billion digital ad industry.