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Why ad tech consolidation is good for CIOs

Matt Kapko | Dec. 9, 2014
There is simply not enough room for the flurry of ad tech companies emerging today. Consolidation is inevitable, and these mergers and acquisitions will represent both a challenge and an opportunity for CIOs.

Facebook has made "big advances" in ad tech, according to the company's CEO Mark Zuckerberg, who spoke on a recent earnings call during which Facebook expanded its Audience Network, closed its acquisition of LiveRail and re-launched Atlas, the ad platform it acquired from Microsoft.

Facebook COO Sheryl Sandberg described these "large and strategic investments" in ad tech as long term and hinted at a heightened period of investment to come. "We're investing in ad-tech for a simple reason. Consumers are shifting quickly to mobile and the advertising industry is not keeping up," she said during the earnings call.

Marketers and advertisers balk because they lack confidence in the measurement of mobile ad performance, Sandberg said, adding that the most commonly used systems are largely cookie-based, and they overemphasize the value of the last click.

Berkowitz of MRY agrees and says most publishers and marketers struggle to make money in mobile, especially those that don't sell app installs. "There are a lot of buyers who are clamoring to improve the breadth and depth of their mobile-driven media offerings," he says.

Ad Tech is Never Fully Deployed
Marketers and publishers clearly need better tools for mobile, according to Sandberg.

"This is an industry problem that we believe we are well-placed to solve," Sandberg says. "I think we're in the middle of what is a very fundamental shift from marketing that is cookie based on a PC, one desktop, to people based marketing on multiple devices, to marketing that is primarily for online sales, to marketing that affects those online and offline sales on mobile." 

Merged content and advertising will eventually comprise what many refer to today as the marketing cloud, according to Altimeter Group's Lieb. "These software stacks will absorb social media software solutions as well as talk to the stacks that manage digital advertising."

However, there's still a lot of work for Facebook and others to do before this happens, and there will always be something new and different to tackle.

"I think we're pretty far from being fully deployed on even this big shift," Sandberg says. "But I think in our industry nothing is ever fully deployed, that as soon as we catch up here, there is going to be another movement and something else that happens that we have to react to and build the technology for."

Although the shift may be difficult and seemingly never-ending, it is also inevitable, according to Berkowitz. "Getting what have traditionally been TV dollars to migrate to mobile is trickier, and yet as mobile cements its position as the 'first screen,' that will have to change."


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