Consolidating Rich Media: Why the Industry’s M&A Plays Out like “Deal or No Deal!”
We’ve been reading excessively about the Google YouTube purchase, which once again focuses the ad and marketing industry’s attention toward mergers and acquisitions. Of course, rich media circles have also been somewhat abuzz around DoubleClick’s recent acquisition of KlipMart and Yahoo’s acquisition of AdInterax. It seems this new cycle of consolidation is hitting, as marketing budgets go digital and companies continue to see M&A as an easy road to entry.
In the rich media world, consolidation has usually proven to be the embarrassing uncle at the family reunion, or, in Howie Mandel parlance, a “No Deal!” proposition. Consider the following failed marriages:
• MatchLogic and Enliven (1999)
Hailed as a perfect match between the digital ad serving, measuring and targeting (Enliven) and the pioneer of digital marketing’s intelligent targeting (MatchLogic), this deal went south quickly because it never lived up to expectations and never delivered anything meaningful to a marketplace that wasn’t ready for it. The online market was focused on inventory management and media buying and we watched as ultimately Enliven was acquired by Unicast two years later.
• DoubleClick and Macromedia (2003)
More of an alliance, both companies lauded the fact that they would “dramatically reduce complexity in the rich media advertising process with a single, streamlined workflow” while “simplifying the process of trafficking and reporting on rich media advertisements for advertisers, agencies and publishers.” These two best-of-breed companies seemed as if they would produce a thoroughbred. Instead, they produced a one-trick pony that forced the template model and turned creative possibilities into [the promise of] operational efficiencies; essentially providing a canvass, but no paint.
• aQuantive and Ads4Ever (2004)
aQuantive (ad serving) acquired Ads4Ever (rich media software) in the hopes of creating a rich media juggernaut. Another acquisition that has yet to bear any fruit, aQuantive created much confusion in the marketplace. aQuantive is best known as a great creative and media buying agency with a very powerful ad serving engine. Few, if any customers have embraced this platform to date, proof that ad serving and technology companies find it difficult to grow into a rich media platform, even when your roots are steeped in the interactive agency world.
• ViewPoint and Unicast (2004)
The press release extolled the potency of two, innovative rich media companies merging. Unicast with its sales force and rich media formats and Viewpoint for its access to public markets and strong, existing desktop and 3D rendering tools. Once more, a failure. Not due to name recognition or technological shortcomings — in fact both companies have been pioneers in the rich media space — but because they failed to execute well and did not believe in their offerings.
• DoubleClick and KlipMart (2006)
More recently, the rich media industry saw consolidation with the purchase of video rich media company Klipmart by DoubleClick. Right now there are more reasons for this partnership to fail than to succeed as DoubleClick has not executed a merger successfully to date. Second, DoubleClick is in the business of serving ads, not producing creative and interactive rich media ads. Further, because DoubleClick’s business model is based upon serving ads, their focus is on volume and transactions, not creativity. Rich media is all about creativity, not just serving ads.
• Yahoo! and AdInterax (2006)
AdInterax (formerly known as Fysix) originally had its sights set on syndicated games and contests when it was found in 1998. In 2001, it changed its name and its focus to rich media software development. Basically, AdInterax builds rich media templates. Yahoo’s acquisition of AdInterax is the first attempt by a media company (portal) to own and integrate a rich media solution into its core media offering.
This is a tool for Yahoo! only inventory and will appeal only to a small set of advertisers. What Yahoo! may not recognize is that the majority of advertisers include other sites in their media plan and will want to build one rich media ad unit to run across all sites. Based on our experience, very few advertisers demonstrate the desire to build multiple units for every site on a rich media plan, thus the reason for integrated third party rich media.
Reader Comments.
“Yahoo’s acquisition of AdInterax is the first attempt by a media company (portal) to own and integrate a rich media solution into its core media offering.”
Isn’t Gannet the first publisher to acquire a rich media company (Pointroll
“Similarly (but worse), some companies have taken a “templated” approach to creative that can’t deliver what advertisers want…”
I guess that the sentence speaks about Pointroll which not only templated thier ad units but also made them simple and limited from creative stand point.
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