Programmatic industry consolidation: what does it mean for brands and media owners? | M&M Global

Programmatic industry consolidation: what does it mean for brands and media owners?

The programmatic industry is on an upward trajectory. The wave of acquisitions taking place this year, from Yahoo’s swoop for BrightRoll to Rubicon Project’s purchase of iSocket and Shiny Ads, shows that it is a part of our industry that is far from slowing down. But what has been the cause behind this explosion of acquisitions and mergers and what does it mean for brands and media owners?

Danny Hopwood

“The critical mass of the ad tech space has got to such a degree that there are always going to be companies that will have to get bought or merged,” says Danny Hopwood (pictured above), head of platform EMEA at Publicis-owned agency trading desk VivaKi.

“The market itself can only sustain a certain amount of businesses. Not saying only five or six, but you can’t continually create businesses in a market that isn’t continually generating non-stop revenue,” he adds. “It doesn’t make sense to have something that doesn’t have a cap on the end of it.”

But it is not just the continual growth and evolution of the programmatic market that is forcing companies to team up; it’s also down to the increasing awareness of how valuable data can be.

“I think it’s mainly about brands becoming more and more aware that they need to own data,” says Sacha Berlik (below), general manager, Europe at demand-side platform DataXu. “This is the key driver – the growing awareness of global brands that data is a key asset.”

Berlik also highlights the “media transparency” that a consolidated platform can provide. If brands and media owners want market research, analytics and insights into their target groups, then an integrated programmatic platform will provide them with that “immediate transparency and speed to insight” in one simple process.

A consolidated platform will also provide the full range of capabilities needed, resulting in “partner simplification” and cost savings.

Cost and technology issues

There has been speculation that this programmatic consolidation is less about improving the consumer experience and is more about focusing on how ad tech companies and agencies alike can improve their own margins.

“If you look at the buying side, I think it does bring in some very good technology and data. I think it has great performance benefits, and cost benefits, but at the end of the day it makes the whole process more streamlined and efficient,” says Oli Whitten (below), senior vice president, Europe at supply-side platform Rubicon Project.

“A lot of the companies that have been consolidating are media owners themselves. What they’re doing is taking control of their inventory and data aspects – it’s a wave that we have seen coming for quite some time,” he adds.

Inevitably, there will always be companies that look for cost and efficiency, but as Berlik highlights, those who understand programmatic have realised that the aim is “creating a better customer experience using data and analytics”.

How will this affect brands and media owners?

Programmatic inevitably opens up more avenues for brands and media owners to not only target their consumers more accurately – a more positive experience for both brand and consumer – but it also provides more opportunities to creatively spread a message.

“Brands can now go back to real storytelling,” believes Berlik. “With this seamless manner across all screens and devices they can really leverage the power of programmatic. Real innovators like Mondelez, Procter & Gamble, MasterCard, Netflix and Amazon – of course cost matters for them but it’s mainly driven by customer experience that results in a better return on investment.”

Tim Webster (below), co-founder and chief strategy officer at multiplatform programmatic marketplace The Exchange Lab, agrees that programmatic can only have a positive result on media owners and brands: “The continued adoption of programmatic is good for media owners as it increases inventory demand. It’s good news for brands too, as they can communicate more efficiently.”

Netflix and Kellogg’s are amongst some of the brands that have recently decided to take advantage of what benefits taking programmatic in-house can offer, but Webster questions this approach.

“In terms of their specific needs, any company that plans on taking programmatic in-house will require a financial investment in order to achieve structure and scale, along with new skills and expertise required amongst the team,” he says.

“Providing the benefits of scale, increased efficiency and transparency ensures that brands remain agile with their marketing efforts at all times throughout the cycle.”

Where to next?

Alongside programmatic, mobile has been one of the other topics taking up marketers’ time and budgets. eMarketer estimates that $32.7bn will be spent on mobile advertising this year alone, so it’s no surprise that bringing mobile into the equation will become the next logical step in this consolidation of the industry.

“Mobile is the next area that needs to be bought up – so many companies in the market talk about being mobile first” says Hopwood.

Mobile companies talk about budgets being saved for mobile but most spend now within the programmatic space is locked up in display and video. The next logical step for programmatic companies will be to buy mobile platforms in order to make themselves cross-channel.

So is the consolidation a bad thing? It seems as if the majority of the industry believes not.

“I think it’s positive – what you’re seeing is programmatic becoming very mainstream,” says Whitten. “Programmatic trading and ad tech is now a must-have capability for buyers and sellers alike. It’s certainly moved up into people’s consciousness as something they need to operate and be able to access.”

The digital landscape is an increasingly fragmented one and causes a lot of confusion for brands. “The whole consolidation makes it much less noisy and much simpler for brands. It’s becoming more and more stable – bringing it together as a whole,” adds Berlik.

It appears unlikely that the ad tech consolidation will slow down in the foreseeable future. You only have to look at the Lumascape slides to see how many players are popping up in the market, and those are naturally going to become the targets for larger business to acquire.

Programmatic has created a huge disruption for media trading and there is no doubt that we are a long way off from the end.

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