With the occasional jab, duck and left hook three leaders of the internet advertising industry faced off in person at the Right Media Open conference on Tuesday to debate the future of ad exchanges and online advertising. Showing up to the panel representing their advertising business and future ad exchange was Scott Howe, President, Microsofta��s DrivePM, Mike Walrath, CEO of Right Media, and David Rosenblatt, CEO of DoubleClick. The discussion that started with a friendly round of respectful back slapping quickly moved to reflect the competitive and cut throat race each leader is in.
Each panelist was quick to start trumpeting the strengths of their respective ad platforms. While Mr. Rosenblatt calmly answered what differentiates DoubleClicka��s ad exchange from Right Mediaa��s, Walrath was clearly irritated by his response and image that only DoubleClicka��s exchange had premium publishers, a�?One of the key differences is that we have top premium publishers,a�? said Rosenblatt. In response Walrath pointed out the status of his new employer, a�?Correct me if I am wrong, but isna��t Yahoo one of the largest premium publishers on the Internet?a�? he said.
This battle of ad dominance is marked by the ongoing and expensive consolidation between the titans. Yahooa��s acquisition of Right Media in April for $680 million, Microsofta��s acquisition of aQuantive in May for $6 billion, and Googlea��s hopeful swallowing of DoubleClick for $3.1 billion, highlight the importance of dominating the technology, supply and the demand. While being asked about why Microsoft was the right partner for aQuantive and DrivePM, Howe put on his best sales pitch, a�?Building ad technology is very complex and Microsofta��s strong history of software development will help us win the ad technology war. We have big big plans for AdEcn and our ad serving platform. Microsoft brings the resources to the table to compete.a�?
Acquisitions are typically marked with frustration and failure as companies with different DNA attempt to get married. However the competitive heat was strong enough here that each group preferred to highlight how conflict wasna��t the case with these integration efforts. Howe was more pronounced than normal with his excitement, a�?The cultural integration is going extremely well and wea��re very lucky to have the Microsoft resources and money behind us, before we were a small company with little money and limitations. We realized that in order to win, Microsoft was the right partner.a�?
While the bicoastal relationship between the New York based Right Media and California based Yahoo may be a saving grace as the Right Media team continue to build their business while integrating one bicoastal flight after another, a�?The cultural integration with Yahoo has been good, they have a real commitment to openness and get it,a�? said Walrath. Rosenblatt was unable to address the specifics of integration between Google and DoubleClick as he continues to face legal review and approval of the deal.
While each company fights it out in the market, one of the more sensitive topics was the Google and DoubleClick acquisition. With the latest calls of anti-trust and for Government intervention to stop the acquisition, Rosenblatt was put on the hot seat with questions to defend the acquisition, a�?It defies commonsense to say that with this acquisition, with all the competitive companies out there, plus Microsofta��s competitive plans, we would kill competition. This deal is very pro-competition.a�? Microsoft has lobbied to have the acquisition stopped and Howe was quick to point out the issue, a�?As standalone companies DoubleClick and Google enhance competition, no doubt, but together they cover over 80% of the display market, this is very serious cause for worry.a�? Rosenblatt deflected the point by repeating that they were different and there was no conflict, a�?DoubleClick is an ad delivery company and Google isna��t.a�? Howe repeated his sound bite, a�?As standalone companies ita��s not a problem, together ita��s dangerous.a�?
Walrath was happy to point out that networks and exchanges are like church and state, a�?The conflict here is AdSense, which is a network, when a platform like an ad exchange or ad server and a network come together into one you have inherent conflicts.a�?Of course the consumer related concerns of such a merger surround the data and consumer privacy. Rosenblatt was quick to point out that he doesna��t speak for Google, but that privacy is very important to protect and consumers own their data, a�?We will work very hard to protect consumer privacy and we do not see much changing there.a�? DoubleClick has a controversial history of privacy concerns and Walrath was quick to summarize his view of the real problem, a�?You do not need to have a breach to have a problem, the perception to consumers is that their data is vulnerable, this is the real issue.a�?
The race to establish closed platforms, gather customers and win dominance is typically how markets are initially successful, however it was interesting to hear all three leaders say they would be happy to interconnect with other ad exchanges and support interoperability. a�?The economics of exchange businesses and networks arena��t so different. If companies want to be in both businesses I would support that and promote interoperability with other exchanges,a�? said Walrath.
Rosenblatt was quick to point out that he would be glad to connect with Right Media. It is unlikely that this will happen anytime soon as each company is working hard to sign up customers and create differentiators. Overall the panel demonstrated a strong mutual respect for their competition, but as each panelist repeated over and over that it is still very early in the race, it became obvious how important it is to establish early market dominance and make their ad exchange the platform of choice.
History has a tendency to repeat itself with Internet companies and being first to market isna��t necessarily a good thing. Microsoft has a track record of coming from behind and improving on the innovations of others. Large acquisitions and integrations have been known to take a nimble innovative start-up to mass bureaucracy resembling the DMV. Typically ita��s not the existing list of players who win in the end; ita��s the one we havena��t heard of yet. Maybe this is a good time to reflect on the history and experiences of AOL, Netscape, and even DoubleClick to understand how to survive change. Where is the cheapest place to buy zoloft