Is Consolidation Building New Walled Gardens?

The vendor ecosystem for marketing and advertising has exploded into an overwhelming mess. Just look at the latest Marketing Technology LUMAscape. Can anyone make heads or tails of it? In addition to fragmentation, there’s the issue of big platforms and their “walled gardens.” Brand and agency stakeholders are concerned about their support for third-party verification, agitated about practices for data collection and frustrated by limited understanding of how measurement is done.

Our industry has two big problems. First, there’s the confusion of too many, then the problem of too few. When it comes to the former, most will agree that an eventual segment shake-out will take place and simplify things. With the latter, we can be sure that the battle to open up the likes of Facebook and Google will go on.

Problem solved, right? Not quite. Through all this industry upheaval and uproar, there's another risk looming on the horizon: a wave of new walled gardens that are being erected right now and right under our noses.

Last year, there were 412 mergers and acquisitions in global ad- and mar-tech, according to advisory group Results International. Each deal reduces the overall size of the industry, meaning there are fewer vendors to choose from. As this trend continues, we risk ushering in a new era of lock-in. Already this year, we’ve seen several big acquisitions, such as the Singtel/Amobee acquisition of Turn, Salesforce of Krux and Oracle of viewability metrics provider Moat.

When Oracle closed the Moat deal this past April, the company issued a fairly typical holding statement, as acquiring giants often do to calm any anxieties of the acquiree’s existing customers. This one said, “Oracle and Moat are committed to keeping Moat an open measurement and analytics platform, with deep integrations and partnerships across the entire digital publisher and ad-tech landscape.” Despite assurances, history has shown that the inevitable drive for post-acquisition synergies requires change, reduction or deprecation of original offerings and services.

Case in point, LiveRail was once a supply-side platform with a rich array of publishers plugging in. When it was acquired by Facebook in 2014, it raised prices and set very strict rules about who it wanted as customers, such as minimum-spending requirements to stay aboard. Then just two years post-purchase, Facebook shut down the last vestiges of the LiveRail service, once so loved by customers like Hulu and A+E Networks.

Now we’re in the midst of another potentially industry-disrupting deal, that between Verizon and Yahoo. We have no idea what will shake out, especially since so many ad-tech acquisitions from Yahoo’s days past remain in integration limbo. Still, it’s our assumption that we’ll see a number of existing technologies and platforms dissolved as a result of consolidation.

No deal like this is intrinsically bad. But, in many situations, the post-acquisition reality can fall far short of what was originally promised whether that’s customer data used in unexpected ways, feature sets pulled out like the proverbial rug or options that were once selling points suddenly rendered invisible or locked down.

The industry’s consolidation situation might look very different if it were being driven by smaller entities teaming up. It’s a bit like the 1980s cult classic cartoon Voltron, with the little players joining forces to fight for the best interests of mankind. But instead, we’re witnessing the creation of the next generation of walled gardens.

We as an industry need to step up to ensure the ongoing survival of a diverse targeting and data ecosystem, one that allows ad buyers and publishers to connect and integrate far and wide while using their data in the ways that best service the consumer. Clients deserve a wide range of integrations, the strongest possible connective tissue and the ability to maintain access to the unique features and benefits of their selected partners with the transparency and control to move freely to whichever combination works best.

Walls aren’t inherently bad; they’re just better when they have doors and windows.

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