Media buying operating systems Donovan Data Systems and MediaBank have received approval from the U.S. Department of Justice to form a single company, Mediaocean in a deal estimated at $1.5 billion.
The combination of the two former rivals was initiated almost six months ago, as the DOJ went through a comprehensive review that included gathering input from top executives at the major ad holding companies as well as rivals Strata and Harris Corp.
For the past decade, the advertising industry has been racing to bring online media buying methods to the traditional TV space. In Donovan’s case, it has been offering platforms for media buying for 40 years. It hadn’t received a real challenge until MediaBank was formed in 2007 by Brad Keywell and Eric Lefkofsky, two Chicago entrepreneurs who also founded online daily deals purveyor Groupon.
What the merger means: Media buying has always been about data. Managing data all begins and ends with the workflow: how that data collected and analyzed determines the media plan. From there, the ultimate decisions are made about pricing and position of a marketer’s advertising.
While Donovan had been attempting to modernize the media buying workflow process for decades, it didn’t really start to get traction until the ad agencies began to update their operations in the 1980s. But it wasn’t until online advertising took off over the last decade that the software space around media buying began to draw greater interest.
Publicis Groupe’s Starcom was an early booster of its fellow Chicagoan, MediaBank, which challenged Donovan on customizable software and pricing.
For the most part, ad agency executives have told us that choosing between different software systems from Donovan and MediaBank have hindered the process of truly automating the workflow process. The feeling is, that while the competition helped produce greater choice and better pricing, gaps and inefficiencies in the process still remained.
The hope, then, on the part of agencies is that even if pressure to keep pricing on Mediaocean’s software is reduced, the upside in being able to take more friction out of the buying and planning process will more than make up for it.
In terms of the players, Michael Donovan, who founded his eponymous company in 1967, will become Mediaocean executive chairman, while Bill Wise, the former Yahoo Right Media head who joined MediaBank two years ago as CEO, will keep his title at the merged company. More details in the release.
By David Kaplan
