Similar to the dot com boom, there’s a revolution taking place in ad tech. The industry is undergoing considerable consolidation at an accelerated rate. The current market giants – Google, Facebook, and now AOL – are battling it out for supremacy. But who will come out on top and what do brands and consumers face losing as the behemoths try to ensure they keep hold of their unique selling points?
Ad tech is an industry that for the last decade has seen money invested across the board. Technology innovation is incredibly strong – companies are either building ad stacks in-house or buying technology in an attempt to keep up. Current market leaders Facebook and Google – who are said to control up to 75 per cent of the market between themselves – operate in closed environments, keeping their ad tracking technology and consumer data to themselves. This has opened up a host of questions relating to data ownership, privacy, and transparency.
The main focus at the moment for ad tech companies is the marketer’s dream of gaining ‘one view’ of the consumer journey. Walled ecosystems can’t achieve this and lead to wastage as the advertiser only sees an individual view within the ecosystem. While the companies themselves have a great opportunity for cross-device tracking through their login data, walled gardens and user-IDs lead to further industry fragmentation.
Independent attribution – the process of applying and assessing value to different marketing touch points – is also difficult in these environments due to the limited data released, making it difficult for marketers to assess real value. The problem is that in order for an attribution company to truly offer transparency to marketers, they must be independent and not owned by large media companies. While ad tech giants are monitoring themselves for attribution, as Facebook is through Atlas and Google through DoubleClick and Adometry, there will remain a conflict of interest.
Furthermore, advertisers' first-party data access comes into question in those ecosystems if demand side platforms (DSPs) can’t track within the walls. Ultimately the real loser in the equation is the marketer, who wants to realise and attain the space where true value lies.
What lurks beneath
But Google and Facebook, although giants, are just two companies in the existing media advertising ecosystem. We’re beginning to see service providers entering the mobile advertising market to monetise their pipes, as the AOL acquisition by Verizon Wireless illustrates. The acquisition gave the company what has been described by Tim Armstrong, AOL’s CEO as, “the largest mobile and video business in the US”. Arguably, service providers are the real behemoths to watch – Australian based Telstra recently bought Videoplaza; Singtel in Singapore acquired Adconion and Kontera; and Telefonica purchased Velti in South America – what further acquisitions will be made?
The opportunities are enormous. For example, in the UK, BT owns personal identifiable information through its pipes; digital, phone, and television packages that Google and Facebook won’t have access to. BT is returning to mobile again: it agreed to acquire EE in February of this year. There are many other companies like this that are yet to show their cards.
And what of the likes of Microsoft’s Xbox, AT&T, and HBO? When half of every advertising dollar in the UK is spent on digital, compared to television’s declining revenue accounting for less than a quarter of total media spend (24.9 per cent), it’s clear that the combination of TV, mobile, and digital ad revenues is too good an opportunity to miss. The next 12 months will see even more consolidation as the battle continues.
James Aitken is CEO and co-founder of The Exchange Lab. Prior to that James founded ad network MediaBrokers in 2001 and ad serving technology company Atlas Europe, both of which were acquired by aQuantive in 2006 and Microsoft in 2007.