ADOTAS — Having previously worked as an IT analyst, I am eagerly awaiting a major ad tech acquisition by an enterprise IT juggernaut such as SAP or Oracle. Given ongoing developments in the programmatic segment in particular, I am confident we’ll see one soon. My gut says it will likely be a company with media-buying and data management capabilities (i.e. DSP/DMP) and in the $500 million-$750 million range.
For those unfamiliar with ERP (Enterprise Resource Planning), it refers to software that runs a variety of business functions across the enterprise. Historically, the global IT players mentioned above have focused on selling solutions or integration services spanning a variety of functions (i.e. finance, logistics, and materials). Not coincidentally, the Enterprise IT companies and their ERP systems are typically deployed via Software-as-a-Service (SaaS), much like the DSPs and their “self-service” model. Most of the DSPs in market today were designed with the idea that they would someday plug into the ERP.
Of course global IT solutions companies have not turned a completely blind eye to the digital marketing segment, as they’ve made investments in analytics, CRM, or even created venture capital arms to invest in ad tech companies. For example, SAP Ventures was an investor in video specialist Tremor Media. However, none have gone “all in” by acquiring one of the high-flying DSPs which continually make headlines, with a few poised for IPOs in the coming quarters, such as Rocket Fuel. However, considering a white hot area like programmatic media buying is still nascent and “big data” is still in the process of being tamed, it makes sense that battle-tested technology leaders have been content to take notes from the sidelines.
One factor to consider will be whether one of the global IT players gobbles up a programmatic heavy-hitter that already overlaps one or two key global advertisers (i.e. P&G or Ford), or if they elect to go after a mid-market specialist that will potentially line up a number of mid-size clients. Of course neither may be considerations given the long-standing executive relationships SAP, Oracle, and their ilk maintain after decades of $100 million plus and even billion dollar IT investments with Fortune 500 clients.
Big data, SaaS, and increased digital marketing investments are bringing enterprise IT and ad tech worlds together. The fact brands are building in-house teams to manage their digital marketing programs builds yet a stronger case for “plugging in” a DSP to a company’s existing ERP. It will be interesting to see which DSPs/DMPs are flying new logos in the coming quarters.