Last week’s news of the merger between Donovan Data Systems (DDS) and MediaBank was certainly exciting. In digital media management terms, it’s kind of akin to rooting for the Yankees; only their fans want to see them grow more powerful, because it sure ain’t good for baseball.

These two behemoths have been fighting over agency budgets for the last four years, and have managed to steal a bit of market share from one another, while advancing the cross-media efficiency agenda slightly. The stated hope for this merger is that the corporate combination will give them enough firepower to finish the golf swing and solve the insanely complicated digital media puzzle, making cross media management possible in a real way.

Is this merger good for the digital media ecosystem? Maybe. Here are the three factors that will determine whether MediaOcean will become the digital media industry’s defacto system:

Standards are good

First off, it helps when everybody is reading from the same sheet of music, and there isn’t an industry that hasn’t benefitted from a common, accepted set of standards. The IAB has done a great job in terms of helping standardize ad sizes and out clauses, and some of the systems and procedures that help oil digital business transactions. An argument could be made that having 80% of agency dollar volume running through the same system brings efficiencies to the entire media buying landscape, but I’m not sure anyone in the industry would say that this was the case when DDS had larger market share.

For digital marketers, a significant hassle has been bill/pay and reconciliation, and that has been an area of focus for DDS and MediaBank across digital and traditional media. There is no doubt they can help standardize the process by which advertisers and publishers reconcile delivery even just by being the largest player – they can bring a de facto standard to bear, but how quickly can they really react to a rapidly evolving space with myriad nuances in ideal workflows for almost every customer? If they can change their DNA, they will be a force to be contended with.

Platforms Are Good

Secondly (and most importantly), the right approach to solving this problem is an open platform approach. But none of the leaders in this space have shown any predisposition for opening things up. This is in large part because the technology landscape has evolved so fast that the legacy companies haven’t been able to adapt their systems to keep up. The market needs an open, extensible platform approach to solve its numerous problems, the question is can any of the existing leaders in the space, including MediaOcean, provide that?

My colleague, TRAFFIQ Chief Product Officer Eric Picard, learned about the power of platform effects while working at Microsoft over the last several years. He recently educated me on the varieties of platform approaches that could be taken in our space, and has offered to let me publish that here:

Systems vs. Platforms: The first thing to discuss is that most companies in our space have built systems – not platforms (despite everyone using the word platform for everything.) A system simply exists on its own, is proprietary and closed – it doesn’t allow third parties to build on top of it. This describes almost all the offerings in our industry today.

Simple Platforms – or Mashups: Most of us have experienced a “mashup” in one shape or another by now. This is where a tool or web site is built that calls to numerous remote services (APIs or web services) to build one cohesive interface. In this case, the platform is really all the multiple different systems used “behind the scenes” to create one simple application that you could use. Many web sites use this technique, using various content management systems, ad servers, etc… A lot of the SEMs and DSPs use this approach, building their own interface that hits each of the paid search providers or ad exchanges via API.

Consumable Back-End Platforms: Lots of companies now offer API access to their systems. This kind of “back-end” access is then used by third parties to “mash-up” the functionality with either their own or other third-party functionality. AppNexus, Right Media Exchange, Atlas, DoubleClick and numerous others provided this kind of back-end access by API. Some of the more sophisticated providers, like AppNexus and RMX even enable third parties to extend their functionality to some degree – but they don’t make that extension generically consumable.

Ecosystem-like Platforms: A great example of this is Salesforce.com – which has built out a platform that really begins to live up to the market opportunity that the industry should be looking for. Salesforce enables numerous services that can be consumed, like the platforms and mashups we discussed above.

But they also let third-party vendors come in and extend the functionality of the core Salesforce platform. They even provide an app marketplace, similar to iTunes, that allows third party vendors to distribute their applications to existing Salesforce customers. This is a powerful approach, but requires a whole new set of skills that most companies in the ad technology space are not quite able to pull off.

Within this overall context of platforms verses systems, you can see the variety of approaches being taken by the various parties in the ad ecosystem:

• Google offers third parties APIs to write against, but keeps the vendors playing in the search ecosystem on their toes by frequently changing the APIs, and it’s fairly clear that their goal is to be both the platform and the applications that run the advertising ecosystem. They support third parties, but only as it furthers their end-game.
• The ad servers understand that their value is in the engine, much more-so than their workflow. And they’ve opened up APIs to let other workflows plug in and become mashups that ultimately are powered by the smarts of the ad servers behind the scenes.
• Donovan Data Systems has brought one mashup workflow to market, their iDesk product. It interfaces with DDS’s other applications fairly well, and can integrate with the dominant ad servers. MediaBank has done somewhat similar things with their application suites, but has taken a more “Google-like” approach when it comes to their business – investing in their own DSP and automated media buying systems. This investment in products that compete directly with the very vendors that would need to integrate into the combined system causes me to pause a bit.

At the end of the day – it’s hard to understand who might have the right DNA among these constituents to actually roll out the right platform to solve the industry’s needs.

Creativity is good

Finally, I think a development like MediaOcean is excellent, if it actually creates an environment that transforms where digital media people spend their time. Right now, digital agencies spend most of their time and effort trying to wrangle an “ecosystem” of nearly 300 technology, data, and media providers. They spend the bulk of their time trying to execute media plans, rather than coming up with creative strategies to engage consumers.

The mess of systems, lack of standards, multiple log-ins, and unmanageable hoards of data that each system throws off has created the ultimate irony: digital media is becoming the least creative, least profitable, and least measurable channel for marketers. If the merger brings us one step closer to making the digital execution piece easier, and gets the conversation back to creative, than I think it’s a step in the right direction.

After being out in the field, and talking to over 400 agencies about their digital media needs, I know that a standardized platform is what everybody wants. Whether or not MediaOcean is going to be nimble and creative enough to deliver a system that meets the needs of our growing ecosystem is very much in question. Technology has always thrived on choice, flexibility, and open standards. I believe that the company that can deliver on all three will end up winning.

TRAFFIQ is one of the sponsors of next week’s Adotas Off-Duty party at Cipriani Downtown– have you RSVP’d?

But industry slides show only which buckets the companies fall into. They offer very little insight into how those buckets are evolving.

The ad-serving world is one small sector where we’re experiencing lots of change, as ad formats go in and out of style. Major tech companies snatched up most of the direct inventory servers a few years ago, but those servers are now changing their focus as the industry attention shifts to exchanges and supply-side platforms. Alternately, video and mobile inventory are on the rise, and the ad-serving sector is pivoting once again.

Here’s how things look today, and how the landscape may change in the next few years.

Direct Inventory

Directly sold servers are used to help publishers manage the inventory sold by their direct sales teams. However, most of the major players in our space, are either “end of life-ing” their platforms in favor of something more inline with the optimization of audience based campaigns or simply letting their technology stay unchanged.  Most of the major platforms have made only minor user-interface changes in recent years.

This market is of course dominated by the 800-lb. gorilla that has held dominant market share for 15 years. Upon their acquisition by Google, this platform has not undergone any major changes at its core, but other acquisitions have led to additional functionality being added to the core ad serving system.

In some cases, this has introduced complexity and additional effort. In other areas, this has added needed functionality that is desired by the largest of publishing companies. Rumor has it that Google is slowly releasing a new platform in order to expose more inventory on the DFP exchange.

Other ad-serving companies that have been in market for years have not been as fortunate to have the resources or focus that Google has placed on their offering and these have had fewer updates and at last informal survey of the market, innovation for the direct sold market has not been at the front of plans for many, older, more established ad delivery vendors.

In fact, many of these established companies have gone through acquisitions, leading to a larger corporate mandate around their use and strategy internally, and of course to the broader marketplace. Another unfortunate side effect, even within the largest of market players, is the exodus of knowledge after these acquisitions.

Expertise on the intricacies within each product is typically limited and this is becoming a major talking point at industry events and operations specific gatherings. Within such a fast-moving industry, having the expertise to leverage the technology is becoming an exception rather than the norm.

Video Ad Servers

Video is obviously a far more complicated medium than standard display. As a result, specialized video ad servers have sprung up to handle demand. With video expected to grow tremendously in the next five years, there’s room for healthy growth here.

From asset manipulation to back-end monetization, multiple video-specific ad servers are available, either from independent players or from video ad networks looking to expand their value to publishers. Certain companies have gained remarkable market share and reputation in a short time. While a good deal of the established players have marketed that they also “serve video,” the rise of these independent players tells the story that in some cases, specialization may be necessary when working with video assets.

The problem I see with video-specific ad servers is that they only serve a limited section of the inventory. If a publisher also runs guaranteed display campaigns on their site, publishers find they can’t utilize one single solution to manage both display and video inventory. This creates more work for a publisher ops team, and more trouble in managing yield across the inventory.

With the adoption of VAST guidelines, our industry is working to ensure that delivery to these environments is structured and standardized. That’s a good thing for publishers who want to manage their entire business within one platform.

Mobile Ad Servers

In the mobile space, there seems to be a large number of ad networks that will offer a mobile ad serving solution to publishers, but of course look for that same publisher to free up inventory for use within their network business. Several mobile-specific ad-serving companies have emerged, but as more and more mobile traffic is delivered to smartphones with full feature browsers, apps on tablets, and other, more “weblike” environments, features that once differentiated a standalone ad server may or may not remain important.

As publishers move from distinguishing the specific environments and work more toward monetizing their audiences across any channel, these solutions will need to be more readily integrated. This presents another challenge and more work for the internal teams at a publishing company.

Mobile ad servers arose to solve a very specific problem: delivering into an environment that requires device detection and complex creative management, but that does not support cookies or redirects. Such servers have done a good job solving those problems, although as devices evolve, those problems are decreasing in importance.

Meanwhile, mobile-specific servers have failed to address traditionally difficult ad-serving issues like reporting or forecasting. They give publishers a tool that solves a problem that is no longer a problem, without solving the persistent problems publishers actually face.

Right now, several demand-side platforms and audience platforms, along with niche ad servers (like video and mobile), seem to realize that they won’t be able to capture enough market share without bundling the core display-ad-serving functionality into their offering. Given the amount of funding and anticipated growth in our industry, especially mobile and video, I expect the market to shift even more dramatically in the near future as ad-serving companies in emerging media (mobile and video) look to integrate or acquire basic display servers so they can increase their market share.

While this may happen, hopefully they will all have the foresight to realize that underlying data structures, and the efficiency with which they expose and share information to their clients, will form the core of their value. All companies must choose their partners carefully, or the technology landscape for publishers may be stifled just as it was several years ago.

But now the wire is exploding with news that Google is finalizing a $400 million acquisition of revenue optimizer Admeld. Just a couple of months ago it disseminated through the ranks that revenue optimizer AdMeld passed on an acquisition offer from Google because the $200 million price tag was too low. How nice of Google to double the asking price.

If this deal goes through, it will be hard to imagine anyone being able to compete with Google in the display space. Big G will have its fingerprints on an unbelievable amount of display transactions from both the supply and demand sides.

In addition to optimizing publisher revenue by enabling participation in real-time bidding on various exchanges such as Google’s DoubleClick Ad Exchange and Yahoo!’s Right Media Exchange, Admeld has been providing the technology behind and powering the private ad exchanges of The Weather Channel, IDG and quadrantONE (a partnership between journalism depots The New York Times Company, Hearst, Tribune and Gannett).

An acquisition would allow Google to take over this business and sell the technology to other major publishers. In addition AdSense partners and DoubleClick for Publishers clients would get hooked up with Admeld’s optimization tech.

Those wary of the deal (including regulators who will definitely give it a long hard look) will be skeptical of Google favoring its own exchange in display transactions, but honestly Big G won’t have to in order to bring home serious revenue. There’s plenty of money to be made by optimizing the supply side.

Admeld competitors PubMatic and Rubicon Project are hoping publishers will be suspect of Google’s intentions and choose to work with an independent revenue optimizer instead. True to form, Rubicon CEO Frank Addante sent out a statement offering existing AdMeld customers 90 days of free service.

To give that figure some perspective, the bigger independent mobile ad networks seem to range from 20 billion to 35 billion impressions served monthly.

But it’s the tablet traffic that’s really blowing minds over at AdMob — with a recorded 300% increase in the last six months, tablets account for one out of every six mobile ad requests. Fittingly, AdMob is introducing several new ad formats specifically designed to take advantage of tablets’ larger screens and touch capabilities. Built in HTML5, new interstitial units can incorporate video, image galleries and other interactive features.

Check out the vid:

I’ll be damned if those don’t remind me a bit of iAds…

Earlier this week, Google introduced in beta the serving of rich media ads from DoubleClick into AdMob. Agencies can use DoubleClick Studio to build these mobile units while advertisers can use DoubleClick for Advertisers to serve them and measure their performance. In addition, DoubleClick for Publishers Small Business ad server will soon be with AdMob, allowing publisher clients to manage ads on their mobile websites.

It seems eventually DoubleClick will become the one-stop platform for advertisers and publishers to manage their mobile and display advertising.

Oh, and there’s more: AdMob House Ads for developers to internally promote products and services has been upgraded with new ad formats as well as improved campaign management and better ad targeting options. Google is also integrating a “mediation” tool into AdMob Ads SDK that will select the “most valuable” ad from competing mobile networks. Very curious about that…

And whatever happened to AdMob founder Omar Hamoui, who left Google five months after the acquisition was finished? Well, he’s playing with digital gnomes…

Already powering group-buying initiatives at The New York Times, Thrillist and DailyCandy, Group Commerce has just added Boston.com to its roster of publishers. The new Boston Deals service will allow local merchants to offer wicked discounts to 1.3 million monthly uniques around Beantown.

As space leader Groupon signs deals with location-based mobile social networks like Foursquare and Loopt, Group Commerce’s plug-and-play platform is an interesting twist to the ever-expanding group-buying game. Local-centric sites like Boston.com offer not only a geotargeted audience, but typically an engaged reader base — exactly who local and smaller merchants want to reach.

Group Commerce was founded in 2010 and is financially backed by Spark Capital, Carmel Ventures, Lerer Ventures and Bob Pittman. It’s executive team boasts a slew of DoubleClick veterans, including former CEO David Rosenblatt in the position of executive chairman, former search head Jonty Kelt as CEO and former engineering head Andrew Glenn playing CTO.

A simplified “AdWords-like” interface lets advertisers modify campaigns from either DCS or directly in the search engines, as well as upload campaigns in spreadsheets with up to 1 million rows. Improved reporting capabilities include keyword highlighting, precise position controls and the ability to construct bidding strategies based on specific ROI goals.

This is the third significant update for DCS since its launch back in 2006. Ariel Bardin, lead product manager for DoubleClick Search, admitted to Search Engine Land that Google didn’t invest enough time in the product and that the previous version “felt more like web 1.0.” He added that integration of international search engines is coming, while social network data may be added based on customer interest.

Screenshot from DCS v.3

With the program currently in beta, exchange buyers will able to use real-time bidding technology in buying YouTube impressions. In time, Google will introduce more video formats for YouTube as well as access to Google Display Network partners across the web.

The advertiser version offers not only information on inventory availability, but also also inventory audience profiles including interests and demographics to enable behavioral targeting. However, but last night at the Adotas party, I heard all kinds of grumblings about the new system, particularly regarding the audience profiles.

One industry player suggested that Google’s attempts to be everywhere all the time had left it scattered and releasing lackluster solutions. Another said that its unwillingness to gather external feedback and over-reliance on Google engineers were giving the search giant problems.

Certainly the latter seemed to be the case with the tripped-up launch of Google Buzz — Google sent a message to Gmail users yesterday informing them a privacy lawsuit against the company had been settled and that Big G had committed $8.5 million to an independent fund primarily dedicated to expanding web privacy eduction.

With any new system, there are bound to be some false starts — so how is the beta version of Ad Planner Marketplace treating you? Are Ad Planner Marketplace hiccoughs symptomatic of bigger issues as Google dreams of ruling display? How wary should we be — as both members of the interactive advertising industry and users — as Google socializes its core components?

But even more interesting, MediaMind discovered that, at about 0.4% in both categories, mobile banners outperformed standard and “polite” banners both in click-throughs and conversions. Mobile banners also achieved higher conversion rates than expandable banners.

“The effectiveness of mobile ads show that the small mobile screen can deliver results for advertisers,” said CEO and co-founder Gal Trifon. “This presents an opportunity for the automotive industry to shift to more targeted and efficient digital media.”

In addition, MediaMind reveals that rich media doubled the conversion rates and tripled the click-through rates of standard banners.

According to Forrester Research, the largest automakers spend an estimated $142 per car sold. Online U.S. advertising spend is expected to grow 21.2% over the next few years: from $1.5 billion in 2009 to $3.9 billion in 2014.

Auto ads also ruled the CTRs in Google DoubleClick’s 2009 display benchmark report, with Flash and rich media CTR both at 0.15% and static CTR at 0.14%.

Overall CTR for 2009 stood at 0.1%, which was the same as 2008. January witnessed CTR above 0.12% and February was 0.11%, but the rate was consistent month-to-month at around 0.09%. The average click-through for static ads was 0.1%, one-hundredth of a percentage point above Flash ads.

In the U.S. on DoubleClick for Advertisers (DFA), Flash ads made up 70% of all ads served, while that number was 85% in Europe, the Middle East and Africa (EMEA). Apparently they like their ads to move move move on the other side of the Atlantic — while 20% of DFA’s U.S. ads were static, the same could only be said about 10% in EMEA. In the U.S., rich media in-page adds made up 5%, and rich media expanding and in-page video accounted for 2% each.

Overall, interaction rate was 2.5%, an increase from 2008, while average interaction time slipped to nine seconds, which was less than the year prior. Interestingly, these numbers and CTR didn’t change when examining rich media alone, while video completion rate stood at 50%. At 0.11%, in-page rich media (with and without video) had a one-hundredth of a percentage margin over expanding.

By vertical, auto ads ruled them all with Flash and rich media CTR both at 0.15% and static CTR at 0.14%.