BMO Capital Markets Yields More Thoughts On Google Demand-Side Platform Plans

BMO ConferenceLast Thursday amidst the Internet Week hoopla in New York City, ad technology and media company luminaries gathered at BMO Capital Markets 2nd Annual Advertising & Marketing Services Conference.

In the private company track, this writer had the pleasure of guiding discussion among participants John Mellor, VP, Strategy & Biz Dev at Adobe/Omniture, Epic Advertising CEO Don Mathis, AppNexus CEO Brian O’Kelley and Joe Zawadzki, CEO, MediaMath in a panel titled “Race for the Digital Marketing Hub 1.1,” which explored the use of marketing technologies in today’s media landscape.

The discussion lasted nearly hour as the panel covered everything from recent M&A to agency strategies. In light of the recent acquisition of Invite Media by Google, the panel offered a compelling thread as MediaMath’s Zawadzki began and offered a parallel to the Urchin acquisition by Google which led to the free Google Analytics product. He argued:

“I think what happened with Omniture is the best analogy that I see. A lot of people said, ‘What happens to the market after Google buys Urchin – $30 million acquisition, small pick-up, free price point analytics product. What’s going to happen to poor Omniture?’ with a $105 million market cap at the time. Omniture proceeded to grow due to amazing work by John [Mellor] and his team to [a market cap of] $1 billion over the course of 3.5 years and really opened up a segment. Google did a very good job of targeting the small and mid-size business and coming up with a very scalable entry point product. But, most people outgrew the [Google] product and moved to the more sophisticated solutions.”

Adobe/Omniture’s Mellor added:

“As scary as [the Urchin acquisition] was at the time, it really created a lot of awareness and drove technology investment in the area towards making things simpler. That’s the big underlying point that I think we’re all struggling with today: though there’s so much cool technology and so many things we could do, it’s just too damn hard. There needs to be some investment focused on making things simpler for the advertiser and the publisher.”

Epic CEO Don Mathis said that he sees a silver lining for many ad intermediaries with Google’s strategic plans especially as it relates to the addition of the Invite Media DSP:

“This may be wishful thinking, but many of us share this hope that ultimately Google’s model starts to look more like a financial services model where it becomes a giant aggregator of supply and starts to look like the New York Stock Exchange or NASDAQ. There is room for brokers in that universe – at least, we hope so. To the extent that they attempt to be the New York Stock Exchange and a major broker going straight to the consumers/buyers on the other side, hopefully there is a structural resistance to that – a church/state divide. If you are an ad intermediary in the space, that’s what you hang your hat on. The alternative to that is that [Google] rolls up the whole ecosystem and that would be a bit scary.”

Finally, AppNexus’ O’Kelley provided his ideas on this topic:

“Google didn’t control their own destiny in building out the [DoubleClick Ad] Exchange and they were reliant upon all of us to drive revenue make the exchange work. And so this is a step for them where – yes, they could have built the technology stack – but the time to market was probably about 18 months. That would have meant 18 more months of not controlling their own destiny and not have a direct way to help an advertiser or agency solve problems and so you can think of [the Invite Media acquisition] as hedge on their own internal technology development team.”

A bit later, O’Kelley concluded on the topic and the agency dollars at stake as follows:

“There’s an inherent challenge for Google. If they leave Invite Media alone, then I think they can make a compelling case to an agency that they are a neutral player and the Invite acquisition isn’t unusually benefiting the [DoubleClick Ad] Exchange. Then again, why make an acquisition if it’s not going to unusually benefit you? – which would then force the agencies to make a choice.”

By John Ebbert

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