Sizmek’s year so far has been tricky, to say the least. Yet, last week’s acquisition developments have unwittingly positioned the troubled adtech firm as a possible kingmaker in adland.
In the latest episode, the recently-bankrupted Sizmek has become a battleground between Amazon and Maurice Lévy’s independent vendor, Ycor – both hungry to grow.
It’s a significant story with implications far beyond our industry. In one corner, those who want Amazon to break the Facebook/ Google duopoly. In the other, those who want to see independents flourish.
But to understand where this story may be headed, we need to understand where it came from.
Why it’s all about data and the customer journey
Of the reams of column inches about the emerging triopoly, consensus is that Amazon probably won’t catch up with Facebook and Google, which, after all, have been ad-funded virtually since inception. Amazon appears to have other ideas.
At its core, Amazon’s purchase is about data. Brands are increasingly incorporating consumer journey data into their programmatic buying, and the acquisition could provide Amazon with a competitive advantage by merging Sizmek’s behaviour, timing, and geographic proximity data with Amazon’s product browsing and purchase history data.
That’s a pretty compelling proposition for brands looking to drive retail sales, for example, through targeted offers and incentives, or trying to reach specific high-value audiences. As others have commented, its measurement and attribution capabilities will also improve by having direct access to impression-level data.
That’s not to forget Sizmek’s talented staff. We can only hope they will remain in place when the acquisition is completed. This point strikes to the heart of the matter: Sizmek never edged into bankruptcy because its offering was poor; rather its main private equity backer cut off access to capital amid snowballing losses.
So what was behind Ycor’s late bid?
No sooner had the ink dried on a bargain-basement deal for Amazon, Ycor sought late last week to outbid the etail giant. The million-dollar question is, though: could Ycor ever fund its acquisition sufficiently to make it work?
It’s unlikely Ycor will win this tug-of-war. Sizmek had signed a ‘definitive agreement,’ after all.
Regardless, Amazon simply has too much financial clout and scale, and it's partly due to the bargain price that Ycor could make a run in the first place. As such, it’s unlikely Ycor has deep enough pockets to invest what's required into the business. This, however, misses the point.
Ycor is keen to build a robust portfolio of independent tech solutions into the marketing mix. Adding Sizmek to its portfolio would extend its ad-server from France and Europe to North American and other global markets, and therefore boost its global expansion plans.
At the heart of its rival bid is likely a desire to promote its view of the value of independents. Its proposition to give consumers control of their data and where it feels the industry should head more widely. All in all, as some have claimed, the bid may be little more than awareness-raising PR. And given the column inches given to Ycor, it seems to have worked.
Brands will be the kingmakers
It's not all straightforward for Amazon. Some advertising clients that use Sizmek, and were watching the output of the bids, may have to reconsider staying with Sizmek due to the competitive nature of the rest of Amazon’s business offering.
The outcome of this tug-of-war will ultimately be determined by brands that will have to decide whether they value independent tech solutions over bolstering a rival with a fully-integrated stack to break the duopoly’s hold on data and customer journey.
Either way, we’re unlikely to see any major crack in the adtech faults. But if seismic shifts teach us anything, stay tuned and expect the unexpected.
Christian Polman is chief strategy officer of Ebiquity