Commentary

The Benevolent Oligopoly In Ad Tech

The prediction of consolidation is finally coming to fruition. The ad-tech space has been bloated for years, and clear winners and losers are beginning to emerge.  Whether through acquisition or demise, the landscape is becoming clearer.

I see three key themes driving M&A in the market.

Data is still important. Salesforce acquired Datorama, and Acxiom sold its marketing solutions division in a move to prep to sell LiveRamp as well.  That brings Salesforce into a category it only barely touched with its previous data-management platform acquisition, making it a strong contender to become a leader in data.  

LiveRamp being up for sale raises the question of whether or not identity linking and matching in the era of GDPR is valuable, since just a year or two back LiveRamp was clearly the crown jewel of the Acxiom stack.  I do think it’s still valuable, and the larger companies that haven’t figured out yet how to leverage identity are going to have to do so quickly.  If they can find a way to work with Google and/or Facebook in the long run, then this is a solid pick-up.  Data is still the centerpiece of a marketer’s tool box.

The open web is not the Wild West. The West was won. AT&T acquired AppNexus, which has always been a solid player in the demand-side platform space, leading the category along with the likes of The Trade Desk and MediaMath.  MediaMath raised more capital to do its own acquisitions and growth, so it’s clearly eyeing a larger play in the market.

These three companies (plus Verizon) own the lion’s share of the open web advertising market.  Anecdotally, when you speak to advertisers, these are the platforms they use.  There are certainly differences between them, with each creating a slightly unique swim lane, but all in all these are the viable opposition to spending on Facebook or Google.  

For a while, this area was literally the Wild West, with company after company shooting it out for your ad dollars, but now it’s getting simpler and simpler.

Retailers are making noise. Walmart is announcing partnerships with Microsoft to oppose Amazon in the online retailer data war, while Amazon and Target are on the tip of every analyst's and journalist's tongue, talking about the landscape for reaching consumers online.  

These three trends all point to the benevolent oligopoly of Google, Facebook, Amazon, Walmart, Target, Oracle, Salesforce, IBM, AT&T and Verizon in the advertising space, with a few smaller players staying in the mix.  These are the companies that will dominate the category of advertising for years to come, with other companies looking to sell themselves and/or integrate into them.  These are the primary channels you have to choose from if you're a marketer looking to spend your money.  

What you don’t hear about are the companies eking out a slow, silent shutdown.  The LUMAscape has some hundreds and hundreds of companies on it, and you don’t hear about half of them anymore.  If you randomly check the websites for most of these companies, you’ll see many of them are still there, but with leadership changes over the last few months.  Some have been downsizing, while some are clearly prepping to fire-sale the assets.  

One clear giveaway that an exit is coming and the company is being packaged up: when the CEO has left, and the new CEO is someone who was formerly CFO.

Consolidation is not a bad thing. Many of these companies simply confused the landscape, and now that confusion is being cleared up.  

Marketers have it hard enough without having to decipher the intricacies of the sales pitch from every ad-tech company.  A simpler landscape results in a more focused approach for speaking to consumers -- which is nothing but a good thing.

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